Privacy Rules Bring New Challenges for Hopkins Fund Raiser

No. 26

By Michael Anft

When John H. Zeller arrives at work each morning, he has a lot to look

forward to. As an associate vice president for development and alumni relations for Johns Hopkins Medicine and the Johns Hopkins Institutions, Mr. Zeller can count on a medical faculty and staff that regularly link prospective donors with Hopkins’s development office. He can also tap a proven staff of 100 fund raisers, which has garnered $800-million for Johns Hopkins’s medical institutions since 2000. And he can tout Hopkins’s world-class reputation: The hospital has been named the best in the country by U.S. News & World Report for 14 consecutive years.

Those advantages helped land the Johns Hopkins Institutions, which also includes the Johns Hopkins University, in the No. 26 spot on the Chronicle’s annual list of the nation’s top 400 fund-raising organizations.

‘Ties Our Hands’

But Mr. Zeller can also anticipate the re-emergence of at least one continuing headache. Because of federal regulations that went into effect last year to protect the privacy of medical information, he and his colleagues will probably only reach about half of their prospective donors. Hospitals can no longer base their appeals on medical information provided by patients unless the patient gives explicit permission to pass such information on to the hospital’s fund raisers.

“In some ways, it ties our hands,” says Mr. Zeller, noting that fund-raising pitches are typically tailored to mention programs and services that have had a direct effect on the prospective donor’s health.

“There’s no question that patients’ privacy is paramount,” he says, adding that, “clearly, diagnosis and [a patient’s] condition are really not relevant information” to anyone for fund-raising purposes. But the new regulations, he says, “can make fund raising awkward because they require us to get written permission from a patient before anyone from the development office can talk with him.”

For example, he says, his staff cannot contact oncology patients and ask them if they would like to donate money to a cancer center unless those patients have agreed beforehand that such contact is acceptable.

Solving the challenge posed by the new privacy regulations is especially vital for Hopkins. The hospital relies mostly on a wide range of gifts from individuals, many of them patients and former patients with whom the fund-raising and medical staffs have cultivated long-term relationships, Mr. Zeller says. The organization relies heavily on face-to-face solicitations, he says, and its gifts cover a wide spectrum, ranging from $25 to multimillion-dollar gifts.

The entire university system is in the midst of a seven-year campaign to raise $2-billion by 2007, of which $1-billion is earmarked for Hopkins Medicine. The hospital is already 80 percent of the way toward that goal.

Educating the Faculty

A tall, dapper 53-year-old with a smooth, unrushed speaking style, Mr. Zeller functions as the face of the Fund for Hopkins Medicine, his colleagues say. His cool demeanor belies the challenges facing him and his staff because of the new privacy rules.

Before he arrived at Hopkins in 1995, Mr. Zeller served for four years as associate vice president for development at the University of Rochester Medical Center, in New York. Previously, he worked as a fund raiser for two colleges in New York State and a medical center in his hometown of Sayre, Pa.

At Hopkins, Mr. Zeller says, his fund-raising department operates in a much less centralized way than did the staff at the University of Rochester Medical Center. He attributes much of the hospital’s fund-raising success to the growth of the Fund for Hopkins Medicine development staff — from 35 when he arrived at Hopkins to 100 now — and to the participation of doctors, researchers, and medical personnel.

“Our faculty and leaders have an extraordinary ability to articulate their vision and the need for philanthropy,” Mr. Zeller says. A fund-raising training program for medical staff has been expanded in the past decade, he adds. “There were already successful programs in place when I got here, but we decided to engage a broader constituency of faculty to become involved in fund raising,” he says. As greater numbers of Hopkins employees, physicians, and faculty members learned more about raising money, the development staff grew so it could build relationships with them, he adds.

“We’ve met with faculty anywhere and everywhere — on campus, at faculty meetings, on retreats — and talked with them about the value of building relationships, articulating a vision, and how they could let donors see how their support can make a difference,” Mr. Zeller says. “That program has ballooned substantially over the course of the present campaign. You can see its success in the numbers.”

Johns Hopkins Medicine is in the midst of rebuilding its aging East Baltimore hospital campus. But many individuals, like most private foundations, are loath to give money for bricks and mortar, preferring instead to support research programs.

Despite that, Johns Hopkins’s Clinical and Academic Facilities Fund has been successful enough to keep an ambitious construction schedule on track. The hospital decided at the beginning of its capital campaign to set aside a percentage of gifts from foundations and individuals for new buildings, Mr. Zeller says. The hospital has gotten better, he adds, at explaining to donors why such earmarking is necessary.

