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Howard Berman
Berman

Blues man

Health plan executive Berman kept focus on the community


By Ed Finkel
Posted: March 17, 2012 - 12:01 am ET
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He served six years as a senior director and vice president of the pre-merger Blue Cross Association, eight years as group vice president of the American Hospital Association, and 18 years as president and CEO of the Blue Cross and Blue Shield affiliate in Rochester, N.Y., before he retired in 2003.

But Howard Berman says he never had any particular aspirations for a fancy job title.

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“What I wanted to do was make a difference,” says Berman, 67, “and the difference I wanted to make was to make the quality of life better in our communities. Later, much later, I recognized that one of the ways for me to do that was to become a chief executive because then you had the ability to marshal all these resources. Becoming a chief executive was the price I had to pay to have that opportunity.”

“He used to talk about Main Street vs. Wall Street,” recalls David Klein, who served as chief operating officer under Berman at the Rochester Blues and has been president and CEO since he retired. “He wanted the dollars to flow to Main Street before it was a campaign pledge.”

During his years in Rochester, at what was then known as Excellus Blue Cross and Blue Shield, and prior to that as Blue Cross and Blue Shield of the Rochester Area—Berman led changes on many fronts. The plan is now the Lifetime Healthcare Cos., and Excellus continues as a subsidiary of Lifetime.

The organization became the largest provider of home-care services in upstate New York, owned an inpatient and outpatient hospice, created a palliative-care program for chronically and terminally ill children, created a long-term-care insurance company, acquired an HMO in the Buffalo area, merged three Blue Cross plans into one and extended coverage on a parent's insurance up to age 26—15 years before the Patient Protection and Affordable Care Act required it.

“We tried to hire people who were better than me and set them off in an agreed-upon direction, and then run around underneath them with a safety net so that if they fell off the tightrope, they wouldn't get hurt,” Berman says. “I tried hard to nurture their skills and make it clear that when things went wrong, I would take the heat, and if things went right, and they did the work, they got the credit.”

He adds, “I just assumed that no one ever came to work saying, ‘Let's see how I can screw things up today.' … I made it clear to everybody that I would never hang anybody out to dry. Now, let's do some great things.”

Klein recalls that during Berman's tenure, the organization grew from nine counties to “virtually all of upstate New York,” from $300 million to $3 billion annually in revenue, and from 500,000 to 600,000 “lives covered” to 1.7 million.

“Those were the business accomplishments—but not the main accomplishments,” says Klein, who first knew Berman as a student in health administration at the University of Chicago, where the latter taught as an adjunct.

“This is a man who—there is not a cell in his body that doesn't care for the community. He's truly a selfless individual. He believes, with respect to healthcare, that the best vehicle for caring for a community is not-for-profit,” a belief that led Berman to launch the advocacy group Alliance for Advancing Not-for-Profit Healthcare.

Klein also remembers the pride Berman felt in building the pediatric palliative-care program, services for Rochester's large deaf and hearing-impaired population, as well as care for early sufferers of HIV and AIDS in the 1980s, when stigma reigned supreme. “He was a risk-taker,” Klein says simply. “He did lots of innovative things.”

At the American Hospital Association, where he served as a group vice president from 1977 to 1985, Berman beefed up the organization's public policy function considerably, although at the time, he and his colleagues just considered it improving management.

“We established that the American Hospital Association data is valid and reliable data,” he says. “We created a public policy research function that was going to look at the significant questions of the time and see where the data takes us. If it supports our position, that's wonderful; if it shows weaknesses, let's know that so we can fix those weaknesses. The third thing we did was we helped craft the Medicare prospective payment program. … We were driven by, ‘What's the right answer?' Later, that morphed into a discipline called public policy.”

Gail Warden, who served as the AHA's executive vice president during Berman's stint there, recalls that the association's “policy shop” strengthened considerably. Berman also reorganized the AHA's Health Research & Education Trust, which had been ineffective prior to this arrival, says Warden, a fellow Health Care Hall of Fame inductee.

“I told Howard to give me a proposal on what he would do with HRET if given responsibility. Howard really got the HRET to stand for what it is,” Warden says. “He had a lot to do with the directions we took in healthcare financing. We developed some very strong positions on cost-based reimbursement.”

Berman staffed the board's finance committee, which also became much more effective, although there were some fireworks along the way, Warden recalls.

