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Cook County hospital CEO wants to sell health insurance

Thursday, January 24, 2013
Crain's Chicago Business
by Kristen Schorsch

Dr. Ramanathan Raju wants Cook County hospital to get into the health insurance business, selling plans on a statewide health insurance exchange, a move he says could generate much-needed revenue.

The ambitious proposal by the CEO of the Cook County Health and Hospitals System is an attempt to transform a network that is often perceived as the health care provider of last resort.

Dr. Raju, who was named chief executive in October 2011, mentioned the proposal during a speech today before the City Club of Chicago, a civic group.

In an interview with Crain's, Dr. Raju acknowledged that the plan is risky, but said the county health system has to adapt to changes in the payment formulas used by government programs, such as Medicare and Medicaid, and private insurance companies.

Increasingly, hospitals and physicians are being paid to keep large groups of patients healthy, rather than receiving reimbursements for how many services they provide. But the new arrangements can create financial losses for health care providers if patients require more care than expected.

"It is risky, but there's no other way," Dr. Raju said.

He said the model was similar to one in New York, where he was chief operating officer for the New York City Health & Hospitals Corp. before taking the reins of the Cook County health system.

The initiative faces several hurdles, including obtaining Cook County Board approval to fund a venture whose startup costs have not been determined.

"I think I have a clear vision and there's a clear path," Dr. Raju said.

Cook County Board President Toni Preckwinkle supports the idea of the county becoming an insurance provider, a spokeswoman says.

Dr. Raju's vision involves expanding CountyCare, a new program that allows the health system to enroll 115,000 new Medicaid patients before 2014, when the federal health care overhaul expands eligibility for the program for the poor.

Within five years, Dr. Raju wants to expand that program to all patients, creating a low-premium, low co-pay insurance product that the county could offer on an exchange.

To accommodate the expansion, the county will need to spend more on primary care doctors and nurses. To offset that spending, the county could cut some specialty services, sending patients to nearby hospitals that already offer those services, he said.

The federal government is teaming with Illinois to the run the state's exchange in its first year, beginning in January 2014.

Dr. Raju said additional revenue generated by the insurance plan could reduce the subsidy that taxpayers make to keep afloat the county health system, which treats a large number of patients who are uninsured or ineligible for government programs.

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