Nine-hospital Endeavor Health was formed through a January 2022 merger between NorthShore University HealthSystem and Edward-Elmhurst Health. Sean O'Grady, president of acute and ambulatory operations at Endeavor Health, recently spoke with Healthcare Innovation about some of the benefits of that integration as well as the pressure health systems like Endeavor are starting to see from Medicaid cuts — and why it may get worse. 

Healthcare Innovation: I am hoping we can talk about the downstream impact from the changes that are happening in Medicaid, such as uninsured patients straining emergency rooms. Is this something that you’re already seeing or are health systems preparing for the impact of that?

O’Grady: We're definitely already started to see the impact. If you go back to the beginning of the fear relative to immigration and the ICE invasion of Chicago, that's when we started to see the immigrant population begin to stop re-enrolling or avoiding enrolling or being terminated from benefits, That's been in play for a while, so we've seen the number of people showing up without any access to insurance increase. We work with all of them through financial counseling to try to get them enrolled or connected if it's possible. But for many of them, they're in that doughnut hole now, so we've already started to see a push in our emergency room utilization among those who don't have insurance. Our charity care and bad debt have been going up in double digit percentages for the past three years.

HCI: There are also a lot of people who are dropping off the Marketplace plans without the subsidy, right?

O’Grady: Yes. As those subsidies have disappeared and people are looking at their out-of-pocket cost, many of them are deciding that it's just better to go without and hope for the best. We see that pressure most in our emergency rooms, but we also have some resident teaching clinics that have seen increased activity as well.

HCI: Could the impact of all that filter down to how other patients experience the health system? Could it have wider-ranging impacts than just those people having to go to the ER?

O’Grady: Yes. What I try to say when people speak to me about this in informal settings is that everyone should be worried about the changes in Medicaid. The really significant ones hit in 2028, and I tell my neighbors and friends that's when you should be terrified about how your access is going to be impacted. They always look at me and say, "Well, how could my access be impacted? I have really good insurance. I have my Blue Cross card.” Well, when the system does not allow individuals to have the appropriate type of access because they are uncovered, they over-utilize the most acute parts of our system, starting with our emergency rooms. Emergency rooms don't care about what your insurance is. They care about how sick you are, so the reality of how the system is set up is everybody is going to feel that impact when they show up, with those who used to be on Medicaid using it when they're really sick, and then the subsequent backup happens to getting a bed, and boarding in the ED. The whole system becomes sludgy, for lack of a better term, and that's the piece that's hard to break through. The politics are it's just poor people who are losing coverage. Well, no, that means you are going to have a harder time when you need emergent care, because that's just the way the system works.

HCI: You mentioned it's going to be worse in in 2028. Which part is hitting then — the work requirements or the impact on state-directed payments?

O’Grady: You start to see the full implementation of both of those, and as written, it seems like people who are completely bedridden have to find a job. Some of us had hoped that there would be reasonableness in some of the detail that were included in H.R. 1, but unfortunately, that's proven to be exactly the opposite as we see the detail get put in the bill. So that's one component. 

The other is that the state of Illinois did have their provider tax approved before we moved into the new administration, and Medicaid is woefully underfunded in the state of Illinois. That provider tax is getting us into the bottom quartile, not the bottom decile of funded programs. That money was really important relative to opening up access and ensuring those of us fighting to have a break-even margin could take care of the patients in a way that was sustainable. So the combination of those two in 2028 is where it gets really challenging.

HCI: Are there some things that people in your position in health systems can do to cope with this? Are there automations or efficiencies or telehealth solutions that can help ease the burden on that entry point into the health system in the emergency room?

O’Grady: The universal rallying cry with healthcare now is affordability. You're looking at potential 12% benefit cost increases from employer insurance bin 2027 compared to 2026. Out-of-pocket maximums keep going up, copays keep going up. So the universal political rallying cry about healthcare is we need to drive affordability, and we wholeheartedly agree. 

