Stanley Hupfeld, who helped create sprawling Integris Health in Oklahoma City nearly a decade ago, is the kind of bold, no-nonsense hospital executive who rarely hesitates to speak his mind.
The 60-year-old Texas native is as passionate as a fire-and-brimstone preacher when he talks about healthcare, describing it as a noble, almost spiritual calling that contributes as much as anything else in this country to the betterment of "mankind."
He's equally fervent about another topic that's clearly close to his heart-physician-owned specialty hospitals, which he opposes with an almost messianic zeal. In fact, Hupfeld hates these niche facilities with such undisguised fervor he has become one of the nation's most vocal advocates for their demise-immediately and completely, if possible.
"This is a life-or-death struggle," declares Hupfeld, conjuring visions of a Manichaean battle between these specialty providers and long-established acute-care hospitals. "And I really do believe that. I don't want to be melodramatic, but I think we're talking about the heart and soul of American medicine."
A member of the Chicago-based American Hospital Association's board of trustees for the past two years, Hupfeld was named in April to a committee that is now developing a long-term policy to try to beat back the threat from physician-owned specialty hospitals. The AHA led the way last year in persuading Congress to ban any new specialty hospitals for 18 months pending the results of two government studies designed to judge their long-term fiscal impact on acute-care hospitals and the healthcare system in general.
Hupfeld, one of the committee's most vocal members, is determined to extend that moratorium past its scheduled expiration of June 7, 2005-or to make the temporary ban permanent. "If this trend continues unchecked," the longtime president and chief executive officer of Integris says, "it will do major damage to the infrastructure of this country. You'd have to completely delude yourself to think otherwise."
No specialty facilities
If "I were king," Hupfeld adds, he would put an end to any new specialty facilities and force the existing 100-odd niche hospitals across the country-including those now peeling away profitable business from Integris-to shed their doctor-owners in a matter of several years after allowing the physicians sufficient time to "unwind" or recoup their investments.
That may be a severe stance, but it's typical of the blunt, direct and purposeful reputation that Hupfeld has developed over nearly four decades in healthcare.
While he says he's an unwavering advocate of physicians, two individuals who have worked closely with Hupfeld paint a far different picture of his relations with doctors who have expressed their independence or voiced an interest in specialty hospitals.
"When Stan didn't like something the doctors were doing, he would say, 'I'll bury you,' " contends one of several acquaintances, colleagues or former employees who provided their perspective on the high-profile executive.
Says Hupfeld of the anecdote: "That's bull! I've never said that. Privately or publicly."
Hupfeld's occasionally combative, us-against-them disposition may have been formed during his two years in the U.S. Army from 1968-70, including an abbreviated, four-month stint in Vietnam as a surgeon's assistant in the medical service corps ("I spent about the same amount of time over there as John Kerry but didn't get a Purple Heart," even though a knee injury forced the young second lieutenant to return home with an early exit from hazardous duty.)
"I became interested in medical administration because of that (job as a surgeon's assistant)," Hupfeld says. "That's really why I'm in this profession."
A product of Roman Catholic schools in his hometown of Dallas, Hupfeld is a 1966 graduate of the University of Texas at Austin, where he was a member of the 1963 national championship football team under legendary coach Darrell Royal. Hupfeld, a halfback on scholarship, quit the team after that championship season, his sophomore year, because he wasn't getting any playing time.
After leaving the service, Hupfeld, armed with his history degree from Texas and a newfound interest in healthcare, returned to school to earn a master's degree in healthcare administration at Trinity University in San Antonio. From there, it was a rapid rise for the hard-charging Hupfeld through the ranks of mid-level manager to president and CEO.
He started his career in a one-year managerial residency program at Providence Memorial Hospital in El Paso, Texas, and was hired as the hospital's assistant administrator in 1973. That same year, at the tender age of 27, he was named administrator of St. Joseph Hospital in El Paso, where he remained for about four years. Hupfeld moved on to All Saints Health Care in Fort Worth, Texas, in 1977, spending a decade there as CEO before his appointment as president and CEO of Baptist Medical Center in Oklahoma City, which later became the linchpin of the 13-hospital Integris system he established in 1995.
Recalling his steep career ascent, Hupfeld laughs and says, "I became a CEO six months after my residency-and I didn't have a clue what I was doing. I was just kind of able to muddle through. But we did some good things, and I got noticed."
Hupfeld needs all the experience he's mustered in the years since that formative residency program to deal with the spate of specialty hospitals and ambulatory surgery centers that have mushroomed in recent years around his flagship facility, 505-bed Integris Baptist Medical Center, which remains the market leader despite a bruising competitive environment in Oklahoma's capital city.
He's also one of the best-known hospital executives in a state where the absence of a certificate-of-need law has served as a catalyst for the recent surge in specialty facilities.
"I think he has a real passion for wanting to make a positive impact," says Craig Jones, president of the Oklahoma Hospital Association, which represents about 95% of the state's hospitals. "You may not totally agree with him, but he's very clear in his views."
In the Oklahoma City metropolitan area alone, Hupfeld says, there are now two orthopedic hospitals, two obstetric hospitals, one free-standing heart hospital and a neurological hospital-not to mention a handful of surgery centers with overnight capabilities and perhaps a couple dozen ambulatory surgery centers. These facilities, Hupfeld says, peel off the most profitable patients, leaving community hospitals struggling with government-funded programs like Medicare and Medicaid, the burden of high-cost services like emergency care and bad-debt expenses that continue to balloon. (That number jumped about 50% from 2002 to 2004 at the flagship hospital, officials say.)
Even ignoring the financial body blow of bad debt, Hupfeld says, single-specialty facilities cost acute-care hospitals in the Oklahoma City market $50 million to $70 million in revenue annually.
