November 16, 2012 at 15:00 PM EST
North Shore-LIJ aims for bigger than behemoth
One of New York's largest health systems believes it's found a way to more than triple its $6.7 billion in revenue—in the next eight years. North Shore-LIJ Health System this week laid out a long-term strategy to capitalize on changes in the way doctors and hospitals make money under Obamacare, while benefitting for as long as possible the current lucrative fee-for-service business model in which health care providers are paid for every service. Under health care reform, providers like North Shore-LIJ will increasingly accept flat-rate payments for delivering care. "Our goal is to be a $20 to $30 billion organization by 2020," said Senior Vice President of Managed Care and Business Development Howard Gold during a Nov. 14 conference sponsored by the New York State Health Foundation. Mr. Gold said the economy can not support growing health care costs, which have been growing at more than twice the rate of inflation and in 2011 consumed 18 cents of every dollar of the nation's economic output. "There is a shrinking dollar, and we want to get a piece of the shrinking dollar," said Mr. Gold. And so North Shore-LIJ is throwing itself into every facet of reform, even hiring staff to comb through Department of Financial Services filings from insurers so the health system can learn how they do business. North Shore-LIJ has made no secret of the fact it is exploring acting as an insurer to capture more of the premium dollar. It first must learn how insurers calculate their premiums. "We have to know as much as the Aetnas and Uniteds know about this world," said Mr. Gold, who ordered his staff to plow through DFS's website. "I want to know what they put in their premium." The system already has taken fledgling steps toward acting like an insurer. It has some full-risk contracts with Medicare and Medicaid to care for certain patients for a lump-sum paid per member monthly. Unlike fee-for-service payments, the model shifts the financial risk to providers from insurers. North Shore-LIJ is betting that its large geographic footprint in the New York City area will give it the volume of patients it will need to make a profit under flat-rate payments, which reward hospitals that keep patients out of them. The system has 16 hospitals, more than 9,000 affiliated physicians, and a large network of long-term care facilities, rehabilitation, home care and other outpatient services. Mr. Gold said North Shore-LIJ is pushing to increase the number of employers, unions and consumers who sign up for insurance products that feature the system's facilities and providers. With higher volume, the system can structure contracts that entitle it to some of the premium paid to insurers in exchange for sharing risks and being financially rewarded for meeting performance targets. North Shore-LIJ also will cling to the current fee-for-service payment model that will generate $6.5 billion this year. "I am going to milk fee for service for as long as we can," Mr. Gold said. North Shore-LIJ also is selling insurers on the idea of using its vast provider network as the foundation of new lower-cost products. Last month it announced a deal with UnitedHealthcare, and this week a healthy turnout of some 200 insurance brokers gathered to get details on the new offering. The UnitedHealthcare offering has tiered health benefit plans that are being sold to Nassau, Suffolk and Queens county employers for Jan. 1, 2013 enrollment. North Shore-LIJ can earn financial incentives from UnitedHealthcare if saves medical costs by keeping patients healthy. The health system has 40,000 people in its own employee health plan. By limiting their network to the North Shore-LIJ system, said Mr. Gold, "our rate of growth of cost increases is under 2% jut by having 80% domestic use." "I'm going to take that model to every payer," he added. Large employers have taken note. Mr. Gold said General Electric Chairman and Chief Executive Jeff Immelt "just talked to (North Shore-LIJ President) Mike Dowling and said can you do this for my workers in this catchment area?
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