The First Lady spent six years promoting neighborhood clinics for the poor near the University of Chicago Medical Center- foreshadowing the conflicts in national health-care reform.

By John Lippert
Bloomberg Markets, December 2009

From the red-brick mansion Barack and Michelle Obama own on Chicago’s South Side, it’s a three-block walk to Washington Park, a neighborhood that’s home to some of the sickest people in the developed world, according to a 2008 press release from the University of Chicago Medical Center.

Washington Park’s population is 97 percent African-American and suffers rates of heart disease, cancer and diabetes at twice the average of Hyde Park, the multiracial enclave that’s home to the university, city data show.

When they need help, many Washington Park residents look to the nonprofit university hospital’s emergency room. Some 80 percent of the ER’s patients aren’t covered by private insurance and 3 in 10 don’t have a family doctor.

The influx of patients seeking help reduces resources for more-complicated, revenue-generating operations -- a situation familiar to executives at hospitals across the U.S. and one that President Barack Obama is trying to address by reshaping the nation’s medical system. Americans spend $2.5 trillion a year on health care and some 47 million citizens still don’t have coverage.

Part of the solution to insuring more Americans and driving down costs may be found in a Chicago health-care experiment that Michelle Obama helped develop. The rollout of the Urban Health Initiative has sparked criticism from all sides. Some university doctors say it diverts personnel and funding from emergency rooms, while a number of local people complain they’re being cut off from the best medical care.

Health Care Advocate

In 2002, the hospital hired the Harvard University-trained lawyer as executive director of community affairs to reach out to South Side residents who often viewed the university as a bastion of white privilege. Three years later, as the university organized a network of neighborhood clinics offering preventive and primary care, it handed the future First Lady control of what later became known as the Urban Health Initiative.

In that role, Michelle Obama worked to improve the clinics the university once fought as rivals and turn them into “medical homes” for routine care. The UHI’s so-called patient advocates -- administrative gatekeepers hired by the university -- help ER patients find family doctors. Some clinics are staffed by university physicians or by doctors whose student loans are forgiven for community service. The program now includes 28 clinics and hospitals on the South Side.

It costs an average of $100 to treat a patient with routine ailments at a local clinic. That’s one-tenth the price of similar care at the ER, says Eric Whitaker, a longtime friend of the Obamas who took over the program after Michelle, 45, left for Washington in January.

Congressional Support

The clinic concept has gained support in Congress. On Oct. 13, the U.S. Senate Finance Committee approved an $829 billion health-care bill. A key provision of the proposed legislation: $10 billion over 10 years for a Medicaid “innovation center” to ease pressure on ERs.

Then on Oct. 29, House Speaker Nancy Pelosi introduced a comprehensive health-care bill that the Congressional Budget Office says would cost $1.055 trillion. It includes provisions for clinic care. Republicans say they’re planning to propose their own health-care legislation.

The UHI will cut the hospital’s portion of revenue derived from Medicaid in half so it’s in line with Chicago competitors like Northwestern Memorial Hospital, Whitaker says. Medicaid, an assistance program jointly administered by states and the federal government, provides coverage for the poor and disabled and for children. The total cost of the program was $339 billion in 2008, according to the U.S. Department of Health and Human Services.

Medicaid payments dropped from 26 percent of the hospital’s $1.1 billion of revenue in 2007 to 23 percent in the year ended on June 30, 2009.

Cutting Costs

The Chicago program’s defenders say it helps show the way in driving down unnecessary costs.

“The UHI is an important model for the country in building health delivery systems that are cost-effective and yet accessible for vulnerable populations,” says Patricia Terrell, an analyst in Chicago for Health Management Associates, a medical consulting company based in Lansing, Michigan.

Ties between the Obamas and the University of Chicago run deep. The future president taught constitutional law at the school while serving as a state legislator and turned down an offer of a permanent position there after losing a race for Congress in 2000. Valerie Jarrett, 52, a lawyer who was chairwoman of the hospital board from 2006 to 2009, hired Michelle Obama in 1991 to be an assistant to Chicago Mayor Richard M. Daley. Jarrett is now a White House senior adviser.

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