Stephen Peeps, President/CEO, Lucile Packard Foundation for Children's Health: Addressing Socioeconomic Disparities in Children's Health

May 12, 2005
Stephen Peeps, President/CEO, Lucile Packard Foundation for Children's Health: Addressing Socioeconomic Disparities in Children's Health

It's a truism that children are our future. But the actions we take, as individuals and as a society, sometimes belie those words. From food, to entertainment, to future fiscal obligations, the choices we make for our kids all too often are informed by convenience and short-term gain.

Recently, Philanthropy News Digest spoke with Stephen Peeps, president and CEO of the Palo Alto-based , about the foundation's origins and current work, the emotional and behavioral aspects of children's health, and the obstacles low-income families face in accessing quality health care.

Peeps was hired as LPFCH's first president and CEO in 1997. Prior to his appointment, he served in progressively senior management roles in external relations for and was the school's associate vice president and director of university development when he left. In that role, Peeps helped set a national higher education fundraising record of $2 billion over a ten-year period. In 1992 he received the Kenneth L. Cuthbertson Award for Exceptional Service to Stanford, the university's highest form of recognition for non-faculty members.

Peeps earned his B.A. in English from Stanford in 1974 and his Ed.M. in Administration, Planning, and Social Policy from Harvard University's in 1981. He lives with his wife, Carolyn, and their two children in Palo Alto.

Philanthropy News Digest: When was the Lucile Packard Foundation for Children's Health created, and what is its mission?

Stephen Peeps: The foundation was created in 1997 with the intentionally broad mission to fund efforts that promote, protect, and sustain the physical, mental, emotional, and behavioral health of children. More specifically, it was created to make sure there was a dedicated philanthropic entity that worked to improve children's health in the region.

PND: The region being...?

SP: San Mateo County, which begins just south of San Francisco, and Santa Clara County, which borders San Mateo County on the south and extends all the way down to Gilroy and Hollister, almost to Monterey.

PND: Silicon Valley, in other words.

SP: Yes, but broader than Silicon Valley.

PND: Is the foundation affiliated in any way with the ?

SP: No, we're independent of each other, although we each support the in Palo Alto —— the Packard Foundation because there's a family interest in the hospital, and us because it's a critical aspect of our mission, which includes making the best pediatric care possible available to any child in the area who needs it.

PND: How did you become involved with the Packard Foundation for Children's Health?

SP: I had been at Stanford University for twenty-three years prior to taking the job here, and I'd probably still be at Stanford were it not for the fact that my wife and I had a baby girl in 1996 who became seriously ill shortly after her birth. Thank goodness we lived in an area where there was a first-rate children's hospital providing pediatric care to the local community, because if it hadn't existed, we probably would be without that little girl. It was just one of those life-changing moments. I had no particular awareness of children's health before that, and had I not found myself in that situation, I probably never would have thought about the state of children's health. But the experience of having a seriously ill child of my own caused a profound change in my perspective and gave me a much greater appreciation for the vulnerability of all children.

So when I heard that a group of people was talking about creating a new foundation from scratch to address children's health issues in the area, I decided it would be an interesting, from a professional standpoint, to be involved with a startup. Well, one thing led to another and I ended up being the foundation's first employee. And today, eight years later, we have about forty-seven employees and are very active on both the grantmaking and fundraising sides.

PND: The foundation raises funds to support the Packard Children's Hospital and pediatric programs at , correct?

SP: Correct.

PND: What percentage of those funds are contributed by individual donors and what percentage comes from foundations?

SP: We're different from most foundations, in that we walk both sides of the fundraising street. We do that because we believe no single strategy is adequate to fulfill our mission. For example, when we looked at the Children's Hospital as a key element of what we wanted to provide for the region's children, we realized that the best way for us to support it was to become its fundraising agent. It already had an in-house development office, but it wasn't very well developed, and we hoped that by assuming responsibility for the hospital's fundraising, it would allow hospital staff to do what it does best, which is deliver world-class pediatric care. And since we've assumed that responsibility, we have focused on individual donors, and in particular on individuals with the wherewithal to make major gifts, which is a model I brought with me from higher education. I would guess that at least 80 to 85 percent of our fundraising comes from individuals. Conversely, we raise a relatively small percentage of our funds from foundations and corporations. In fact, we have just two staff members dedicated to foundation and corporate gifts.

PND: Silicon Valley was one of the prime beneficiaries of the dot.com wealth created during the late nineties. Has your fundraising suffered in the wake of the dot.com bust?

SP: No, not really. In fact, it has held pretty steady. Sure, it was rising on a steeper trajectory the first two or three years of our existence, but we've never had a down year. Can I honestly say we didn't expect there to be a dip? No. But we've been fortunate and have managed to raise between $35 million and $40 million a year, every year, since 2001.

