Flasch: Provider-Owned plan focuses on quality, growth, and new technology - Executive Insights - interview with H. Michael Flasch, vice president of claims/administrative services and support, Health Alliance Plan

Healthcare Financial Management, Dec, 2001

H. Michael Flasch, FHFMA, is vice president of claims/administrative services and support for Detroit, Michigan-based Health Alliance Plan (HAP), a subsidiary of Henry Ford Health System (HFHS), which also comprises a dozen owned or affiliated hospitals, 25 medical centers, and numerous other health services. His responsibilities at HAP encompass benefits coordination, configuration of information services, and the claims function. He also has played a key role in HAP'S acquisition and integration of an HMO, SelectCare, in March 2001. Flasch joined HFHS in 1984 as associate controller and senior director of patient financial services. He served as vice president of managed care for HFHS and COO of Alliance Health and Life Insurance Company for HAP from 1995 until 2000, when he assumed his current position. Before joining HFHS, Flasch worked for Hospital Corporation of America in Nashville, Tennessee, and other hospitals in Cincinnati.

HFM: Please describe Henry Ford Health System (HFHS) and your responsibilities within the system.

Flasch: HFHS is a huge integrated delivery system, with 15,000 full-time employees. HFHS has five inpatient units with more than 1,700 beds. The system has 65,000 admissions and 2.5 million outpatient visits annually, generating $2 billion in annual revenues.

The flagship operation is Henry Ford Hospital, a 903-bed tertiary care facility There also is Henry Ford Wyandotte Hospital, a 359-bed community hospital; Horizon Health System, which consists of two hospitals with a total of 365 beds; and Kingswood Hospital, a 100-bed psychiatric center. Another major component is the Henry Ford Medical Group, which has 900 physicians in 40 specialties. HFHS also has 25 ambulatory care centers that help support the main hospital.

HFHS also includes Community Care Services; a medical supply retailer; pharmacies; and units providing home infusion, dialysis, and private-duty nursing services. Another entity is the William Clay Ford Center for Athletic Medicine, a state-of-the-art facility where many members of Detroit's professional sports teams are treated. We also have joint ventures with Bon Secours Cottage Health System and Mercy Health Network.

I am the vice president of claims/administrative services and support for the Health Alliance Plan (HAP), which is HFHS's not-f for-profit health plan. HAP is a major component of HFHS that offers a multitude of products, including an HMO, a self-funded product, and a fully insured experience-rated product. My responsibilities at HAP encompass the areas of benefits coordination, configuration of information services, and the claims function. For the past year, I have been heavily involved in working on the acquisition and integration team for SelectCare, the HMO we purchased in March 2001.

HFM: What is HFHS's service area and patient mix?

Flasch: Our service area is southeast Michigan, predominantly the Detroit market. Our patient mix is 37 percent HAP members, 37 percent Medicare, 11 percent Blue Cross/Blue Shield, 8 percent Medicaid, and 7 percent other health plans.

HFM: Are there any special challenges you face in your region?

Flasch: Because we are in an urban setting, many of the challenges we face are related to the Medicaid program and the uninsured population. When the managed Medicaid program was rolled out in the state of Michigan, members basically were aligned with what were called "qualified health plans." Because the members are in managed care plans, we must follow many different rules and regulations that vary from plan to plan. Also, these plans use different payment levels for their commercial members than for their managed care members.

Trying to get paid for rendering services has been a real obstacle. The changes in the Medicaid program probably have worked against us more than other healthcare providers because of our geographic location.

HFM: What trends are you seeing in managed care?

Flasch: We are seeing a lot of managed care organizations curtailing or greatly limiting their offering of the Medicare managed care programs because the funding isn't there to support it. The days of capitation and shifting the risk to providers seem to be ending quickly We have seen a tremendous push back from providers who are not willing to take risk anymore. They want the more typical, fee-for-service payment arrangements. That has had a big impact on our Medicare managed care program. We still have some Medicare managed care members, but we have limited those numbers significantly. We also were in the Medicaid managed care program for a while, but we decided that it was not our core business. We exited that program a year ago.

HFM: Salaries are typically a large percentage of a healthcare organization's expense. As the sixth largest employer in Michigan, this issue must be significant for your organization. What tools do you use to manage this vital asset?

Flasch: We assembled a series of reporting mechanisms that measure both productivity and quality We are operating under a very tight budget with regard to employees. It is a problem because we want to be the employer of choice, which means we have to pay market salaries as well as offer other inducements to attract the best employees.