Care Redesign
Talk
The Boom and Bust of Managed Care (10:42)

“I’m a primary care internist who was drawn into medical administration by a desire to try to do a better job for our patients,” says Benjamin Chu, President and CEO of Memorial Hermann Health System.

When Chu became Associate Dean and Vice President for a large academic health center in New York City, his job was to build an integrated delivery system of hospitals and doctors to get ready for the managed care revolution, he recalls, which, toward the beginning of his career, he believed was an opportunity for the country to embrace change that would truly help patients.

“That was the bold experiment in the mid-1990s, and most of us remember what happened,” says Chu. “Somehow, as we were migrating California managed care across the country, it scaled into a discounted fee-for-service system for providers and managed utilization for patients. No one asked the members of the health plan or the patients what they thought, and so it was not a surprise when our patients revolted over the loss of choice.”

Chu’s management service organization held one contract for 4,000 lives when the managed care bust happened in New York City and had to close shop after only 3 years of operation. “It seemed to me, even though it was such an incredibly promising agenda, that better care for patients was not really part of the movement,” notes Chu.

But after 9/11, when Chu was given the honor to run the largest public hospital system in the U.S., the New York City Health + Hospitals Corporation, his opinion changed.  Managed care helped NYC Health + Hospitals — which at the time took care of about 1.3 million New Yorkers, 500,000 of whom where uninsured — heal from the tragedy, both emotionally and financially.

The New York State Medicaid enrollment computers had been housed in the World Trade Center and were destroyed in the attack. In response, the state created the Disaster Relief Medicaid program, which simplified the enrollment process and put presumptive eligibility into effect. More than 350,000 previously uninsured New York City residents enrolled in the Medicaid program over a 4-month period, which in turn helped NYC Health + Hospitals stabilize their finances. Their provider-sponsored health plan also grew from about 80,000 members to a quarter million over 3 years.

But more importantly, says Chu, NYC Health + Hospitals used the enrollment “to do something that I think was really necessary and that we didn’t pay attention to in the first wave in the ’90s with managed care. And that was to concentrate on cultural change.” For example, one marker of change in care processes was a throughput for primary care access to patients of no more than one hour.

“It’s not about the covered lives, the numbers of people you enroll in the health plan that’s important, but it’s what you do with the members and how you approach improving their health that was the key,” he says.

“There’s a long runway when you start to think about the kinds of things that we need to do in terms of bringing our delivery system into a more integrated nature,” Chu says. “But I think the keys to success should be the same devotion to looking at that exceptional end-to-end care experience that we’re all talking about providing for our patients, and putting it out there — taking it out of our provider hat and looking at it from the viewpoint of our patients.”

From the NEJM Catalyst event The Future of Care Delivery: Relentless Redesign at Providence St. Joseph Health, January 19, 2017.

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