While people and foundations in the region are less wealthy than they were during the peak of the dot.com boom, that doesn't mean they're not wealthy....

I have a couple of theories as to why. One is that, while people and foundations in the region are less wealthy than they were during the peak of the dot.com boom, that doesn't mean they're not wealthy. People may feel as if they have less, and obviously some people do, but even some of those who have less still have a lot. And two, children's needs are still an interesting proposition to market from a fundraising standpoint. Having been in higher education exclusively before this, I was used to dealing with alumni who had axes to grind when it came to the institution, and that often affected whether and how much they gave. But children are a completely different story. When it comes to children, no one has an axe to grind, even in down economic times.

PND: The foundation is also an active grantmaker. What are your grantmaking priorities, and do you restrict your grantmaking geographically?

SP: Yes, we restrict it to San Mateo and Santa Clara counties, which have pretty large populations relative to our grantmaking capacity. But I'm glad you brought that up, because it's part of the story here. For most people, the words "Silicon Valley" conjure up images of a wealthy, high tech, high-flying kind of community. And that's true of a relatively small slice of the population that calls San Mateo and Santa Clara counties home. But there are also six hundred thousand kids in those two counties, and one in four families in the two counties lives in relative poverty. And there's a dramatic contrast between the haves and have-nots in the two counties. What we focus on, in terms of our grantmaking, is the less well-off segment of that community. And we do that by making grants of about $3 million a year to programs serving children in those two counties. Now, while $3 million a year is only about a tenth of what we're able to raise for the pediatric programs at Stanford Medical Center and Packard Children's Hospital, it's still a lot of money when it's directed toward prevention of children's health problems at the community level.

You know, when we first sat down in 1998 or 1999 to figure out how to be an effective grantmaker for the region, most of us were only familiar with the pediatric definition of health. But as we talked over the next eighteen months or so with what we referred to as key informants —— pediatricians, school administrators, daycare providers, and so on —— we discovered, to our surprise, that most of the health issues affecting the majority of kids in the area had very little to do with physical illness or disease. What we learned, instead, is that most kids in San Mateo and Santa Clara counties are born healthy and are not overly affected by illness or disease. What does compromise their health over the course of their childhood is what we call behavioral factors. By behavioral, I mean both adult behavior toward children and, at a certain age, children's own behavior relative to their and other children's well-being. And what the people we talked to kept telling us was that pretty much everything that compromised children's health could be prevented, at least in theory. So we decided that our main goal as grantmakers would be to protect and sustain the good health that most kids start off with, and that meant we had to be involved in prevention.

Kids start making decisions that can have serious implications for their long-term health in the latter stages of grade school and the middle school years....

After that decision had been made, we identified two age groups, birth to age five and pre-teens, as cohorts where behavioral factors have a huge impact. In the first group, birth to age five, we focus on preventing injury to children, with an emphasis on abuse and neglect. And in the second, pre-teens, which covers kids between the ages of nine and thirteen, we focus on asset development and equipping kids with the internal capacity to make the right decision when high-risk behaviors are presented as an option. This second group was barely on anyone's radar when we announced our plans back in 1999; people talked about little kids, they talked about teenagers or adolescents, but nobody talked about pre-adolescents, which is intriguing, because today pre-teens, or "tweens," as they're sometimes called, have come into their own as an age segment where a lot of development issues arise. We now know, for example, that kids start making decisions that can have serious implications for their long-term health in the latter stages of grade school and the middle school years.

PND: There's been some good news on that front of late. Recently, for example, New York Times columnist David Brooks cited a study which reported that teen pregnancy and abortion rates had fallen over the past fifteen years, that the percentage of early adolescents having sex had declined, and that teenagers were waiting longer to have sex and were having fewer partners when they did have sex. Similarly, the , which is put together by researchers at Duke University, has shown a dramatic improvement in children's well-being, including many of the behavioral indicators you alluded to, over the last twenty-five years. Are you seeing the same kinds of trends in your research?

SP: Yes. And some of them do amount to good news. For instance, teen births in the fifteen-to-nineteen age range have steadily declined in both San Mateo and Santa Clara counties in recent years. The problem is that the kinds of studies you've cited are generalized studies. What I mean by that is that the differences within the sampled populations are quite noteworthy when you start breaking them down for ethnicity and socioeconomic factors. And because the population of our counties is so much more diverse than the national population, what those statistics reveal is not necessarily consistent with our experience.

PND: Can you give us an example?

SP: Sure. Let's talk about obesity. One in five kids in San Mateo and Santa Clara counties is overweight. That's 20 percent. Among Latino adolescents the percentage is even higher. Latinos comprise 11 percent of the child population in Santa Clara and San Mateo counties, so that's significant.