“Howard has always been a little rough around the edges, kind of a curmudgeon,” he says. “One board meeting, a member asked … a question that didn't matter one way or the other—it wasn't relevant. Howard didn't answer him, and I said, ‘Howard, will you please answer his question.' And Howard says, ‘I'm not going to answer because it's a stupid question.' ”

Berman's effectiveness also benefited the Blue Cross Association, where he served from 1971 to 1977, in the post-Medicare implementation era. Berman says he helped ensure Blue Cross was acting as a “responsible steward within the Medicare product context, and making sure that money was being spent on the appropriate cases, and at the same time helping local Blue Cross plans to leverage their financial payments so the community was getting the greatest value.”

Berman became an early proponent of HMOs at a time when the political culture of “the Blues” made that risky, Klein says. “It wasn't just something he said: He committed to it in writing, and he began to convince others,” Klein says. “They were so beholden to fee-for-service medicine that it was almost sacrilegious to have physicians and the delivery system take on some risk. … He was gutsy. He would not shy away from a fight, that's for sure.”

Berman also had a hand in establishing Blue Cross' model of negotiating discounts for services and then paying based on those services—instead of defining the dollar amounts the company would pay—which the rest of the health insurance industry complained about at the time but has since largely adopted, says Bernard Tresnowski, retired former president and CEO of Blue Cross and Blue Shield Association.

“It isn't always the retail price,” he says. “Howard was the one who defined the discount Blue Cross was entitled to. They used to call it ‘but for Blue Cross'—but for Blue Cross, you would be getting dollars rather than services.”

Tresnowski also recalls Berman's curmudgeonly side. “He didn't suffer fools very easily,” he says. “He learned over the years. He mellowed considerably. He realized that approach to leadership wasn't going to get him anywhere, and he was going to piss people off in the process. At base, he is a very, very fine human being who has great values, makes big commitments and cares

about people.”

At various points throughout his career, teaching and writing have been part of Berman's professional life, as well. After completing his master's degree in hospital administration from the University of Michigan in 1969, Berman remained in Ann Arbor for two years as an instructor and assistant professor, and he's returned to teaching in retirement at the Bittner School of Business at St. John Fisher College in Rochester.

With an early mentor, Lewis Weeks, Berman co-wrote the textbook, “The Financial Management of Hospitals” (University of Michigan, 1971), which went through eight editions and became a university-level mainstay for a quarter-century. More recently, reflecting his board service at Blue Cross and Blue Shield, Holy Cross Hospital in Chicago and elsewhere, Berman wrote, “Making a Difference: The Management and Governance of Nonprofit Enterprises” (CCE Publications, 2010).

Berman serves as editor of Inquiry, a prominent journal that began at the Blue Cross Association in Chicago and is now published out of Rochester, where he continues to reside. And he was heavily involved in inspiring an oral history project through which the AHA is capturing the wisdom of numerous healthcare leaders of his generation.

“My writing is driven by two things: One is curiosity, and the other is the need to explain things to myself,” he says. “If I wanted to move an organization or a group of organizations in a particular direction, I had to understand how I was going to do that. I needed to explain, how do you do strategic planning? How do you budget?”

He started writing “Making a Difference” because “I didn't like the quality of the first set of lectures in the class I was teaching,” Berman says. “Why do we have these nonprofits? Why do we need governance? Why do we budget? I needed to answer all those ‘why' questions for myself, and not just accept the conventional wisdom.”

Berman asks plenty of probing questions as board member and chairman of the finance committee at Holy Cross, which serves an under-resourced area on Chicago's West Side, not far from where Berman grew up, says Wayne Lerner, CEO of Holy Cross and a childhood friend of Berman's younger brother.

“He expects you to know your material. He expects you to do your homework,” Lerner says. “It's pretty simple stuff. Pablum is something that doesn't go with him well. … But he's got a heart of gold. He's mentored dozens if not scores of individuals. His starting question is always, ‘What's good for the patient?', ‘What's good for the community?', and then, ‘How can we make this work?' Then let's talk about the financial side. That's not something you typically hear from someone of his background.”

Lerner has been amused to watch Berman speak extemporaneously on a board with a membership that's about half composed of nuns.

“The nuns pause, and then laugh,” he says. “Howard is used to a little looser environment. He has a very quick wit, a very dry sense of humor. He uses it very well in the course of a meeting, to break things up, reduce stress—and then make sure people are back on point.”

As he looks back, Berman passes along the advice of an early mentor, Walter McNerney, another Hall of Famer who served as CEO of the Blue Cross Association during Berman's time there—for those just getting started in healthcare careers.

“Don't plan a career,” Berman says. “You can't control things. Is what you're doing now interesting? If it isn't, what do you want to do? Stay where you are until you want a greater challenge—and take risks!”


Ed Finkel, a frequent contributor to Modern Healthcare, is a freelance writer based in Evanston, Ill. Reach him at edfinkel@earthlink.net.


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