Karen Davis is the kind of woman who has never been averse to speaking her mind-softly, but emphatically. Still, she's managed to survive-and thrive-during a nearly four-decade career spent dealing with the delicate egos that populate politics, academia and government bureaucracy.
Ever since her college days at Rice University in the late 1960s, an era when Houston was among the most segregated cities in America, the outspoken Davis has been a vigorous champion of the vulnerable, the poor and the underprivileged. Her finely honed sense of social justice and personal compassion have served her well as president of the New York-based Commonwealth Fund, an influential healthcare policy foundation that reflects the same qualities embodied in its leader.
Yet for someone who is so completely immersed in the intricacies of the U.S. health system, Davis, a highly regarded economist, isn't a big fan of the way it works. "You know, we're the only industrialized country without universal coverage. We're talking about ... New Zealand, of all places, that have what we don't. We're the only major industrialized nation in the world where you see a large number of people who can't get care because they can't afford it.
"The U.S. spends more-but it doesn't get more."
At 62, Davis is quiet and composed until she starts weighing in on issues that matter deeply to her, such as the 45 million Americans who lack health-insurance coverage. She's not reluctant to berate politicians, blast a business culture that marginalizes women or criticize the level of charity care provided by America's hospitals.
Earlier this month, for instance, Davis addressed a group of hospital chief financial officers, offering this typically blunt assessment: Not-for-profit community hospitals are failing to live up to their mission and must do more to address issues of equality and access for the poor and underprivileged. She says she told the group that hospitals should take patients who are below twice the poverty level and agree to give them the lowest rates available to any patient.
"They've got to start doing more," says Davis, sitting behind a broad mahogany desk in her expansive office on the second floor of the historic Harkness House, a stately, white marble mansion that stands out even among the many elegant buildings that dot New York City's Upper East Side. "And I think that for any hospital to charge an uninsured patient more than they charge commercially insured patients, or more than they take from Medicare, is completely unacceptable."
When she took over as president in January 1995, Davis quickly set about "refocusing" the foundation's efforts toward vital public policy issues that affected the disadvantaged, transforming universal healthcare coverage into one of her signature issues. It is now almost as closely associated with the Commonwealth Fund as its chief.
Known as a tough taskmaster who expects a lot from her nearly 50 staff members, Davis has been involved in healthcare policy for most of a professional life that began when she earned her stripes back in the late 1960s as one of the first-if not the first-female healthcare economists in the nation.
As a graduate student, Davis concentrated on mathematical economics, or econometrics, an area that examines the way companies behave, and why. For her doctoral dissertation, she took the advice of a mentor and focused on how for-profit hospitals behave differently than not-for-profits-and whether not-for-profits deserved their tax-exempt status, foreshadowing by decades the current debate on the issue.
Her conclusion, then and as it is now, is that not-for-profit hospitals are "interested in providing better care" at the same time they must balance the need to act like any other business.
Davis earned her doctorate in economics in 1969 from Rice before heading to the Brookings Institution in the nation's capital for a seven-year stint in the 1970s. She worked there until she was tabbed for government service in 1977 under President Carter, serving as a deputy assistant undersecretary focusing on health issues in the Department of Health, Education and Welfare, the predecessor to HHS.
"I remember meeting her at an American Economic Association event in New York in 1969," recalls Uwe Reinhardt, one of the nation's best-known healthcare economists. "Most of the prominent healthcare economists were invited to a breakfast meeting. There were no more than 12 of us. Karen was the only woman. Since then, she's had an enormous impact in two ways: through her scholarly writing and her position as a role model to women who were just entering the profession."
The Commonwealth Fund, established in 1919 to "enhance the common good," supports independent research on health and social issues and provides grants to improve healthcare practice and policy. Its focus has long been in two areas: improving health-insurance coverage and access and improving the quality of care for vulnerable populations.
Davis says she is particularly proud of the foundation's pioneering work in pressing the case for pay-for-performance, an effort that began about five years ago and is now beginning to bear fruit.