“Even if a donor is giving exclusively for research, that research can’t exist in a vacuum, or in the facilities we currently have,” he says. “When our faculty and staff talk to a donor about that, then lay out what they’re trying to accomplish, donors become pretty reasonable about it.”

Privacy Regulations

But reaching those donors in the first place has been made more difficult by the federal Health Insurance Portability and Accountability Act of 1996.

The law, commonly known by its acronym, HIPAA, went into effect in April 2003. The bulk of the law deals with privacy of medical records, the ability of a patient to maintain health-insurance coverage, and the elimination of fraud and waste in the health-care system. Since the law’s passage, fund raisers have begun to interpret the eight paragraphs that pertain to them among the 1,500 pages of regulations and to make necessary changes in the way they operate.

Some hospital fund raisers, including Mr. Zeller, have provided testimony to the National Committee on Vital and Health Statistics, a federal agency, in hopes that the regulations will be changed to allow them to offer some information to patients on how to make contributions to specific departments, even if the donor hasn’t given consent. So far, the federal Department of Health and Human Services has not changed the new regulations.

Interpretation of the law varies widely, says Joanne E. Pollak, general counsel at Johns Hopkins Medicine. “If you call 100 different hospitals, you might get 100 different opinions on it,” says Ms. Pollak.

Many institutions have overreacted to the law by prohibiting development offices from including patients and former patients in direct-mail campaigns seeking general contributions, says William C. McGinly, president of the Association for Healthcare Philanthropy, in Falls Church, Va.

“There are some hospital attorneys and privacy officers who are so concerned with protecting hospitals from liability that they won’t even let fund raisers use a patient’s name and address — and the law doesn’t say that,” says Mr. McGinly, whose organization represents 3,700 health-care fund raisers across the country.

But the law does prevent fund raisers from making specific appeals to patients who have not authorized such pitches. Most hospitals, including Hopkins, have opted to include forms that patients can sign when they register for treatment. A signed form allows fund-raising staff members to contact patients to ask them to support a particular hospital program — usually, the department where the patient is treated.

The signed-authorization approach has its pitfalls, however. Only 45 to 50 percent of patients nationwide sign them, says Mr. McGinly. “The problem is people are asked to sign the authorizations before they become aware of their treatment, what the work of the institution is, and where research is going,” he says.

At Hopkins, where more than 70 percent of total gifts come from out of state, getting authorizations signed can become cumbersome. (Mr. Zeller says Hopkins does not yet have reliable data on how many of its patients sign the forms.) “Often, people tell us after they have been here that they would like to receive information about giving, but we don’t have a signed form,” he says. The hospital, he says, has chosen to interpret the law to mean that it cannot mail patients the forms to sign, although he acknowledges that this is a matter of debate among other medical organizations.

“We have to wait until they come back to Baltimore to sign a form,” he says. “Then, we can get them information about the work of a particular department.”

Hospitals saw an increase in giving last year — 6.5 percent, according to the latest report by Mr. McGinly’s organization — but the boost was smaller than observers expected, Mr. McGinly says. The outlook for this year remains uncertain, he says. Although the sour economy in the early part of the decade and the new privacy regulations are certain to have a continuing effect on health-care donations, he says, it is difficult to tell how much impact each factor exerts.

At Hopkins, which has spent $500,000 and added four employees to help bring it in compliance with the regulations, gifts from individuals decreased slightly in fiscal 2003, although the hospital won additional support from other private sources to make up the difference.

Mr. Zeller says it is impossible to tell whether the downturn in gifts is related to the new privacy law. But for hospitals such as Hopkins, which are seeking money not only for patient care but also to train medical students and undertake large research projects, he says, any hindrance to fund raising can potentially cause a shortfall.

“We need money to maintain affordability and diversity, and so we can find better ways to do things through research,” Mr. Zeller says. “It’s hard these days to find funding sources for all that, other than philanthropy.”

THE MAKING OF A TOP FUND RAISER

John H. Zeller, associate vice president for development and alumni relations, Johns Hopkins Medicine and the Johns Hopkins Institutions

Years in fund raising: 27

Education: Earned bachelor’s and master’s degrees in education from Elmira College, in Elmira, N.Y.

Previous employment: Associate vice president for development at the University of Rochester Medical Center, in New York, from 1991 to 1995. Also worked as a fund raiser for Ithaca College, in Ithaca, N.Y.; the Guthrie Medical Center, in Sayre, Pa.; and at Elmira College.

Most important lesson learned: “Have a passion about what you do and an unending desire to make a difference with people.”