Micro-regulations lead to failures, not progress

One of the greatest frustrations among many health care leaders today is the federal government’s increasing addiction to micro-management.

Whether it's a soccer match, or a football, hockey or basketball game, the referees set the rules and then allow the players to compete, stopping the game only when the rules are broken. Rather than let the players play, today's federal regulators have set the rules and often enter the game themselves. On occasion, they're even changing the rules during the middle of the game.

Regulation is a necessary part of any industry. I fully support and recognize the need for high-level regulations that provide vital guardrails for health care providers, but micro-regulations limit organizations' flexibility and become almost impossible to change because of the complicated bureaucratic process that established them in the first place. Bureaucracy moves at a glacial pace and often lacks accountability. As a result, regulators are not cognizant of changing realities, particularly when it comes to what’s happening on the front lines of health care delivery.

One prime example is Northwell Health's experience in trying to enter the insurance market. When we became New York’s first provider to enter the insurance business four years ago, many of my fellow health care leaders in the metropolitan area thought it was foolhardy. However, I firmly believe the only way to create a truly value-based organization is to control the premium dollar, as organizations like Kaiser Permanente and Geisinger have demonstrated. When you get payment from an outside insurer, it comes with all sorts of restrictions on how the money can be spent. A built-in insurance model as part of a comprehensive provider network, on the other hand, gave us flexibility to promote wellness and address the social determinants of health affecting our customers by investing premium dollars on new, efficient care models.

I wanted to create innovative care solutions for patients in our market and give them the support they need to stay well and avoid hospitalizations. But being the new kid on the block in the health plan world presented some stiff challenges for CareConnect, our insurance arm. These challenges did not stem from a lack of customers — a robust patient base was eager to join — but instead we were thwarted by oppressive federal regulations that eventually made it impossible for us to grow and thrive.

Risk adjustment regulations forced CareConnect to forfeit $112 million this year — 45 percent of our revenue from our small-group health plan — because flawed methodology arbitrarily determined that we had a healthy customer base. In theory, the risk adjustment program was intended to take money from highly profitable companies that can afford the penalty because they insure healthier customers and redistribute some of the wealth to payers who have taken on sicker customers. However, the only reason we were classified as having "healthy" clients is because we had not been in business long enough to collect sufficient medical claims on our enrollees.

The crippling effect of this over-regulation led us to withdraw from New York's health insurance markets in late August and wind down the company over the next 12 to 15 months. This is just one example of federal regulations deterring innovation and stifling creativity among progressive health care providers.

In applying regulations to health care providers, government agencies seem distrustful of our intentions and believe that, without oversight, our actions will be guided by self-interest. However, in the same breath, regulators tout the importance of innovation.

If elected officials and government regulators truly want to change the nation's health care delivery system for the better, they need to loosen the shackles on providers so they can pursue innovative solutions to the challenges we face. Because of micro-regulations, we are given little flexibility, making it extremely difficult to make the kinds of creative changes that lower costs and improve quality.

Many of the problems can be traced to regulators' approach to working with businesses. They are not interested in the ground-level realities of our industry, and as such, their regulations rarely reflect the situations that providers confront on a day-to-day basis. During my 12 years overseeing health and human services in New York State, I took a different approach to regulation. I tried to listen to what providers told me and reduced regulations when it made sense, allowing them to be creative without being confrontational. I think the only way federal officials can craft truly beneficial regulations is by engaging more closely with providers and listening to what they have to say.

For instance, let's say regulators wanted to see a 50-percent decrease in sepsis infections within three years. To achieve that goal, government should issue a directive that essentially says, We'll be monitoring these rates, and in three years you will either receive a penalty for not achieving this benchmark or a positive incentive for doing the right thing. Set a target and get out of the way. Trust that natural ingenuity and good intentions will lead to desired results, all accomplished without someone looking over our shoulder and telling us exactly what to do every step of the way.

A culture of compliance and over-regulation can be the antithesis of creativity and innovation. During a time when patients are clamoring for changes to the health care system that deliver real value to consumers, it is up to providers to think outside the box and give people the care they deserve. Conversely, it's up to regulators to loosen their grip on the industry and let providers pursue innovative approaches that will enable them to get the best results.

This op-ed appeared in Becker's Hospital Review.