The system has become incredibly fragile, and the margins on the provider side are under water. Half are barely making a single-digit percentage point, and a lot of value accrues to other parts of the healthcare ecosystem. It accrues to insurance providers, it accrues to pharma, it accrues to medical device manufacturers. I mean, the data is very clear. So the system has got to figure out how to adapt with the constraint of the resources and take care of people who have no funding. Because as a not-for-profit, we do have that obligation in the community. We call it segmented care models, where we're going to need to stand up models that are financially sustainable, but look really different than they do today. To your question, they leverage a lot more digital, virtual health and group visits as well as other types of models that aren't built upon the same exact delivery model that someone with Blue Cross may have, but with the same intent of having a safe, positive, affordable outcome. I think we're in a disruptive moment in the industry. The model has been that we build one thing and we hope you can afford it, and if you can't, well, someone else will subsidize it. There's not money left to subsidize in the way there used to be, so we see this as an opportunity, albeit with a fair amount of potential risk between here and there, given the federal cuts.

HCI: Are there also opportunities to get more involved with community-based organizations to address people's social needs upstream of some of the conditions that are causing people to show up in the emergency room?

O’Grady: Yes, one of the things I'm super proud of is when we came together as Endeavor Health, we stood up a $200 million community investment fund, and we've given away over $50 million since we came together as a system to organizations that can do just what you said better than we can as healthcare delivery providers.
 
So behavioral health that is embedded in communities and schools, out in places where hospitals can't reach, and addressing food insecurity, job creation and development, domestic violence, housing insecurity. This fund has put money directly into the pockets of organizations that do that really effectively at a grassroots level, creating jobs for those organizations, but also solving those problems that often wind up in emergency rooms or in much more significant healthcare issues that could have been avoided. We continue to lean heavily in that space. We also use funding from that to support our federally qualified health centers. They are an invaluable resource that need to be sustained in our healthcare system to make sure that the underserved get the culturally sensitive and connected care in the community, so that we can avoid those catastrophic events.

HCI: Are you also seeing shifts in care into the home? Do you have a hospital-at-home program? Or SNF at home? 

O’Grady: We have not yet jumped into the hospital-at-home program, just given that it has been on again/off again with whether it's going to be paid for or not. We think there's tremendous opportunity there, but it has to come with a very clear and stable funding source that isn't always up for grabs, for lack of a better way to describe it. We do a lot of work with skilled nursing facilities and actually have a preferred network where our physicians and nurse practitioners manage patients in those settings. When it makes sense to transition people to those levels, we are heavily involved to make sure that they're getting high-quality, efficient care, so they don't stay there any longer than they need to.

HCI: We've talked about Medicaid. What about relationships with other payers in the Illinois market such as like Medicare Advantage and commercial insurers, Are there shifts taking place in in that market and in your relationships with them?

O’Grady: Let's spend a minute in the Medicare Advantage space because I do think that there's some overlap with opportunity in Illinois Medicaid. It is well documented some of the challenges with Medicare Advantage on multiple levels: the government funding level, the third-party insurer, and whether that's still a profitable business or not, and then the provider level, which is frustration with the very onerous pre-authorization network requirements that add a ton of cost to our system. And then patients are mad at us because they think we're the ones telling them they can't get care.

What we are enthused about and have demonstrated success with is in our ACO model, in our risk models, where we are directly managing the population health of individuals in Medicare. We've shown that we can decrease the cost of care for the beneficiary and for the government, so we want more of those arrangements, where as providers we can actually share in the success of better managed, lower cost care. When you put a third party in the middle who has responsibility to shareholders and others, they retain all of that value and they pay us a lower price. We want to be directly involved in bringing down that cost, and then getting the benefits from that. 

HCI: So more of a partnership model?

O’Grady: Absolutely. We see in our market fewer people opting for Medicare Advantage as some of the challenges with pre-authorization and choice and all that's coming up, and choosing to stay in traditional Medicare and then be a part of an ACO that brings down the cost of care.

HCI: Endeavor came together through a merger a couple of years ago. Are there already some benefits accruing from creating that integrated health system and perhaps some other things still on the to-do list?

O’Grady: I talked about the community investment fund, which is incredibly impactful. We have committed to a singular clinical and corporate operating model. We are very proud of the fact that we have fully integrated all of our clinical services under common physician, administrative and nursing leadership, and have been executing on our specialization strategy. We’ve been focusing on bringing that highly sub-specialized care into the community.

A week ago we launched our new instance of Epic in half of the organization. This version of Epic is going to be exactly the same across all of our hospitals and medical group and ambulatory offices. The first step was implemented August 1st. The next one is November 3. This is our commitment to driving consistent experiences, consistent outcomes, and it's super exciting to see that first part go so well. Then we'll be able to spread that more broadly in the system. Consumers will have one portal; they have three right now to get all their information and manage their healthcare, so it's our last big integration action that's on the horizon.