Hello, everyone. This is Jacob Emerson with the
Becker health care podcast. Thrilled today to be
joined by 2 special guests.
Die Medal is the President and Ceo of
Saint. Anthony Hospital here in Chicago.
And Mike Jackman is a partner at Miller
Shack, La and Feldman. He serves as lead
counsel to the hospital. Gentlemen, thanks so much
for taking the time to be with us
on the podcast today.
Thank you.
So, Guy, let's dive to to your background.
Tell us a little bit about your your
career in health care.
And what it is that you do today
at San Anthony Hospital?
Well,
my career and healthcare care started very, very
late. And actually, it was...
You know,
a not a
strategically planned process.
I
was working for F fbi consulting.
And
went into their health care division.
With no health care background, my my background
was
mergers and acquisitions,
with a very diverse background, very, very diverse
career
working for
corporations like the Ce
Corporation and
Montgomery ward and so a little bit of
mix of manufacturing and
and retail. But
I brought some project management experience So
I... There was a need in the healthcare
care division. I went into the healthcare division
and
never ran a hospital before. I've I've
run
divisions
for
corporations, but never a hospital. And
1 of my clients was ascension health an
ascension held the owned State Anthony Hospital.
And
at that point in time,
it didn't fit into their
their current model
and so they were looking to leave at
that time, Chicago, Illinois and And they asked
me actually to
just
I'll use my words. Baby the hospital
until such time as they they were either
sell it or close it. And that was
supposed to be maybe no more than a
3 to 6 week project,
still being able to get involved in my
other project. So
not a lot of heavy lifting. When when
I got to Saint Anthony hospital,
you know, it was a a, small inner
city hospital serving,
you know, a a relatively poor community.
And
you know, it the the more I got
outside the building and into the community,
because I really wasn't there to do any
work for the hospital. So I I decided
to get and get get outside the hospital
and start to talking to some of the
organizations and some of the communities that we
served.
And
it reminded me quite a bit of
where I grew up in Cleveland, I grew
up in the projects at Cleveland. So
I felt relatively comfortable
in the community,
and with with the people I was interacting
with.
Sure. Absolutely That makes complete sense both from
a professional and and personal standpoint, Guy.
Can you expand on upon that a little
bit? You you mentioned the the patients that
San Anthony serves
in Chicago. Why are you so committed to
to the safety net hospital and,
ultimately community based health care?
You know, my parents
were both Italian immigrants. They migrated hear from.
From
Italy, my mother was from sicily, my father
was from Cal,
part of the the heel of you know,
the Italian booth there. And
you know, as I said, we grew up
in in a poor community. III still remember,
I was relatively young maybe about
9 or 10 years old. My father was
a a labor.
And and I still remember him coming home
1 day with his
han all bandage up,
and
I later found out that something fell on
his hand,
he didn't have any insurance, you know, they
rushed him to the hospital.
And
you know, instead of fixing his hand and
his fingers, they cut his fingers on.
Leaving him with 2 out of 5 fingers.
I you, you know, I remembered that that
kinda of stuck with me.
And when I got to the hospital, I
I started,
when I got the saint Anthony,
I started thinking about it all over again.
You know, in terms of how do we
provide care for these people.
Just because they don't have money. We didn't
have any money when when I was growing
up, You know, what what are we doing,
you know, to make their care better?
And
I wasn't sure how long I was gonna
be there at Saint anthony, you know, it
I the client could've have pulled me out
at any point in time.
But, you know, I wanted to to make
the best that I could. Well,
anyways, to to move the story forward,
the employees, the Board of directors, the community,
of, they wanted to keep saying Anthony's hospital,
you know, open.
And you know, they they weren't
they they really didn't know about, you know,
it being sold anybody. But you know, they
were under the impression that it was gonna
be
closed.
And
you know, I had a lot of people,
you know, trying to convince me to help
them to keep it open.
You know, make a long story short,
you know, after about 18 months,
we went from, you know, large losses to
a very small margin.
And and we did that by
working with the physicians and, you know, working
with the community,
we raised the the acuity
we broaden our community reach.
When I got there, it was strictly a
latino hospital,
now it was
becoming both black and brown,
so so we broadened our reach,
and
You know, that was I started July
fifth of 2007.
And
2008
through 2016,
you know, we always reported a small margin.
I mean, it it wasn't big, but we
we reported a small margin. Sure. That's amazing.
Considering we we... As you know, Guy, the
the state of finances for a lot of...
Similar facilities around the country. So it's it's
amazing to hear. And I I also... I
really appreciate you sharing that that personal
anecdote there.
Let's let's dive in though to to what
we're here to talk about, though the the
lawsuit against the state of Illinois.
Micah, I wanna come to you.
