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Obama Camp Has Many Ties to Wife's Employer

By Joe Stephens
Washington Post Staff Writer
Friday, August 22, 2008

A few years ago, executives at the prestigious University of Chicago Medical Center were concerned that an increasing number of patients were arriving at their emergency room with what the executives considered to be non-urgent complaints. The visits were costly to the hospital, and many of the patients, coming from the surrounding South Side neighborhood, were poor and uninsured.

Michelle Obama, an executive at the medical center, launched an innovative program to steer the patients to existing neighborhood clinics to deal with their health needs.

That effort, in time, inspired a broader program the hospital now calls its Urban Health Initiative. To ensure community support, Michelle Obama and others in late 2006 recommended that the hospital hire the firm of David Axelrod, who a few months later became the chief strategist for Barack Obama's presidential campaign.

Axelrod's firm recommended an aggressive promotional effort modeled on a political campaign -- appoint a campaign manager, conduct focus groups, target messages to specific constituencies, then recruit religious leaders and other third-party "validators." They, in turn, would write and submit opinion pieces to Chicago publications.

One key recommendation from Axelrod's firm: "Respond quickly to opposition activity."

The medical center's initiative provides a window into the close relationship between the Obamas, their associates at the University of Chicago and Axelrod, the strategist most central to Barack Obama's rise. It also illustrates how that circle, and particularly Michelle, dealt with an intractable social problem that confronts many urban areas: How much care should large, nonprofit hospitals offer the poor in return for tax-exempt status?

The medical center markets its initiative as an effort to improve patient health for the poor and at the same time free its resources for emergencies and complicated procedures. The Urban Health Initiative also could save the hospital substantial amounts of money, by removing the nonpaying poor patients from its emergency room.

"An ER visit for something that's not an emergency costs the medical center $1,200," said Kelly Sullivan, a hospital spokeswoman. "That's sucking up dollars in health care that we don't all have to just blow through carelessly.

"Michelle inspired us . . . to step back and take a holistic approach to this problem."

Those involved in the effort in Chicago say that they are hopeful but that it is too soon to judge its success.

Michelle Obama and Axelrod did not respond to requests for an interview about the initiative. Axelrod's partner, Eric Sedler, confirmed his firm did the work but declined to discuss specifics. Hospital executives declined to say how much Axelrod's firm was paid.

Howard Peters of the nonprofit Illinois Hospital Association praised the medical center's efforts, saying the ER is not the place to provide patients with primary medical care.

"Patients need a source of ongoing care, and this initiative is trying to make that care available in a more appropriate setting and in a more timely way," Peters said.

Axelrod's firm warned hospital executives in its May 2007 presentation that, although many people welcomed the initiative, primary-care doctors opposed it as a break with the center's commitment to the community. Opinion research showed that a small but passionate group of people already considered the hospital to be elitist, arrogant and lacking in "cultural empathy" for the surrounding economically depressed South Side neighborhood, according to a draft report obtained by The Washington Post. Some doctors in focus groups dismissed local health clinics as "wholly inadequate."

One of the suggestions from Axelrod's firm: Change the name of the initiative.

"Internal and external respondents expressed the opinion that the word 'urban' is code for 'black' or 'black and poor,' " according to a report the firm gave the medical center on May 14, 2007. "Based on the research, consideration should be given to re-branding the initiative."

Links to University

Both Barack and Michelle Obama have worked at the University of Chicago, a financial and intellectual powerhouse with 9,500 employees and a legacy of nurturing Nobel laureates.

Barack was a part-time lecturer at the law school for more than a decade, earning as much as $69,000 a year. Michelle was the founding director of the university's community service center, working there for five years before moving to the medical center in 2001.

Shortly after Barack Obama joined the U.S. Senate in 2005, the medical center promoted Michelle Obama to vice president of community and external relations, and more than doubled her salary. She is now on leave from the $317,000-a-year post, in which she sought to bridge the gap between the wealthy institution and its poorer neighbors. The hospital declined to discuss the budget for her program or her input into budgetary decisions.

The vast majority of political contributions from university employees have gone to Democrats, and over the past nine years they have donated at least $373,000 to Barack Obama's campaigns, records show. The university's executive suites are home to a number of the couple's closest friends and financial backers.

The medical center's chairwoman, Valerie Jarrett, is a close friend and top adviser who travels frequently with Barack Obama. One of Barack's best friends, Eric Whitaker, is executive vice president at the center and is now in charge of the Urban Health Initiative. Hospital board member Kelly R. Welsh is executive vice president at Northern Trust Co., which extended the couple a $1.3 million home mortgage shortly after Barack Obama was elected to the U.S. Senate. Dan Shomon, Barack Obama's former campaign manager, is a university lobbyist. Jarrett, Whitaker, Welsh and Shomon all declined to be interviewed or did not respond to requests.

The 600-bed medical center, which has a $1.3 billion budget, has more than 700 attending physicians. The hospital is a leader in such specialties as cancer care and organ transplants, and boasts that patients travel from around the world for treatment. Its facilities feature valet parking, a meditation garden and, in some rooms, 42-inch flat-panel televisions.

Quentin Young, a local physician whose five-doctor medical office lists Barack Obama among its patients, said that in past decades the South Side often viewed the institution as a "citadel of exclusion," more interested in research than the well-being of its neighbors.

The hospital's general counsel, Susan Sher, said she approached Michelle Obama in 2001 and asked her to develop plans to bring the hospital closer to the surrounding neighborhood. Sher is a longtime friend of Michelle Obama; they worked together at Chicago City Hall, where Sher was head of Mayor Richard M. Daley's law department. Michelle Obama "grew up in this community," Sher said, adding that that makes her uniquely qualified.

