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NYC H+H president discusses plan to turn public agency into profitable health system by 2020

Mitchell Katz vows to eliminate the budget gap with a culture shift to focus on billing, add profitable services and reduce unnecessary testing.

Beth Jones Sanborn, Managing Editor

NYC Health + Hospitals at Bellevue. Photo by Andrew Burton, Getty ImagesNYC Health + Hospitals at Bellevue. Photo by Andrew Burton, Getty Images

Mitchell Katz, now president of New York City Health and Hospitals, said providing care to virtually anyone who needs it regardless of their ability to pay is his own personal mantra and the system's cornerstone. But Katz learned in his first few months with the largest municipal health system in the U.S, that treating everyone does not necessarily lay the groundwork for financial success. 

Building a new, forward-thinking foundation will include operational changes and, most importantly, a major shift in focus and culture, Katz said. 

"The history of organizations like H+H is they were created before Lyndon Johnson created Medicare or Medicaid in the early 60s, before the expansion of Medicaid that occurred in New York right before the ACA, then again with the ACA," Katz said. "So when you're running a system where nobody has insurance there's really no reason why you'd spend your money learning how to bill." 

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H+H was slow to realize that a large-scale and detailed operation to bill insurance was needed, as well as a new culture built on such precepts as billing, really begins with registration when the patient comes into the hospital, the need to ask for insurance information and calling for prior authorization. 

"That's also not in our history. It's not even in our culture because our culture is we take care of everybody regardless. So I have actually had to explain to people 'yes, get a prior authorization.' If they are insured I want the insurance company to pay so there is more money for the uninsured," Katz said.

Another logistical area that Katz and his team are working on is growing the list of services provided that actually have healthy reimbursement rates. For instance, the system is a leading provider of behavioral health, an area with extremely high demand but low reimbursement. While its mission is to provide such services, Katz said no matter how well you bill, their system would never "break even" on them. 

Conversely, he said they have never done procedures like cardiac angioplasty, which reimburse well. Thus they evolved into a system that specialized in procedures that aren't financially beneficial even if the person is insured but don't do any of the things where there's a chance at cross-subsidy because their patients were used to going elsewhere for those. 

"Obviously that's not a successful business model and staying on that model will ultimately collapse the system. If I got our system billing accurately and completely, and started providing some of the services that are common and well-reimbursed, I would have money to grow and provide more care," Katz said.

That's all part of the plan moving forward. But those are logistical points. Katz's overreaching mission is all about primary care and making that the crux of its culture and focus.

Moving that mission forward means, first and foremost, hiring many more primary care physicians, nurse practitioners and boosting the number of primary care centers.

"Our system is tilted very far to hospital providers," Katz added. "PCP's were an afterthought to the system. Part of my job is to say 'No, PCPs are the center of the system.'" 

It also means enhancing the system's outreach capabilities with a team of community health workers who could go out and engage people who might need care and bring them into the system, educating them on how to manage chronic illnesses in a better way, making sure they are adhering to physician recommendations or simply achieving better health and wellness through primary care oversight.

"When people have confidence in primary care it changes how hospitals will do things for patients, like a procedure, because they are unsure they will see the patient again or whether the patient will follow up so they feel like "I better do this procedure. I better get it done," which leads to excessive testing. But if they know that person has a primary care doctor and they know when they will be seen again, that results in more appropriate test ordering," Katz said.

Less testing also means fewer unpaid charges or episodes of care that result from false positives or unwarranted procedures.

Katz also is eyeing building a bridge back to the community to ease transitions for those who receive inpatient behavioral health services. While the system's record for providing such service is strong, Katz said there tends to be nothing in between the hospital bed and going home. 

"Most people would benefit from a transition where they are no longer in a locked hospital but are not back out in the general community," he said.

Katz is also looking to expand the use of eConsult, sometimes termed eReferral or eCR, a digital means of seeing patients that make it easier for primary care providers and specialists to communicate about and co-manage patients when appropriate. For those primary care patients who have specialty problems and need some way to get additional help, eConsult takes care of the specialty focus. It allows the patients to "see" specialist who can then determine if a face-to-face visit is needed.

Making this massive shift will not only be good for patients, but he said it will secure the system's financial future as well. Right now that future forecast includes a substantial funding gap that could reach $1.8 billion by 2020. It's a problem he has faced before in his previous role as the leader of the Los Angeles County Health Agency, the second largest public health system in the country. That system faced a $250 million budget gap in 2011 when he headed up the Department of Health Services and, by the time he left in in late 2017, it had a $560 million surplus. 

Katz said he employed a similar philosophy and model in L.A. to what he has planned for H+H and he has pledged that the H+H system will not have a funding gap in 2020. 

"We will close the funding gap by decreasing administrative expenses through using less consultants, less administration and costs, and increasing revenue through better billing, attracting paying patients, more insurance contracts, and providing services that have better rates of reimbursement." he said. "Providing primary care homes is both a good economic strategy and was a lot of the success I had in Los Angeles. I want to bring that here to New York City because in that sense there is a similarity. Los Angeles was a very hospital-focused system when I got there and was a more primary care focused system when I left. I hope to do the same thing here."

Like most health systems, H+H uses consultants for specialized IT, workforce, financial, and legal matters, among others. In March, Katz announced he had already eliminated $16 million in consultant costs over the past three months.

The system said they will not cut back on the use of consultants to help build out the EMR and then train staff on how to use it. The system adopted the Epic EMR in 2017.

Another thing he plans to do at H+H that he did in California is continue to see patients, despite the sizable burden on him to lead H+H back to the black, and with a reshaped vision for the future. Seeing patients, he said, is a very good way to see what works in your system and what doesn't work in your system. Part of his job is to know well those ins and outs, and you get a good view of that when you see patients. It's also still his passion, he says, and it's consistent with being a good administrator. 

"I never ask anyone to do anything I myself am not willing to do. It seems like a funny kind of statement to be walking around saying primary care is really important but I don't do it," Katz said. "If it's so important why wouldn't I do it? It's just a way of making it clear that I really do think it's important and I like the idea of developing long-term relationships and helping them with their medical and non-medical struggles. I want other people to do that as well."

Twitter: @BethJSanborn
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