Evaluating all options
I kept my concerns to myself for a few months to see if my team would raise these issues without my prompting. Eventually, they did begin to voice their concerns. Though I harbored my own doubts for months, I pushed back on them, holding out hope that federal agencies and Congressional leaders would take meaningful action to correct regulatory inequities and honor previous promises of additional funding. As the weeks and months dragged on with no solutions on the horizon, I encouraged members of my team to hone their arguments both for and against shutting down CareConnect so that we could weigh all sides.
When faced with such a high-profile decision, leaders must reflect not only on the business implications, but staff reactions and brand repercussions. In every organization, an intimate cadre of executives is involved with every important decision. During this process I relied heavily on my chief operating officer, chief financial officer, several strategy experts and our marketing and communications team. We also engaged in ongoing dialogue with our legal counsel to understand what regulatory hurdles we would need to overcome to actually shut down the program and what we needed to do if we wanted to reenter the market at a later date. Every team member brings a different perspective and area of expertise to the table, and leaders must curate a discussion that spans a wide breadth of knowledge and opinions.
I knew the closure of CareConnect would have widespread marketplace consequences. In the months prior to the ultimate announcement, I had discussions with the insurance division of the New York Department of Financial Services, members of Congress and officials from CMS. Many people lauded our efforts to expand into the payer space, but in the end, they acknowledged there was nothing they could do to significantly reduce the impact of the risk-adjustment payments. These discussions came during a monumental transitional period in Washington, DC. As President Obama left office, countless questions swirled around the agenda of President Donald Trump's incoming administration. No one knew how or whether the industry landscape would be changing.
Though it seemed unlikely that President Obama's administration would take action to ameliorate the problems caused by risk-adjustment payments, many members of our team brought up the possibility that President Trump's administration would enact policy changes to dismantle the payments. As 2016 gave way to 2017, we slowed growth of the program, enhanced processes to improve efficiency, improved implementation and did everything else we could to save money while holding out hope that new leadership at CMS would change the payment structure.
Finally, as new financial information came to light, we began to accept the cold, hard reality that CareConnect's future was unsustainable. The financial realities were stark: CareConnect would have to pay $112 million into the ACA's small group risk-adjustment pool in 2017 – amounting to about 44 percent of CareConnect's 2016 revenue from its small-group health plan. CareConnect would be facing another risk-adjustment payment of more than $100 million in 2018 from its 2017 small-group revenue.
We could no longer wait for help to save CareConnect. Ironically, there has been some regulatory help since the decision to shut down CareConnect was made. While that is incredibly frustrating, I know that at the time the decision was made, we had no other option.
Fortunately, the size of our organization allowed us to absorb many CareConnect staff into different Northwell divisions, including our care management entity, Northwell Health Solutions, which has benefited from all the capabilities we developed by operating CareConnect. Northwell is fortunate to have the scale to retain so many of the talented individuals who took our offer to remain with health system. Knowing that relatively few of our employees would become unemployed as a result of the shut-down allowed me to remain clear-headed when deciding the best direction for CareConnect.