New York doctors, hospitals see a onetime critic become an ally

Physicians are grateful to receive support from a banker who formerly believed that those providing the care were the problem in health care finance.

By Jonathan G. Bethely — Posted Dec. 18, 2006

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When New York banker William Mooney first got involved with issues of health care finance, he figured any problems likely were caused by physicians and hospitals who didn't know how to run a business efficiently. But once he looked a little closer, Mooney had a change of heart and has become one of physicians' staunchest allies in fighting the conduct of what he now sees as the true problem: health plans.

Physicians and hospital associations credit Mooney and his organization, the Westchester County Assn., with providing the extra push that helped them get health plan reform in New York.

"He has helped reshape the provider side of the debate," said Moe Auster, council for the division of governmental affairs with the Medical Society of the State of New York. "He has helped move the business community on the side of providers on a lot of health care disputes [and] his efforts were helpful in getting legislation passed. What he does is supplement the efforts that the medical society has been taking."

Among the changes for 2007 mandated by the New York Legislature: requiring that commercial insurers standardize their coding requirements; shortening the credentialing period for new physicians from nine months to 90 days; and only allowing retroactive audits to go back two years, a decrease from six years.

Andrew Kleinman, MD, a plastic surgeon in Westchester, N.Y., said having someone like Mooney condemn some of the unfair business practices that health plans engage in on a daily basis makes a difference. The Westchester County Assn., located just north of New York City, is a business advocacy group whose members include everyone from local heating contractors to locally based giants such as PepsiCo.

"It helps to have a leader of the business community basically being on the same side that we are on [in] some of these arguments," said Dr. Kleinman, who is also a past president of the Westchester County Medical Society.

"Politicians remarked that they hadn't seen the business community come out and ask for restrictions on other businesses before. Having some segment of the business [community] coming into the discussion helps give our arguments that much more credibility," Dr. Kleinman said.

Mooney's road-to-Damascus moment came last year, when he led a study into why the state's public hospital system was in such financial disrepair. Mooney said he and his Westchester colleagues had a bias entering the study that hospitals and physicians were "mismanaged." Hospitals and physicians opened their financial books and talked at length with the businessmen. As it turned out, "there's just a bunch of issues we just weren't aware of," Mooney said. He said he's convinced now that the real problem is that too many health care dollars are not being spent on actual health care. Instead, he said, the money is going to fatten the profits of health plans and the salaries of health plan CEOs.

According to the study, New York's reimbursement rate for hospitals is among the lowest in the nation while health insurance premiums have risen 67% in the last three years. Also, HMO reimbursement rates are 35% higher for Connecticut hospitals, and a handful of HMOs control nearly 70% of the insured market in New York.

"Physicians aren't the ones making all the money," Mooney said.

The findings are echoed in a recent report released by the Healthcare Assn. of New York State, the state's hospital association. It showed that New York hospitals have lost money for eight consecutive years. And that the state's hospitals rank next to last in the nation with an operating margin of -0.2%. The national average is a 3.7% positive margin.

More than 70 hospitals in the state have closed since 1983, and at least nine more will be shut down by the end of 2007 if New York lawmakers approve a plan set forth by the state-appointed Commission on Health Care Facilities in the 21st Century. Another 50 hospitals would be "restructured." In all, the state would lose 4,200 beds, or 7% of hospital capacity, according to the commission.

Mooney is listed as a regional member of that commission, although he said he stopped work on the project when he started evangelizing on the problems caused by health plans.

From Buffalo to Long Island, Mooney is traveling the state, touting the lessons learned from the Westchester study and trying to gain support for reforms that he believes will improve the state's health care system. He'd like to see a health care reinvestment fund created where a portion of health plan profits would help hospitals and physicians pay for such things as electronic medical records and other IT improvements. He's also drumming up support to bring back the state's authority to regulate health insurance rate increases. Plans have been able to increase rates without review since 2000.

Not surprisingly, New York's health plans are not so supportive of Mooney's active criticism of their role. Mooney approached plans to participate in his study, but he said they were far less cooperative than physicians and hospitals.

Paul Macielak, president and CEO of the New York Health Plan Assn., said his group opposes state regulation of health care premiums. Macielak said the health care reinvestment fund is unnecessary because health plans already contribute to a fund that pays for things like charity care and medical education.

The organization's senior vice president, Leslie Moran, wrote to Syracuse's The Post-Standard, after Mooney appeared in that city, that "Mr. Mooney wants the state insurance department to have greater authority -- essentially "price fixing" -- over health insurance premiums. ... [R]eform won't work if we simply look at one player and one piece of the overall system."

In testimony to the facilities commission on Dec. 1, two days after the hospital-closing report was released, the state medical society said merely shutting down beds would do nothing to solve things without "requiring a greater contribution to public goods from commercial insurance sources. Managed care entities have merged and consolidated, achieving savings of scale that have made them more profitable than ever. These insurers should be obliged to contribute more towards reinvesting in restructuring, rather than escalating their own investors' profit margin."

Mooney, feeling the same way, says he has made no plans to stop speaking out.

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