Last year, the Commonwealth Fund, which has assets of about $610 million, provided external grants of approximately $17 million and another $5.4 million for internal research and fellowship programs. While those numbers pale in comparison to philanthropic heavyweights like the Robert Wood Johnson Foundation-the biggest and best-known organization focusing on healthcare, with nearly $8 billion in assets-Davis says the Commonwealth Fund packs a lot of punch for its comparatively small size.
One example: In the long debate over the Balanced Budget Act of 1997, the Commonwealth Fund paid for a $200,000 study whose results supported offsetting Medicare beneficiaries' financial burden from out-of-pocket expenses. That study, she says, helped lead to a bill that added about $2 billion in financial protection for the low-income elderly over five years.
If Davis has her way, the U.S. healthcare system will be dragged kicking and screaming-by her, if necessary-into a 21st century of improved quality and efficiency. "How do you make it more efficient?" she asks with an expression halfway between dismay and disdain. "It's politically tough to do. For one thing, people don't have good ideas, truthfully."
Wild cost variations
She says she's continually amazed by the variation in cost and quality among American hospitals. How, she asks, can a medical procedure cost $1,800 at one facility and $8,800 at another hospital just a few miles away? And why is it that one hospital can perform complicated surgeries and post such demonstrably superior results than a competitor?
"For one thing," Davis says, "there's no incentive to improve. You'd think the (higher-cost or lower-quality hospital) would be out of business, wouldn't you? But insurers just keep paying."
Hospitals don't have enough data to effectively measure how they're doing, she says. And the reason is simple: "Nobody wants to be measured and to be forced to make their data public. Hospitals are going to have to get over not wanting their data public."
Indeed, Davis says, quickly warming to one of her favorite topics, the U.S. healthcare system leads much of the world in one area-secrecy. In a recent survey by the Commonwealth Fund, only about 31% of U.S. hospital executives believed that mortality rates should be released to the public, and just 40% said they thought medical-error statistics should be disseminated. That's far less than their counterparts in either Canada or Australia, where, Davis says, hospitals have "come to accept that transparency is both a public right and inevitable."
Something also must change dramatically in the way Americans pay for health insurance, says Davis, a fervent advocate of an all-payer rate-setting to establish standard norms and perhaps reduce the high markup enjoyed by the nation's increasingly monopolistic corps of huge insurance companies. The 10 largest companies, she notes, now boast about two-thirds of all enrollees. "Have we controlled costs any better?" Davis asks. "No. We spend more publicly on healthcare than any other country."
In her world view, there's a simple, cost-effective way to provide basic insurance for every American. Under her plan, most of the 45 million without insurance could be covered through an expansion of several programs, including Medicare, the State Children's Health Insurance Program, the federal employees' health plan and traditional employer coverage. The total annual federal outlay to provide insurance to nearly 40 million? About $70 billion, Davis estimates, or less than the amount returned to predominantly wealthy individuals from President Bush's first tax cut.
"One of these tax changes would generate enough revenue to finance this," says Davis, who doesn't hide her scorn for the administration's tax policy. What's more, she thinks Americans would support her plan. "We've done surveys that show people are willing to give up tax cuts for universal coverage or improved health insurance coverage," she says. "But it's not a message that's getting through (to lawmakers). That doesn't mean, how-ever, that we shouldn't be trying to get that message out there."
Birthplace: Blackwell, Okla.
Family status: Single. One daughter, two grandsons.
Education: Bachelor?s degree, mathematics and economics, Rice University, Houston, 1965; doctorate, economics, Rice University, 1969
Previous jobs: Senior fellow,
the Brookings Institution, Washington, 1974-77; deputy assistant secretary planning and evaluation/health, office of the secretary, Department of Health, Education and Welfare, Washington, 1977-80; professor of economics and chairwoman, department of health policy and management, School of Hygiene and Public Health, Johns Hopkins University, Baltimore; executive vice chairwoman, Commonwealth Fund, 1992-94.