LUTHERAN STATEMENT TO THE MEDICAID REDESIGN TEAM'S HEALTH SYSTEMS REDESIGN: BROOKLYN WORK GROUP

LUTHERAN STATEMENT TO THE MEDICAID REDESIGN TEAM'S HEALTH SYSTEMS REDESIGN: BROOKLYN WORK GROUP
The Medicaid Redesign Team's Brooklyn Work Group held a public hearing on Oct. 19, 2011. Lutheran HealthCare's chief financial officer provided the following remarks to the group. The remarks were in response to the group's request to hear our views on the health care challenges in Brooklyn.

My name is Rick Langfelder and I am the CFO of Lutheran HealthCare, a safety net system serving southwest Brooklyn. We appreciate the opportunity we had to meet with members of the MRT and were able to discuss the ongoing challenge of providing ambulatory, inpatient and long-term care to Brooklyn's most vulnerable populations.

We expect that the configuration of health care delivery in Brooklyn will be fundamentally changed after your recommendations are implemented. Traditional hospitals and out-patient clinics as they are currently configured are unable to provide truly integrated management of healthcare. Realignments of existing facilities will be the first step in creating a financially viable structure to provide care to the thousands of Brooklynites supported by Medicaid. There is no question that these health homes can provide this higher quality care at reduced costs.

Lutheran HealthCare, with its hospital, nursing home and federally qualified ambulatory network is uniquely poised to make this transition to be a comprehensive health home. We can and want to be part of the new Brooklyn delivery system. But, the MRT must recognize certain truths if it is going to be successful and foster the metamorphosis of the current fragmented, often failing, hospitals and health centers.

First it takes significant dollars to invest in the information systems, equipment, renovations and specialty trained staff that are prerequisites of a new delivery model. Although both the federal and state public funded programs are building new reimbursement systems which include penalties and rewards for improved performance, there have been little or no dollars available to actually invest in making the needed changes to today's delivery system. In fact, all the new incentive dollars flow only after the completed changes achieved their desired results.

Ironically, as you have seen in Brooklyn, the hospitals that most need to make the investment in systems and staff are the least able to do so. So, the needed reform actually threatens to widen the gap between the "have" and "have not" institutions and undermines the sustainability of any change you propose. Limited dollars in the Medicaid system must be redirected to the institutions that truly provide the safety net for Brooklyn. Attention must be paid to both those hospitals that are failing and those like Lutheran that, to date, have generated slim but adequate margins. These margins keep us operational but do not support the investment in change needed, nor the cushion required, to continue to efficiently operate during the transitional period. This is not an easy challenge. New infusion of capital dollars will only be available to safety net providers only if the State takes bold steps to secure them.

What also must be recognized is that even after health homes become the dominant form of health delivery, the disproportionate number of under and uninsured patients in Brooklyn will destabilize the fragile new system you create. Continued and expanded access to dollars from indigent care pools is essential even after the needed transformation is achieved. The populations cared for by the safety net hospitals and health centers have complex medical issues exacerbated by historic delays in receiving care, language barriers, limited family support systems and lower education levels when contrasted with the commercially insured population. Even the most aggressive case management will have limited success in bringing about the necessary lifestyle and behavioral changes that will ultimately result in reduced admissions and emergency room use that everyone is expecting.

We at Lutheran are hopeful that with all the MRT has learned about health care in Brooklyn, your recommendations will extend beyond system configuration to include mechanisms that infuse dollars for transformation and continued special support for facilities that will still be unable to cross-subsidize their Medicaid and charity patients by cost shifting dollars from their virtually non-existent commercially insured population.

Lutheran, as you know, remains committed to serve all of the people of southwest Brooklyn. For more than 125 years, Lutheran has been evolving to provide creative delivery models that optimize the limited federal and state available resources. At no time before, has this tradition been more critical. While other institutions desert these populations, Lutheran is committed to serving them in new and creative ways. We cannot do it alone. While the frailty of some facilities may be extreme, you must help break this cycle of physical and programmatic deterioration that threatens all of the Brooklyn safety net providers. It is inevitable that there will be less total dollars available for publicly funded health programs which means that it is absolutely essential that these dollars be concentrated on those facilities that provide the highest proportion of indigent care. To squander these ever shrinking dollars on facilities that have alternative funding mechanism will doom the reconfigured Brooklyn delivery system to fail miserably.

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