Another issue is access to dental care, which, like access to health care, tends to affect children at the lower end of the socioeconomic spectrum much more than kids from affluent families. It's not the kind of thing that comes up a lot in public debate, but when you talk to teachers and school administrators, they'll tell you that dental health is one of the biggest health issues they have to deal with because of the effect it has, in general, on kids' emotional well-being.

PND: I want to come back to the issue of health care in a moment. But first, can you tell us what your indicators are saying about kid-on-kid violence in the communities you serve. Is it on the rise?

SP: We don't often see the violence that comes to mind when someone mentions Columbine or what happened recently on the Red Lake Reservation in Minnesota. I can't tell you why that's the case, although I do think that some of the behavioral issues that cause the occasional kid to resort to extreme violence —— things like bullying, ostracization, isolation —— frequently manifest themselves in other ways. For instance, a recent survey of high school students —— I can't remember if it was in San Mateo County or the state as a whole —— found that slightly less than 20 percent had seriously contemplated suicide, roughly 15 percent had actually planned how they were going to do it, and 8 or 9 percent had actually attempted it. That's pretty spooky. I'm not just talking about the occasional blue day. We're talking about kids who, for whatever reason, were unable to function normally over periods of a week or more because they were depressed. So, to get back to your question, it's not the stuff the media latches onto, like gang warfare like in L.A. or school shootings, that worries me; it's the constant emotional undertow that affects pre-teen and adolescent kids that we have to pay attention to.

PND: It's been almost a decade since major welfare reform legislation was passed by Congress. What has been the impact of welfare reform on kids in San Mateo and Santa Clara counties?

SP: Let me see if I can summarize it in a useful way. The number of poor Californians who receive cash assistance has declined every year since the mid-1990s. But as single mothers and low-income parents, many of them immigrants, have been forced off the welfare roles and into the job market, they've often had to settle for very low-end, menial jobs that pay them less than what they would have received from welfare before it was reformed. So you have this odd situation in which poor people are being punished for getting a job and off of welfare, even as more affluent residents of the state are reaping the benefits of reform, in the form of an abundance of cheap labor.

PND: Are you seeing a similar socioeconomic stratification in terms of who can and cannot afford health insurance?

...having health insurance doesn't automatically guarantee one access to quality health care....

SP: We are, although the situation has improved in the last few years. California passed a children's health initiative a few years back that resulted in a 66 percent increase in the number of children enrolled in state-funded health plans from 2000 to 2004. In the case of San Mateo and Santa Clara counties, only about 4 percent of our kids are without some kind of coverage. The problem is, having health insurance doesn't automatically guarantee one access to quality health care. For starters, the fee reimbursement schedules under state-provided programs are so poor that the number of physicians or dentists who will actually see kids who are insured through state programs is very small. It's just a money loser for them.

Second, we're talking about communities that are spread across a huge geographic area and where transportation is a problem for a lot of people. We're talking about communities where language is a problem. And we're talking about communities where distrust of authority is widespread. So yes, while the number of kids who are covered has improved significantly, we are not seeing an equal increase in the number of kids with access to quality health care.

PND: Where do private funders fit into the picture? Do they have a role to play in an issue as large and as multi-faceted as this one?

SP: Yes and no. Let's face it, foundations and individuals simply don't have the financial resources to be a substitute for public funding on an issue like access to health care. Where they can make a contribution, I think, is in the area of policy. An issue such as access has to be addressed on a systemic basis, and there are a number of foundations —— the is a good example —— that do an excellent job of commissioning research and bringing real data and statistics to the attention of the legislators who make those kinds of budgetary decisions.

I also think it makes sense for foundations to be involved, in an objective, evidence-based way, in raising public awareness of these issues. We spend a lot of time doing precisely that at the Lucile Packard Foundation for Children's Health. I'll give you an example. We've been working with the Field Poll to survey Californians —— apparently for the first time —— about the well-being of children in the state. Isn't that amazing? The Field Poll, a California institution since the 1940s, has never asked Californians about the well-being of their kids. We almost didn't believe it, but it's true. So, working with us, the Field organization included four questions about kids in the statewide survey it conducted a month or so ago. And when survey participants were asked to rank their most pressing concerns —— from the economy, to terrorism, to you name it —— to everyone's shock the number-one concern cited by respondents was the well-being of children. It didn't make a difference whether they were rich or poor, lived in the Bay Area or L.A. —— however the numbers were sliced and diced, it turns out that the number-one concern of Californians was the well-being of their kids. No one would have guessed that if the evidence hadn't been gathered and put out there by a credible organization like Field. As I said, foundations are well-suited to funding that kind of information dissemination, and they should do more of it.

PND: Your organization sponsors a Web site that serves as a conduit for that kind of information, doesn't it?