As you obviously know, Saint Anthony's is suing
the state of Illinois over issues with medic...
Made payments from managed care organizations. Of course,
those are private insurance companies.
Can you
explain a little bit about what aid the
lawsuit is for those who who might not
be familiar.
What's the timeline of this and and where
do things currently stand. But I'd be happy
to do so. Guy came to us in
early in 2020.
Just before the pandemic hit, our law firm
has 1 done
litigation against the government when it went appropriate.
And he explained that the hospital
starting in 2016
when the state of Illinois shifted over from
direct payment of providers to using these insurance
companies or managed care organizations to pay that
the impact on the hospital not only S
Anthony, but this was common knowledge hospitals across
Illinois was devastating.
Saint Anthony
went from
that guy reported a small margin, which meant
it had enough cash on hand before the
arrival would be the Mc to fund about
72 days of operation by early
thousand when he brought these issues to us,
that had dropped down to 2 days of
funding. So when the state paid directly on
a fee for service basis for the same
patients getting basically the same kind of care.
They were had over 2 months of revenue
and reserve, and the Mc squeezed it down
to 2 days, which really threaten the ability
of the hospital to
care for the patients who largely poor and
rely on Medicaid.
We filed suit the federal Court.
We we relied on a federal statute
says that there has to be prompt payment,
which was 1 of the major problems.
Payment means
there's, I'm sure all the hospitals the do
Medicaid work. No. It means you have to
get 99 percent paid within 90 days.
And 90 percent paying in the first month.
Clearly, the Mc were not meeting that. And
even worse the remit they used to to
pay were completely opaque you could not tell
from those remit is what you were being
paid for. Sometimes they simply sent lump sum
payments and hope that that would satisfy the
hospital. You that they'd leave the Mc alone
asking for detail. We filed suit in the
Federal Court after some discovery they...
Trial judge in the Us district court in
Chicago concluded that the statute we were relying
1 didn't support the claim we were making
and dismissed it The court of Appeals reversed,
the Us Supreme Court got involved and directed
the Court of appeals to reconsider its decision
based on inter entertaining.
Us. Supreme Court case involving Medicaid,
the court of appeals reconsider and past April,
it reaffirmed its prior ruling in a lengthy
the opinion that basically says that that the
hospital has the right to to sue the
state that cause the state to make the
managed care organizations
live up to their federal statutory and constitutional
obligations to pay promptly and do so transparent.
Transparent.
So that's the present status of the loss,
understood. So the courts of have essentially found
the the hospital has standing to sue the
state over these issues.
Guy, what's what's your perspective on all of
this? What was your mindset going into,
taking on the state? And what were the
risks?
From your perspective in doing so. Yeah. Yeah.
I I was...
I don't like to admit this, but I
was
very naive. So so let let me let
me paint a little backdrop for you. Okay?
I
I was a
a long term republican. My my parents were
Republican that, you know, the household grew up.
I mean, it was a Union family, but
they were very, very much you know, Republicans.
And
I come into Illinois and, you know, I
do my due diligence after a while I
find out that... You know, this is a
very democratic state. You know, the city,
you know, the state. I mean, find with
the exception of the the 1 governor during
my time here,
Governor Around was a Republican Ai everybody else,
democratic. So I'm going and thinking, you know,
I'm just gonna go in and explain the
situation you know, to the head of
health and family services down in the capital,
and I'll explain the situation, and I'll bring
fax,
and I'll bring data, And, you know, they're
not gonna wanna to do anything to to
hurt the people or hurt a hospital that
is
caring for the underserved.
III
was completely blindsided.
I I mean, honestly,
what I heard,
from the former
director was,
you know, my my words. Okay, I'm para,
But basically suck it up you know, stop
whining,
and, you know, figure it out,
you know, because, this is the way it
is.
And, you know, I I...
And that... This is prior to going to
to Michael,
S.
You know, I I sent to myself. They
they really don't understand what's going on here.
They don't
understand the impact. So so we tried a
couple of more times. You know, Like, I
tried the using some of the elected officials
just couldn't get anywhere. And
you know, I'm still surprised today.
Because of the fact that there is
definitely
not just in Chicago or Illinois, but there
is a need. There is a place for
community hospital
everywhere.
We... You know, we serve
you know, a payer mix that
most larger
organizations,
it doesn't fit in their model. Let me
put it to you that way. Okay?
And
so I figured out, you know, I mean,
what we'll just
keep trying to work the state, but but
it didn't work. Okay? And and it resulted
in
having to do something very
unpopular. And and when I say unpopular
the other hospitals
putting it bluntly said,
guy, we know it's a problem. This is
very risky what you're at he wants to
do, we can't do it. Now, if you
win, we all win, that's great. But if
you lose,
Yeah. We're not gonna get hurt.
