‘Why the hell should in­sur­ers be up­set’ about our health plan?

Modern Healthcare - - Q & A -

Since 2002, Michael Dowl­ing has served as pres­i­dent and CEO of the North Shore-LIJ Health Sys­tem, the largest in­te­grated health­care sys­tem in New York state with 19 hos­pi­tals, more than 6,400 beds, more than 400 out­pa­tient physi­cian prac­tices and $7.8 bil­lion in an­nual rev­enue.

It in­cludes the Hof­s­tra North Shore-LIJ School of Medicine. Dowl­ing pre­vi­ously served as the sys­tem’s ex­ec­u­tive vice pres­i­dent and chief op­er­at­ing of­fi­cer. Be­fore that, he was a se­nior vice pres­i­dent at Em­pire Blue Cross and Blue Shield and the state direc­tor of Health, Ed­u­ca­tion and Hu­man Ser­vices. Dowl­ing has been on Mod­ern Health­care’s 100 Most In­flu­en­tial Peo­ple in Health­care rank­ings eight times. Mod­ern Health­care edi­tor Mer­rill Goozner re­cently spoke with Dowl­ing about his sys­tem’s ex­pan­sion ef­forts, its in­sur­ance op­er­a­tion, and his views on fed­eral pay­ment and qual­ity re­forms. This is an edited tran­script.

Mod­ern Health­care: What are the great­est fi­nan­cial chal­lenges fac­ing North Shore-LIJ now?

Michael Dowl­ing: We’ve done pretty well. We’re in­vest­ing a lot in our fa­cil­i­ties, we’re in­vest­ing a lot in ex­pan­sion of am­bu­la­tory and out­pa­tient care, and we’re in­vest­ing a lot in ed­u­ca­tion. I could stop in­vest­ing and it would look bet­ter for the short run, but we would be in trou­ble in the long run. You’ve got to take a five- to 10-year view.

I’m fo­cus­ing a lot on how I can gen­er­ate new rev­enue streams to off­set the longterm re­duc­tions in Medi­care and Med­i­caid. That’s go­ing to be a prob­lem for ev­ery or­ga­ni­za­tion in the U.S. You don’t have the cross-sub­sidy op­tions that you had years ago. Now you have to fig­ure out how to be­come more ef­fi­cient, how to ex­pand all the pro­grams and de­velop other sources of rev­enue.

MH: What are the most promis­ing sources of other rev­enue?

Dowl­ing: Hav­ing an in­sur­ance base has great po­ten­tial but it’s a long-term play. You have to grow it slowly. I look upon this as a five-year play be­fore you’re go­ing to see any sub­stan­tial re­sults. We’ve had ours up for al­most a year and a half. That has great po­ten­tial if you can man­age the care ef­fec­tively and if you get the right membership in your in­sur­ance en­tity. If you have low pre­mi­ums and high-risk cases, you’re go­ing to be in trou­ble. You’ve got to watch that all the time.

We’re grow­ing the am­bu­la­tory busi­ness and go­ing into new mar­kets. We’ve moved into the Westch­ester area, We’re mov­ing into Brook­lyn. We’re mov­ing east on Long Is­land in a big way. So it’s a mix of dif­fer­ent strate­gies. You’ve got to be do­ing all of th­ese things at the same time.

Hav­ing a pres­ence in Brook­lyn is very, very im­por­tant, partly be­cause Brook­lyn is the new des­ti­na­tion place to live in New York. We are in dis­cus­sions there with a num­ber of the big play­ers and they will po­ten­tially be join­ing us in the next cou­ple of months. Mai­monides Med­i­cal Cen­ter is one which is a big, big place in Brook­lyn. We’re go­ing through the duedili­gence process. It would be a full merger.

MH: What ap­proach are you tak­ing on physi­cian prac­tices?

Dowl­ing: We have close to 3,000 physi­cians on full salary with per­for­mance in­cen­tives. That will prob­a­bly ex­pand some more. By hav­ing a very large med­i­cal group, you’re in a much bet­ter po­si­tion to man­age the care, es­pe­cially when you’re an in­sur­ance en­tity and you’re tak­ing on risk. We have joint ven­tures with a num­ber of other physi­cian groups. We have mul­ti­tudes of th­ese where we own 51% and they own 49%. That’s hap­pen­ing more and more. To­day, physi­cians who have formed large groups don’t want to be taken over. They know they can’t be to­tally in­de­pen­dent, so they’ll do a joint ven­ture.

MH: How do you han­dle care co­or­di­na­tion for pa­tients un­der fi­nan­cial risk con­tracts?