SP: It does. It's called , and it was born out of a discovery on our part that it wasn't always easy to find high-quality data about children's health issues, particularly at the local level. When we were trying to determine what the leading issues affecting the health of children in San Mateo and Santa Clara counties were, we couldn't find a lot of the information we needed. And when we did come across data, it frequently had big gaps in it or differed in the way it was tracked or organized from county to county. So we decided, somewhat selfishly, that until somebody spent more time gathering high-quality information and synthesizing it for public consumption, this would continue to be a problem, not only for ourselves, but for lots of other folks, from school districts, to community clinics, to the media. And that realization led, eventually, to the development of kidsdata.org, which has been a major breakthrough, I think, for advocacy organizations, policy makers, and anyone else that needs real-time, objective information about children's health issues in our two counties.

PND: Have you made an effort to take that data and extrapolate it to the state or national level?

SP: That's really beyond what we're comfortable doing. The exception to that, of course, was our collaboration with the Field organization. But, in general, we prefer to stick with what we know best, which is San Mateo and Santa Clara counties.

PND: Fair enough. With the kids in those two counties in mind, can you share with us three things you would do to improve their health and well-being over the next five years.

SP: The first thing I would address is access to health care, especially for lower-income kids. As I've said, though, that is beyond the scope of foundations.

PND: Let me jump in here. If we were to develop a consensus around the importance of providing improved access to health care for kids at all socioeconomic levels, how would you recommend we fund it?

It's tough to stay in business if you lose money on every low-income patient who walks through your door....

SP: Well, it certainly seems to me that any solution would have to flow from medical reimbursement rates. MediCal is a good example. The state has imposed such low reimbursement rates on physicians and hospitals for such a long time that it is no longer economically feasible for healthcare providers to care for these kids. And until and unless there is a significant shift in policy to provide coverage that matches the true costs of care, nothing will change. Not because doctors and hospitals and clinics don't care about these kids, but simply because they lose money on each and every procedure. It doesn't matter whether you're a hospital or a medical practice, it's tough to stay in business if you lose money on every low-income patient who walks through your door. So, until the state of California comes to grips with the low reimbursement rates it offers through MediCal, we will continue to see doctors and hospitals focus on patients with private coverage, to the detriment of lower-income kids.

PND: And the second thing...?

SP: I think we need to focus more on the significance of emotional and behavioral health. When people talk about health care, the first thing they think of is care as it relates to physical health. In contrast, we strongly believe that many of the factors that put kids' health at risk, both in the short term as well as over the course of their lives, are not necessarily related to health in the physical sense, but instead are much more connected to their behavioral and emotional health. And we need, as a society, to make those kinds of factors much more visible and get more people concerned about them than has been the case.

The third thing would be the dental issue I mentioned earlier. Serious dental illness can affect a child physically in a number of ways, but in some ways its most serious effect is the stigma that often attaches to kids who suffer from it. So while most people might view access to quality dental care as trivial, because they never have to think about it, I would put it near the top of my list.

So there you have it —— improved access to quality health care, increased recognition of emotional and behavioral factors affecting kids' health, and much better access to dental care. It may strike your readers as an odd list, but in terms of having the greatest impact on the health and well-being of low-income kids, those would be my three things.

PND: I have to say that the overall picture of children's health you've given us today is kind of mixed. You've identified some positive trends, but you've also highlighted some serious problems that need to be addressed. When you consider the prospects of kids growing up in San Mateo and Santa Clara counties today, do you feel optimistic? Are we giving them the leg up, in terms of their health and well-being, they're going to need to succeed in the twenty-first century?

SP: I have very divided emotions on that score. For kids in the middle and upper middle class, the trends are positive. But the disparity between the haves and the have-nots is so profound, and widening so quickly, that I find it hard to feel optimistic about the future for kids on the wrong side of that divide. In most parts of the country, that's probably not a significant percentage of the child population, but in San Mateo and Santa Clara counties it is. Sixty percent of the kids in San Mateo County and 64 percent of the kids in Santa Clara County belong to minority households. Minority households in general tend to be poorer than non-minority households, and those are the kids I worry about. Whether we're talking about disparities in access to quality health care, or cultural competence, it's hard to be optimistic about improving the prospects for that large a population of kids.

PND: It's probably worth pointing out that, according to demographers and the Census Bureau, the rest of the country is going to look more, not less, like San Mateo and Santa Clara counties in twenty-five years, right?

SP: Absolutely. At least on the coasts. It's harder to predict what might happen in the middle of the country. But in California, definitely. And as California goes...? It's such an important state. It's the eighth-largest economy in the world, it's home to thirty-five, going on forty, million people, about a quarter of whom are kids. It could be a major problem for us down the road.

PND: Well, I wish we had another hour to talk about some of the hard decisions we may have to make over the next ten or fifteen years. Unfortunately, that's all the time we have today. Thanks for speaking with us, Stephen.

SP: Thank you.

Mitch Nauffts, PND's editorial director, spoke with Stephen Peeps in April. For more information on the Newsmakers series, contact Mitch at [email protected].