Health System business model: From volume to value

Vincent Tammaro, YNHHS senior vice president and CFO, talked with Cynthia Sparer, senior vice president, YNHH Operations and executive director, Yale New Haven Children's Hospital, after his presentation at the conference.

Vincent Tammaro, YNHHS chief financial officer, talked about the major payors of care for Yale New Haven Health. Medicare, which insures citizens over 65 years of age, pays YNHHS approximately $.89 on every dollar spent, and Medicaid, the State's payment program for people with lower incomes, pays $.33 on the dollar of cost.
"Those two payors insure 62 percent of the patients who seek care in the Health System," said Tammaro. "So we lose money on all those patients.

The remaining 38 percent of the population we serve, who are covered by commercial insurers like Anthem, Aetna, United and Cigna, are charged more than our cost to help make up for that shortfall. The insurance companies pass on those higher costs to their clients, in the form of employer-specific high deductibles and co-pays."

"As a result, patients have become consumers who shop around for value in health care – they shop for the best clinical quality, safety and the best overall experience for the patient," said Tammaro.