The Changing Face of Healthcare: Insights from Mark Neaman

Mark Neaman has served as President and Chief Executive Officer of NorthShore University Health System since 1992. Mr. Neaman has spent his entire career in Evanston, joining the hospital in 1974 after earning his Master of Science, Business and Healthcare degree from Ohio State University. Mr. Neaman undertook a Healthcare Fellowship with the International Hospital Federation. He was named the “Young Healthcare Executive of the Year” from the 35,000 member American College of Healthcare Executives (ACHE). In 2009, Mr. Neaman was the recipient of ACHE’s highest recognition, the Gold Medal Award.

What are the two biggest challenges hospitals are facing with the recent passage of the Affordable Care Act (ACA)?

There are plenty of challenges out there, but I can give you two.

The first one is uncertainty, particularly in terms of the near impossibility of setting a direction, a plan and a strategy for the future. There is no good way to plan or develop strategies or tactics related to the ACA, because we don’t know if the Supreme Court is going to overturn all of it, or part of it, or uphold it. We don’t know what impact, if any, the 2012 elections are going to have on it and in a state like Illinois, where so much is dependent on Medicaid, it’s uncertain where the State of Illinois is going to be financially. So uncertainty is the focused word here.

The second is actual funding cuts without any systemic changes to the industry. So whether it’s Medicare cuts or Medicaid cuts in payments, insurance company reductions, taxes by the State of Illinois for tax-exempt organizations, all of those have the common theme of less money to the healthcare system. And it’s pretty easy to understand why that’s important, given it makes it that much more difficult to sustain and invest in future programmatic elements.

How do you envision the healthcare industry changing, regarding stand alone facilities versus healthcare networks and systems? Specifically what is NorthShore doing and why do you think we’re headed in this direction?

My suspicion is that in many markets across the US, given all of the challenges that are going on, free-standing community hospitals will be almost impossible to sustain. They’re not going to have the scale to be able to fund the enterprise, including things like making huge investments in informatics and electronic medical record systems. And importantly, they’re not going to have the requisite geographic coverage that is necessary for being part of a network that in essence provides some sort of insurance coverage or is able to take Medicare Advantage.

In other markets where you have a community hospital that’s the only hospital in the region, like in 100,000 population cities, that’s a different story, but even those are going to be really challenged, as all of us are going to be, with the finances associated with the ACA.

NorthShore is focused on the integration of hospitals, primary care physicians, specialty physicians, and hospital-based physicians, into a single, integrated system. It’s all about getting the hospitals and physicians on the same page with the same alignment and the same direction.

First, much of our effort is doing just that through the development of a faculty physician practice group, where about 750 or 800 multi-specialty physicians are salaried by NorthShore. Typically this is only associated with some university hospitals.I saw an interesting statistic the other day that the trend towards hospitals employing physicians has accelerated greatly. About 25 percent of physicians across the US are employed by hospitals.

Second, we use a distributed geographic model where we have some 80 ambulatory care centers spread out geographically in addition to our four hospitals. This is done in case we have to offer some sort of an insurance-type product. We want to have coverage of a bigger geographic region for the future.

What is the benefit of moving in this direction, as opposed to a more traditional model (where physicians do the majority of their work in solo, private practices and aren’t salaried by hospitals)? Is it different for specialists compared to general practitioners?

There are a couple of reasons. First, the practice of medicine has changed, so clinically, it’s very difficult to practice alone. You need to be linked to other practices and disciplines, because you need a lot of team members for complex patient care. Second, financially, it’s getting increasingly more difficult for many physicians to really make a go of it economically, by implementing electronic medical record systems and handling the complexities of billing.

It’s become very hard to run a small business, like it’s a small retail outlet and you’re trying to survive against the big box stores. However, if you are a specialist who can exist by yourself, like a cosmetic plastic surgeon, you can live like an island, and just kind of be out there all by yourself, because you are not as dependent on other specialists to provide additional support to your patients.

Do you think this newly emerging network of physicians affects the patient’s experience or how physicians interact with each other?

I think going to a system-wide approach is beneficial to the patient experience. And at least at NorthShore, by having a distributed system, you can be closer to the patient, which makes it easier for access.

By having a system like this you can offer coordination of appointments because all physicians are part of the same network, they get a comprehensive look at the patient and have a clearer sense of the patient’s history, which may be driving why they’re coming in.

The addition of the electronic medical records system is a huge tool to make it all work, because the patient’s information is always available and has created a much better patient experience that allows them to become an active participant in the care delivery system.

How do you predict the relationship between hospitals and insurance companies will change? What are some of the financial risks associated with this and how will they affect patient options and physician responses?

If the Affordable Care Act goes through as currently constituted, I think this first phase will be insurers increasingly pushing the risk on providers (like NorthShore).

This occurs in part because Medicare is an insurer with monopoly pricing power, so they are able to reshape the system. For instance, instead of paying fees for individual services, they will pay a bundled payment for the entire continuum of care. This means, they will pay a set amount that will have to cover everything that happens to the patient, and as a provider you have to take the risk if a complication occurs. Therefore the risk moves from the insurer, like Medicare, to the provider. I think some of that’s going to happen almost regardless of whether the Affordable Care Act goes through or not.

The second phase of this would be if insurance moves from group insurance, as it is currently modeled (with the majority of Americans getting their health insurance through their employer), to the emergence of individual insurance. Insurance will move online to connector sites modeled like Travelocity or Orbitz, where individuals can compare policies and choose the policy they want, instead of their employer buying it as a group for them.

I think when that happens, since providers like NorthShore are already taking the risk, they’re going to be able to provide their own insurance plans on the connectors for two reasons. First, the providers won’t have to sell to an employer and all of their employees; instead they can go online and say, “Here’s our NorthShore insurance product, and you can go to anyone of our hospitals and here’s the price.” Second, there won’t be huge marketing costs associated with doing that.

There are many “ifs” in that equation, but it’s where I can see providers moving toward as they will likely have to get at least minimally involved in insurance-type products.

Feature photo: cc/Alex Carmichal