Forward Thinking

Timothy J. Nelson, President, Northwestern Michigan College

Canary in the NMC tunnelWhen systems are in a transformative state, the underlying assumptions that influence their operations and purposes must be examined and questioned. One way to do this is to look at organizations or industries with similar characteristics and determine what we can learn and/or project from their journey. Thus, as higher education—in fact all of education—is faced with changing demands, changing demographics, technological advances and changing expectations we can look for a similar industry. I have long believed it is health care.

Consider that the federal government in 2010 passed the Health Care and Education Reconciliation Act. Looking at the health care reform component of this act and the sister Patient Protection and Affordability Act, is it worth asking, “What if these changes are applied to education and higher education?”

A significant tenet of these acts is the shift in what hospitals and providers will be paid to do. Under our current system, hospitals are paid for performing procedures. Whether these are surgical, emergency room, or radiology tests, there is an agreed upon billing process that differentiates the revenue received by the payer type. Insured, uninsured, Medicaid, etc. all pay different rates that are negotiated by the payer. The incentives now for the hospital are to be able to bill the maximum amount for the procedure while minimizing cost for the procedure.

In the future, the expectation is that the majority of payments will be received for creating a healthy community. Penalties for readmitting patients for the same ailment within a 30-day period already exist and will be expanded. A shift in revenues will inevitably change the services some hospitals can provide. We already see acquisitions and consolidations in rural areas. Almost immediately, our portfolio of offerings is decreased and tighter transfer systems with metropolitan or regional facilities are established.

So, what if these same directions were applied to higher education? What are our equivalencies to hospital services? Our courses are procedures. We are paid by the credit hour for offering a class. While there is some differentiation in rates, it is not yet negotiated with the payer. We might think of our governmental subsidies as equivalent. Remediation can be thought of as re-admitting for a prior condition. Our discharges include transcribed learning as documentation. Our students are the patients.

What if the government said, rather than pay you for procedures we are going to pay you for how well you establish and maintain an education population with certain characteristics? At Northwestern Michigan College, we are looking through a lens that says,

“NMC’s ultimate purpose is to provide our learners and communities with the skills, experiences and values that will help them to create social and economic wealth in their lifetimes.”

How would we measure those outcomes and attendant activities? Would numbers of degrees, hours in class and persistence to completion be the measures? I’m not sure.

Hospitals are struggling with traversing the gap from funding for procedures to funding for community health. They have been given notice and a number of years to deal with these unknowns. Should a similar set of directives be applied to higher education, would we have the same luxury of time? It’s questionable. With that in mind, leaders must monitor the health care transformations and prepare for similar outcomes. It very well could be our canary in the mine.


Health Care and Education Reconciliation At of 2010, H.R. 4872, 111th Cong., Second Sess. (2010).

Patient Protection and Affordable Care Act of 2010, H.R. 3590, 111th Cong., Second Sess. (2010).