Yet despite dire predictions about the fiscal impact on community hospitals, niche facilities have not left their full-service counterparts teetering on the brink of collapse, according to the preliminary results of a national study by the Medicare Payment Advisory Commission. In a report released in September, MedPAC found that most acute-care hospitals remain profitable and were able to reclaim much of the volume lost to local specialty hospitals (Sept. 13, p. 7).
Indeed, the stiff competition in its hometown does not appear to have crippled Integris, a 1,800-bed behemoth with a market share of about 28%, an increase of 1.2 percentage points over the past three years. In June, Moody's Investors Service upgraded the system to Aa3 from A1 as a result of a "very consistent and improving five-year trend" through much of 2004. But challenges, the report added, will come from the "competitive threats to cardiac and outpatient surgical volumes given the predominance of outpatient surgery centers and the opening of specialty hospitals." Moody's describes the market as "saturated" with large hospitals, ambulatory surgery centers and specialty facilities.
Even with those challenges, Integris enjoyed net income of $62.1 million in the most recent fiscal year, ended June 30, with a healthy net profit margin of 6.3%. That net income was about $3 million higher than the previous fiscal year, when Integris boasted a 6.4% net margin. Yet a cautious, concerned Hupfeld says the continued existence of these niche facilities almost certainly portends fiscal calamity in the near future.
"Bad debts are way up as small employers drop insurance because of the high costs," he says. "Our bad debts are rising exponentially. And now we've got another element out there (specialty hospitals) that are determined to take only those patients with good revenue streams, and leave us with the rest. Project this over time, and it looks very bad."
For now, Integris continues to post impressive financial numbers even as it struggles to rebuild its market share in areas like cardiology, where it has lost significant revenue to a free-standing heart hospital that Mercy Health System of Oklahoma built as a joint venture with a group of cardiologists, including a handful who split from Integris. Instead of partnering with physicians on a similar business model, Hupfeld created a heart hospital within an existing facility that remains under the control of Integris.
While he calls his own heart hospital a "good model" that has helped to cement a bond with physicians, the competition from Mercy's 2-year-old Oklahoma Heart Hospital initially stripped Integris of at least one-third of its cardiology business and continues to hurt the system's bottom line. (It's such a sensitive topic that Mercy officials declined to respond to numerous calls seeking comment on their decision to build a free-standing hospital.) While Integris remains the market leader in cardiac surgery, about 16% of the volume has shifted to Mercy, according to the Moody's report.
"We have not recovered entirely," he says. "We have gained some (volume back) but it's been a hard hit."
Battles with physicians
To some who have worked with Hupfeld, his resistance to ceding any real authority to physicians is the reason he has lost market share to Mercy's joint venture.
"Unfortunately, I believe Stan has got his head buried in the sand when it comes to partnerships with physicians," says David Veillette, CEO of the Indiana Heart Hospital in Indianapolis who left Integris about three years ago after what he described as a series of frustrations while developing the hospital's cardiac program.
"(Hupfeld) let that thing slide down the tube because of an attitude that doctors were not that bright," says Veillette, who was president of the Oklahoma Heart Center at Integris (now Integris Heart Hospital) and worked with Hupfeld for nearly five years. "He continued to fight physicians. He wouldn't give up control. He wouldn't give the doctors the trust they needed."
"I like Stan," he adds. "He's a wonderful person. He believes he's physician-oriented, but he does not demonstrate it."
Says Hupfeld: "In some cases, physicians have not appreciated my stance, but I think those that are loyal to this organization understand our mission."
As for his Nikita Khrushchev-like threat to "bury" headstrong physicians who don't agree with his policies on specialty hospitals, Hupfeld dismisses it as a "myth."
"I've heard that story before," he says. "I have never in my life said that. That is out of character for me and so counterproductive that even if I thought it I wouldn't say it.
"You're not going to bury anybody. They (doctors) are too smart, and they have too much power for that."
In Hupfeld's view, the problem with these niche facilities is not competition but the injustice of allowing physicians to refer their high-margin patients to single-speciality hospitals in which they have a vested economic interest. It's far from a level playing field, he says.
"If I were to reward a physician for admitting a patient, I'd go to jail if I was found guilty," he says.
Another former Hupfeld associate, Donald Burman, CEO of the Orthopedic Hospital of Oklahoma in Tulsa, a 27-bed hospital that opened three years ago, calls his onetime boss shortsighted to think that he can somehow put a complete stop to the phenomenon of niche hospitals.
"It's a protectionist attitude," says Burman, a former vice president of post-acute services at Integris who worked for Hupfeld for about 15 months. "The paradigm has shifted. Stan and a lot of other hospital executives are reacting out of fear of competition."
Hupfeld describes himself as the kind of executive who looks at the big picture and hires talented people to run the day-to-day operations. He says he hopes the 10,000 employees who make up the Integris system know that he presides over an entity "that really cares about them personally."
When he's not putting in 10-hour days, Hupfeld spends a fair amount of time on the golf course-he plays to a decent 15-handicap and tries to get out once or twice a week. "I've been playing long enough I should be better," he jokes.
He and Suzie, his wife of 36 years, have three adult children.
Hupfeld appears happy and content in his longtime role at Integris-even despite those continuing hassles from pesky niche-hospital operations. What's more, he seems confident he will prevail in that battle and prosper in a professional role that has become far more than just a job. For Hupfeld, it's a calling.
"I really like the fact that we're doing something for mankind," Hupfeld says. "What we do makes a difference-our work really does make a big difference in a lot of people's lives. That's a good feeling."
This article was originally published in the Nov. 1, 2004, issue of Modern Healthcare.