And and and I, you know, I was
upset initially with that, but I understand it
now.
Sure. Yeah. I mean, that makes sense. And
you make an astute point guy that this
is 1 of the few states in the
in the nation that is...
The entire state government is controlled by the
democratic party,
and interestingly that we've seen just this week
that that this... That the governor of Jb
P is interested in in health insurance reform.
We did see legislation signed by him this
week.
Impacting major insurers in the states. So
maybe Mike, you can weigh on us weighing
in on this too, but
is it a lack of understanding? It it
doesn't seem like there's a lack of interest
in reforming some of these issues. What what
isn't clicking here between what Saint Anthony's is
experiencing and what's the state government is is
not doing.
Well, it's a good question, and I I
can't read the minds of the state Regulatory.
Regulators and administrators with whom we deal other
than to say that they've consistently opposed and
bought the relief were seeking in court,
and and as a lawyer, I respect the
right their lawyers to make their arguments. But
as a citizen of the state, I'm... I
like I am really puzzled by it because
what they've done is
Medicaid and Illinois is the largest single expenditure.
Only my budget, We're talking about 20000000000 dollars.
That's b as a billion a year going
into Medicaid in Illinois. And the idea that
they would turn over the state would turn
over the control and fuck. Those funds and
the payment of providers to
initially 7 and now 5
managed care organizations, all of whom are with
1 exception brought by the County at Cook,
are all private insurance companies
who are
but it's simply making a fortune out of
out of this process
by
a series of,
behaviors that are the subject of our lawsuit
not paying 1 time.
They improve that. I must say after we
filed the lawsuit.
But still resisting in the need to make
disclosure of
how they compute
payment and
allowing the... Hospitals without creating a large administrative
staff their own to confirm they're being paid,
what they're supposed to be paid. I think
everybody who deals with Medicaid knows that the
payment structure is complicated.
There are a variety of add ons and
adjusters. There are in the case of Saint
Anthony. Their
are special adjusters because they
provide services to a high proportion of Medicaid
patients and they have a para,
program. It's an excellent program. That's unusual for
a safety at hospital that also adds adjusters
and the like you can't tell what you're
being paid by these insurance companies from the
remit as they get. And when we've asked
about that,
the state agency has said, well, why don't
you try and figure it out yourself? That's
nonsense.
You you can't expect a safety that hospital
to go out and hire
a bunch bunch of people to
reverse engineer payments that come from insurance companies
that are making hundreds of millions and dollars
a year on this process,
and,
shift that burden from the insurance companies to
the to the
hospitals that are working hard to provide patient
care
I do wanna mention that the... We have
an organization that you're probably familiar with,
some of our
listeners may not. That's the better government association
and dylan illinois like,
and they did an excellent study on the
Mc system,
managed care system in 2020
that if anybody Google's
the words, insurance firms, reap billions and prophets,
while doctors get stiff for serving poor, they'll
find that Pga study. When it pointed out
the 3 of the firms,
Meridian Health Plan of Illinois, Ae and Molina
Healthcare reported
294000000
dollars in profits from those
contracts with the state and the fourth firm
subsidiary in Blue Cross Blue Shield,
reported a billion and a half, 1500000000.0,
but that included data from private patients and
from other states in the Midwest. The bottom
line is the insurance companies are making a
fortune, serving Medicaid and the shift over from
fee for service to managed care has been...
A real burden for the providers, and we're
not getting the help from the state that
the providers really deserve. Sure. And I I
think, Mike and guy, I think any
health systems for in other States listen and
this probably doesn't come as a huge shock
to them given that...
Majority, I believe it's around 40 states use
managed care for their Medicaid programs.
So this is not necessarily a unique situation
just to Illinois.
So in that vein guy, I I guess,
big picture, why does this loss matter to
2 other hospitals? Does this affect, hospitals in
other states
and around the country.
Oh,
absolutely.
You know,
working for
As long as I did. I I built
a little bit of a network. And
you know, the issue is,
you know, safety net hospitals
don't
necessarily have the cash or the ability
to put into, you know, sophisticated
Emr systems. I mean, there are good systems
out there.
We we use a system, a Medi tech.
K And and it's a very good systems
system it really is. But however,
however,
it makes it very difficult to find out
how much money you're leaving out the table.
And
And and, you know, we see all the
time how
rural hospitals,
urban, you know, community hospitals are are closing.
And
and again, nothing against, you know, larger
institutions, but it doesn't fit into their model.
You know, they can't have a large influx
of,
you know, of managed care patients. Otherwise, they
can't grow and they, you know, they can't
reinvest
into
the healthcare care system. And, you know, we
we minimize research and advancement.
But but on the other hand,
you know, as these hospitals close, where do
the people go?
And...
