Facing federal cuts, Northwell Health looks to keep people healthier

Northwell Health has plenty of experience with modest operating margins.

Dr. John D’Angelo, Northwell’s new president and CEO, says the system has managed to continue to invest in new clinical programs even in a challenging financial landscape.

Even as Northwell’s revenues improve, the New York system has dealt with rising expenses that have grown significantly. Northwell has also grown accustomed to reviewing programs and identifying areas to cut expenses, gain efficiencies, or spend less in areas that aren’t driving as much value, D’Angelo says.

“Northwell is, I think, very good at walking a very thin line of very low margins,” he tells Chief Healthcare Executive®. “As you know, we've been able to keep our head above water financially and stay strong, where that's not been the case for the majority of hospitals and health systems.”

But Northwell will face new financial challenges in the next few years, as millions of Americans are expected to lose Medicaid coverage in the wake of the tax package approved by President Trump and Congress. States will face new rules on how they finance Medicaid programs, and they’ll be faced with raising taxes or covering fewer residents.

D’Angelo, who took over as CEO this week, says he’s worried about the impact of changes in Medicaid programs and how they’ll affect patients, and the prospect of more financial challenges for Northwell.

In an interview, he says Northwell needs to continue to invest in more clinical programs and also offer more healthcare options in local communities, to keep people healthier and out of the hospital. He says that approach is especially important as Northwell expects to see more uninsured patients, and an aging population needing more services.

"I have confidence that we'll manage it," he says. "We've managed worse, to be honest with you. I'd be lying if I didn't say it wasn't going to have an impact. But we'll navigate around the impact."

(See part of our conversation in this video. The story continues below.)

• Read more: Northwell Health CEO outlines top priorities

Worries of delayed care

Northwell operates 28 hospitals in New York and Connecticut, and the system takes care of all patients, regardless of their ability to pay, D’Angelo says. So if there are fewer people with Medicaid or any form of health insurance, Northwell will be providing more uncompensated care.

“We're going to continue to care for them,” he says.

An emergency physician, D’Angelo says he expects to see more people packing Northwell’s emergency departments, as patients seek care for even basic needs. And that will pose problems for staff and create longer delays for patients.

But D’Angelo also says he’s worried about the prospect of people that won’t be seeking care of any kind, until their illnesses worsen to the point that they end up in an emergency room.

“If you think more globally and long term, I think folks will not seek care as readily,” D’Angelo says. “It'll lead to more emergency department volume for things that could have been better treated in other clinical arenas. But it'll also lead, I think, to people delaying care.

“And as we're dealing with more and more chronic disease out in the communities we serve, I think it's going to have a negative impact on outcomes. And again, we're here, first and foremost to drive health and wellness and manage disease. So I worry about the outcomes in that avenue,” he says.

• Read more: Longtime Northwell CEO Michael Dowling steps down: ‘This has been my life’

‘Get more in the community’

In addition to the prospect of more uninsured patients, D’Angelo also sees Northwell facing more challenges with an aging population.

The last members of the Baby Boom generation are approaching retirement age at the end of the decade, so Northwell, and all health systems, are likely to see more older patients requiring more services.

“There will be more demand than I think the current infrastructure can handle from a hospital bed perspective, not just Northwell, but in the industry,” D’Angelo says.

Northwell is looking to meet that demand by expanding more services in its communities to help some of those patients manage conditions before they end up in an emergency room, or requiring a hospital stay.

“We get more in the community,” D’Angelo says. “We keep people healthier. We get more proactive and upstream.

“We won't need less hospital beds. If we do this right, we'll hopefully have the right amount of hospital beds to meet the demand for the people that need to be in the hospital. If we don't do this right, there'll be more demand, more demand than there'll be beds,” he explains.

Northwell actually cares for more patients in ambulatory settings than in the hospital. Inpatient hospital stays account for less than half (47%) of Northwell’s business, D’Angelo says. Northwell operates more than 1,000 ambulatory locations.

“That balance of inpatient, outpatient and how they work together, how they're seamless, is really important,” he says. “So yeah, that, in my mind, is critical to how we get ahead of the demographic and the other trends that we're looking at.”

Expertise in each market

Northwell has been expanding its cancer, cardiovascular and transplant programs, and D’Angelo notes that the transplant program in particular is seeing rapid growth.

The system has been working to knock down the traditional silos in medicine and is working to offer a better patient experience.

Northwell is aiming to “disperse that expertise into all our geography,” D’Angelo says.

“If you live in Suffolk County, yes, you might come into North Shore or Nassau County for the actual surgery. But everything you're going to need for the years up to, and the years following, care for that disease can be local, somewhat local,” he says.

“So we anchor that subject matter expertise in every one of our markets,” he continues. “So it's kind of how we leverage the ‘system-ness’ of things. We’re very passionate about, how do we build that full thickness, clinical programming?”

As Northwell enters new markets, the system aims to continue that approach. D’Angelo says that strategy will be important as it integrates Nuvance Health into the organization. In May, Northwell completed the acquisition of Nuvance, a system operating seven hospitals in New York’s Hudson Valley and western Connecticut.

With the addition of Nuvance, D’Angelo says Northwell will be looking at its existing portfolio and examining ways to provide more services.

He says those questions include, “What are the hospitals focusing on? What is the ambulatory network? Does it support that? Where do people in those communities go for all these different types of care? If they're leaving their communities for this type of care, is it something we can bring to that community?”

“So thinking about people, process, program, partnerships in the community is really how we think about our approach in delivering care in all our various sub markets, and trying to keep care local,” he says.