"We really didn't know what this office would be, so it was really her creation," Sher said. Today, Sher said, Obama's office has grown to include more than 20 staffers and has proved a success at boosting the medical center's image.

The hospital told state regulators it spent $10 million on charity care for the poor in fiscal 2007 -- 1.3 percent of its total hospital expenses, according to an analysis performed for The Washington Post by the bipartisan, nonprofit Center for Tax and Budget Accountability. That is below the 2.1 percent average for nonprofit hospitals in Cook County.

As a nonprofit, the University of Chicago Medical Center receives annual tax breaks worth nearly five times as much as it spends on charity care, the analysis found.

Sullivan, spokeswoman for the hospital, said the institution's commitment to the community extends beyond charity care to include research and treatment of a large number of patients covered by Medicaid.

"It's very important to consider the broader benefit that hospitals, and in this case, the University of Chicago hospitals, provide to their communities," said Peters of the hospital association.

Still, Quentin Young, the South Side physician, described the medical center's level of charity spending as "ludicrous." Young, known in Chicago for having been the Rev. Martin Luther King Jr.'s personal physician, is chairman of the Health and Medicine Policy Research Group, a Chicago-based nonprofit that advocates health-care reform. Young considered himself an ally of Barack Obama while he was a state legislator.

"That's shameful," Young said of the percentages. "They are arguably, if not defrauding, then at least taking advantage of a public subsidy. We would like to see them give more than the minimum. The need is there."

'World Is Seeping In'

One of Michelle Obama's signature efforts has been working to relieve crowding in the emergency room, the second-busiest in Chicago. It logs 80,000 visits a year.

Backed by a federal grant, Michelle Obama in 2005 launched the South Side Health Collaborative, under which counselors advise patients with noncritical needs that they can receive care elsewhere at a reduced cost. The medical center said in a report that some patients "make frequent visits to the ER because no one in the family has a personal doctor."

"Obama's goal is to connect people in the community with doctors at [community health] centers, to let them know that they can use those physicians on a regular basis instead of ignoring symptoms until they send them to the ER, where care can cost five times more."

The hospital report quotes Michelle Obama as saying, "The world is seeping in, and our salvation will be the success of our partners" at local clinics.

Obama's program has enjoyed favorable news media coverage in Chicago and was eventually expanded into a broader program, the Urban Health Initiative. Under the effort, the hospital has started providing selected clinics with part-time medical personnel and has given $350,000 to enable a nearby clinic to nearly double in size.

Center executives said the initiative, on which they spent $2 million last year, could be a national model. Critics, however, describe the program as an attempt to ensure that the hospital retains only affluent patients with insurance.

"If you put enough money into it, you could save a whole bunch of community health centers," Young said. "But to date, they haven't."

Edward Novak, president of Chicago's Sacred Heart Hospital, declined to discuss the center's initiative in particular but dismissed as "bull" attempts to justify such programs as good for patients. "What they're really saying is, 'Don't use our emergency room because it will cost us money, and we don't want the public-aid population,' " Novak said.

Selling the Idea

In December 2006, the medical center hired a public relations firm, ASK Public Strategies, to help sell the Urban Health Initiative. ASK is co-owned by Axelrod, Obama's chief campaign strategist.

ASK was selected on the recommendation of Michelle Obama, Sher and Jarrett, according to Sullivan, the hospital spokeswoman. "Axelrod has a love affair with UC, and is arguably the best in the country at public affairs," Sullivan said in an e-mail.

ASK started work in January 2007; the next month, Barack Obama launched his campaign.

The firm delivered its report in May 2007 saying that, while nurses were generally favorable about the Urban Health Initiative, "primary care doctors were more negative, viewing it as a break with UCMC's community commitment."

An April 2007 draft report from the medical center's polling firm, Peter D. Hart Research Associates, said focus groups suggested that "enough latent suspicion toward the hospital and university as elitist exists to ensure that a political attack against the Urban Health Initiative as deceptive and self-serving would find fertile ground."

While most of those surveyed expressed favorable views of the center and its program, critics complained of arrogance and a lack of empathy, the report said.

"More than a few staff members -- particularly medical staff -- express strongly worded concern or disappointment with UCMC in its commitment to the community," the report said.

One survey question asked for reaction to a particular criticism that had been leveled:

"This new health initiative is not really about helping the residents of the South Side of Chicago. It is simply a way for the University of Chicago Medical Center to save money and reduce costs by serving fewer poor people without health insurance."

ASK's report emphasized the need to be transparent and acknowledge that the hospital was pursuing the initiative in its own self-interest, as well as that of patients. It also stressed that in selling the program to the public, "credible validators are critical; public health experts and ministers trump politicians."

What the Neighbors Say

The medical center appears to have enacted some of the ASK report's recommendations but not others; the name was not changed.

"I've had some complaints from my constituents," said Alderman Toni Preckwinkle, a former teacher who represents Chicago's 4th Ward and who will be an Obama delegate at the Democratic National Convention. "It's hard to know whether this is motivated by the interests of the patients or by the financial interests of the medical center."

Asked her personal conclusion, Preckwinkle paused. "They have decided they need to have as many paying patients as possible," she said. "That's all I'm going to say."

Jeffrey Schaider, chairman of emergency medicine at nearby John H. Stroger Jr. Hospital of Cook County, also is skeptical. Schaider said his emergency room welcomes all patients, whether or not their maladies ultimately prove urgent. Lower-income workers also often find it difficult to visit clinics, which have limited hours, he said.

"Often, the patients think it's something serious when it's happening to them," Schaider said. "And a lot of the time, the patients are right."

Database editor Sarah Cohen and staff writer Matthew Mosk contributed to this report.

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