The cost, and this is what the government
I don't believe realizes.
You know, the cost of healthcare care keeps
getting larger.
And, you know, instead of
trying to fix the problem
long term, they're only thinking short term.
And
they're they're not being realistic
you know, in their
understanding
of where health care is going. That... That's
just
my view, you know, from my office here
in a in a hundred and 50 bed
hospital.
Absolutely.
Absolutely. And and guy, before we do go,
I wanna make sure
that we do specifically talk about, the impacts
that this is all had on S saint
Anthony's.
Specifically and of course, most importantly, on your
patients. Ultimately, this is about
non payments for services that are being rendered
So
what does that mean for other other things
at the hospital in terms of projects or
expansion. You know, you you mentioned you operate
on very slim margins.
So what is getting fore gold or delayed
due to lack of funds right now.
So you we had to revisit our product
lines, which is unfortunate. You know? So
well well, first of all,
I'm thinking if I'm reading correctly, your your
viewers understand that the days of private practitioners
are almost over with. So, you know, you're
you're either
partnering with a large institution which cost you
money. So meaning when I say partner, you're
buying physician services or Atms or or you
know, other clinical services
to come work at your hospital. That becomes
very expensive. So then what you have to
do is reevaluate
And, you know, you have to say,
you know, do do we
do we have to cut out this 1
service here? And
you know, instead of providing full service.
So as an example,
we have
pediatric
department. And
prior to this all hap,
I employed 2 in,
Well, you know, we had to... That tend
us are very expensive
to to employ. And
you know, we had to...
Scale back and,
you know, by part time services,
you know, from a nearby university,
and and we did that in
several areas. So instead of patients being able
to come in, and, you know, seen a
specialist immediately,
you know, they would have to wait or
they may have to be transferred out, but
which is not the right thing to do.
So
it it's put a burden on of the
community,
which... It... And the other thing is our
education. At it's at 1 point in time,
we had a community wellness program with, you
know, approximately 80 people out in the community.
It's, you know, it's down to below 50.
And those people they weren't billing or, you
know, we weren't billing or collecting on on
those individuals, but they were out there.
Okay, educating people, wellness program,
and trying to get out in front of
hypertension and, you know, diabetes
and even if we couldn't get the current
generation fixed, we are working on, you know,
the next generation. And those
funds get dried up,
And and that doesn't help the system. And
What really, you know, upsets me or pisses
me off is the fact that,
you know,
the state kinda shook their shoulders at it.
I don't believe in wasting money, and and
III
understand and that, you know, nothing is created
equally across the board. But when you proved
over and over and can when the statistics
are out there and you prove over and
over again that you're not wasting money and
you're bringing value
to an underserved
population. That's where you should get help. Versus,
you know, I I will tell you, we
are not the most popular hospital in the
state of the Illinois
we're not getting help from elected officials. They
turn their their backs at us.
Okay? And a state you know, isn't necessarily
helping us. Now, I mean,
they're not open about it, okay. But we
have a number of
situations where
reimbursement rates, dropped to to almost 0. And
then once I call up, you know, Michael
and his firm gets involved, then all of
a sudden we start to get things fixed,
But in the meantime, okay, this
continues to pop up.
So
yeah,
that there has been tremendous impact over this,
but we're not gonna quit.
Absolutely. No. III
appreciate,
you you sharing all these details with this
guy? Mike, what else missing? Any any fun?
Closing words, I guess. Yeah. Your listeners may
be interested in,
how does this affect them if they have
problems with managed care organizations in their states.
The answer is the court of appeals decision
in our case is law that can be
applied anywhere. It says that the states have
a duty to to manage the managed care
system, if you will, to make sure that
they're doing what Congress has told them to
do.
And really importantly,
When Congress set up the managed care system,
or authorized the states to use the managed
care system, it recognized that there was gonna
be a conflict of interest between the... The
Mc who have a powerful incentive to delay
payment
as long as possible or to under underpaid
to maximize their own profits, Yeah and as
our court of appeal said, here in in
our case, and I'm quoting them. It's a
classic agency problem.
Mc are expected to act in the provider's
interest but their interests aren't the same. And
regarding timely payments, they're indirect conflict. End of,
quote, So how do you solve that problem?
The state agencies have to step up, and
become active
proponents of enforcing the federal law. Our case
provides a precedent.
People and other jurisdictions who are having the
same problem can look to it And while
it isn't any fun to suit the state
as guy has made clear, it may be
your only remedy, and it's a real remedy.
So thank you for asking.
Fantastic. Well, gentlemen, thank you so much. For
taking the time to be with us for
for sharing
the story of Saint Anthony's and and everything
that it is that you're you're fighting for
right now. We really appreciate it.
Okay okay.
Thank you. I'll wait Unity to speak.
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