Dowl­ing: We’ve cre­ated a care-man­age­ment or­ga­ni­za­tion called Care So­lu­tions. When we’re on a risk ar­range­ment, that or­ga­ni­za­tion man­ages the care of pa­tients and brings in all of the other play­ers. We make sure pa­tients are in a sit­u­a­tion that achieves the best out­comes and is least re­stric­tive. I don’t put you in a hos­pi­tal un­less I have to.

MH: Are you also in­volved in post-acute and long-term care?

Dowl­ing: We are big into long-term care. We have our own nurs­ing homes. We have re­la­tion­ships at all the as­sisted-living fa­cil­i­ties. We’ve got huge home care. We have an af­fil­i­ate net­work of long-term-care fa­cil­i­ties. We mon­i­tor the qual­ity of care for the pa­tients in the fa­cil­i­ties and we mon­i­tor the

“Physi­cians who have formed large groups don’t want to be taken over.”

move­ment of pa­tients. If (fa­cil­i­ties) don’t hit cer­tain met­rics, they’re no longer part of our af­fil­i­ated net­work.

MH: How is your in­sur­ance op­er­a­tion go­ing?

Dowl­ing: Our goal is to dou­ble the cur­rent num­ber of en­rollees within the next year. Be­gin­ning in 2016, we are dis­cussing putting our own em­ploy­ees in as well. We’ve been mov­ing cau­tiously. It’s still los­ing money, which is fully ex­pected.

Our big fo­cus is on em­ploy­ers. There are not that many big em­ploy­ers in New York. We’re work­ing now with one em­ployer I can’t name yet that has 5,000 em­ploy­ees. What peo­ple are fas­ci­nated about is that, when they call our plan, they get a hu­man be­ing who can solve their prob­lems. The CEO of our in­sur­ance com­pany is pas­sion­ate about ser­vice.

Hav­ing an in­sur­ance com­pany be­comes a huge cat­a­lyst in get­ting the whole or­ga­ni­za­tion to think dif­fer­ently about how we should be do­ing things. When you col­lect the pre­mium dollar, you’re go­ing to do all of the things a lit­tle bit dif­fer­ently than when you’re just paid fee-for-ser­vice, be­cause of the align­ment of the in­cen­tives.

MH: Have other in­sur­ers been up­set that you’re en­croach­ing on their turf?

Dowl­ing: No. My at­ti­tude is that they’re be­com­ing providers too. They’re buy­ing doc­tors. They’re open­ing am­bu­la­tory sites. Why the hell should they be up­set? It’s not like I’m go­ing into their busi­ness. They’re com­ing into mine. Fair game, you know? I don’t worry about that kind of stuff. I can’t let that de­rail me from what I want to do.

MH: Are you in­ter­ested in get­ting into Medi­care Ad­van­tage?

Dowl­ing: Oh sure. We are go­ing to be within the year. That’s very, very im­por­tant.

MH: How are your la­bor unions re­act­ing to your mov­ing more care out of the hos­pi­tal?

Dowl­ing: We have a pretty good work­ing re­la­tion­ship with the unions. That doesn’t mean ev­ery day is pain­less, but over­all, it’s worked pretty well. We have ex­panded our am­bu­la­tory dramatically. You’ve got to work with the unions on those sit­u­a­tions to see what the ap­pro­pri­ate re­la­tion­ship should be go­ing for­ward. Also, there are some part­ners you want to do deals with that don’t want to have any­thing to do with the union work­force. How do you do that? It’s very, very com­pli­cated.

MH: What are your thoughts on the Obama ad­min­is­tra­tion’s pay­ment and qual­ity re­forms?

Dowl­ing: It’s one thing to say that they want value-based care, but it’s an­other thing to say how they’re go­ing to do it. A lot of the value-based pay­ment is ba­si­cally fee-for-ser­vice, but you have to pro­duce cer­tain re­sults. It’s not go­ing to full cap­i­ta­tion.

The one thing the gov­ern­ment could do is stop mi­cro­manag­ing. I have a huge prob­lem with the qual­ity arena, where we have so many qual­ity met­rics to meet that it is lu­di­crous. I wish there were six qual­ity met­rics. They should de­cide, for ex­am­ple, that over the next five years we want to have a 70% re­duc­tion in mor­tal­ity due to sep­sis. That’s it. You would have the great­est gain in qual­ity you could ever imag­ine.

Philo­soph­i­cally, I would like to see more and more full cap­i­ta­tion over time.

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