How One Of America's Largest Health-Care Providers Prepares For Obamacare And The Future

The way health care is provided, paid for, and measured in the United States is rapidly changing. That will continue to happen as the Affordable Care Act, also known as Obamacare, comes into full effect.

Few people know that better than Michael Dowling, the CEO of North Shore-LIJ, the third-largest non-profit secular health system in the United States by number of beds, and the third-largest private employer in the New York City area.

While the country is scrambling to react to Obamacare, Dowling's organization had a head start. One of the most notable results of the passage of the law has been massive and growing consolidation of health-care providers and insurers into big, diversified groups, emulating something NSLIJ started in the 1990s.

What's more, NSLIJ is taking it a step further, as one of the biggest health-care organizations to become an insurer as well, becoming a one-stop shop for patient needs.

We spoke to Dowling, a native of Ireland who previously worked as a social policy professor and insurance executive, about how NSLIJ is building a health-care system for the future.

Our conversation has been edited for length and clarity.

Business Insider: What's it like leading a health-care giant during the largest health-care overhaul in America's history?

Michael Dowling: It's a privilege to be the leader of a large organization at a time like this. Despite what other people will tell you, I think this is a great time to be in health care because it's all about transformation. It's basically trying to forget about a lot of the things that we were taught 15, 20 years ago. Because I think we're heading into a different world, and you have to map a course through that.

If you're somebody who is resistant to change, I think this could be an awful position to be in. But if you're somebody who welcomes change and tries to create change, then I think it's a great place to be - so I'm excited about it.

BI: How have you changed the way you work as Obamacare gets implemented?

MD: We started to change a lot 10 to 15 years ago. We were the first organization to create a very large, integrated health system. The concept behind 'accountable care,' as we now talk about it, is how you bring multiple parts of health care together, combine units of service and combine entities. Well, we started to do this back in the mid '90s.

We didn't say, 'Oh my God, the Affordable Care Act just passed; now what do we do?' We've been preparing for a lot of this stuff for a long time. Like the move towards transparency - we're big fans of this. We actually put a lot of our stuff on the website years ago, before anybody suggested that we should do it. We also engaged in pay-for-performance contracts for many, many years - way before anybody said that we should do it.

BI: You employ more then 46,000 people. How do you manage them all successfully?

MD: We have central administration, single clinical leadership, single metrics across all parts of our entity. We've consolidated all the back office functions like finance, government relations, purchasing, legal, real estate, marketing - all of those things that, in most organizations, sit within each individual component of an organization. None of it works perfectly, but compared to most organizations, we've made dramatic changes that other people are now just beginning to think about.

For example, we have single clinical service leaders across all of our organizations. The head of medicine oversees medicine everywhere, and the head of pediatric oversees pediatrics everywhere, irrespective of the location. That's not uncommon in non-health-care businesses, but in health care, it's a rarity.

BI: What's the role of data in your organization?

MD: You'll always be chasing better data. You'll always be trying to figure out how to better use data. The caution I would give is that more data is not necessarily the most important thing. It's having the right kind of data. You can get swamped with data that doesn't tell you anything. You have got to be able to turn it into information that you can use for implementation and practice purposes.

Traditionally, in health care, we've worked as if the hospital is the center of the universe. As time goes by, the hospital is going to be important, but it's not going to be the center of the universe. It'll be about quality of care across the full continuum. It'll be much more about what happens in the home, what happens in outpatient ambulatory care, as well as what happens in the hospital.

BI: So how do things have to change?

MD: Most of the metrics and most of the policies that have been promulgated by government over the past couple of decades have always been about what happens when somebody becomes a patient. The future, in my view, is in how you transition yourself from a hospital-centric system to a system that provides care in the most appropriate environment.

The second thing is how you go from being a system that primarily treats illness to one that is also in the health promotion business. We don't want to just be taking care of people after they get sick. We've got to be figuring out how to deal with people before they get sick. That's one of the reasons, incidentally, that we decided to move forward and get an insurance license so that we can incentivize the practitioners themselves to do the right thing, in the right location, at the right time, and the right place, and not wait until somebody gets sick.

BI: Why the decision to become an insurer?

MD: These days, everybody's talking about how we need to get away from fee-for-service [where the patient pays for each medical service individually, a system that encourages health-care providers to layer on excess services]. If you're a critic of fee-for-service, which I am to an extent, it means that the incentives are not always aligned, that you should move to another form of getting reimbursed.

If you decide that you want to take on risk arrangements and take on responsibility for the quality and cost of care for a population, you have to build an infrastructure to figure it out. You've got to have competencies that don't automatically exist in a traditional health-care organization. My idea was, if you're going to build all of those competencies, you're essentially building what exists in many insurance companies. So why not get an insurance license?

BI: You have the largest corporate university of any health-care system. What role does it play?

MD: The only way that you can ever improve and ensure some degree of success going forward is if you have your employees well trained. You've got to hire the right people, train the right people, promote the right people, and provide opportunities for ongoing learning.

So we decided that we wanted to build an in-house corporate university. I modeled it after what existed at GE, IBM, Motorola, and the Ritz-Carlton. In fact, we worked with GE directly for almost two years when we were establishing our program here. We call our program the Center for Learning and Innovation.

We started that in 2001, and it has dramatically grown. We have one of the largest simulation training centers in the United States. That allows us to replicate almost anything that goes on within this organization and replicate a simulation so people can practice before they have to do it on real people. This has proven to be enormously successful. In fact, last week I had about 25 CEOs from Sweden here taking a look at our simulation center.

BI: How do you make sure you hire the best people?

MD: All of our hiring is centralized, and we train hundreds of people in behavioral interviewing. We look for people who have the right kind of commitment and passion, with a lot of integrity. You know the old phrase: You hire for the attitude, and you teach skill. Give me the people with the right attitude and the right passion and the right dedication, who understand the nature of health care and the legal responsibility that exists here. You focus your recruitment on that.

BI: You don't come from a hospital background. How has that affected your approach?

MD: Well, I've had the fortunate experience of being a laborer, working on the docks, working in construction. All of these were educational opportunities. Then I went into academia. I spent a lot of time at Fordham University in a leadership position and a faculty position. I was in government for 12 years, and then it was insurance.

I know that in government, they pass regulations that often don't work. I'm willing to challenge those things. Since I was on the other side of it, I'm not scared to challenge what government does. Having a broad level of experience gives you an open mind - the freedom to entertain new ideas, the freedom to look at things differently. You're not constrained by tradition. Health care can be very tradition-bound.

For the people who run our hospitals, I like to hire people who have never run one before, because I don't want to hire somebody who is thinking about a hospital of 10, 15, or 20 years ago. I want people thinking about the hospital of the future.

BI: How would you describe your approach to leadership? How did it develop?

MD: In any organization - especially in health care - you're dealing with multiple constituencies, so you're dealing with the issue of constituency politics. We have doctors, and we need the doctor community. You have nurses, you have union and non-union. You have the administrative staff.

The key is figuring out how to influence behavior and being very, very clear about where it is you want to get to. Leadership is about promoting change and about influencing behavior, but you've got to understand the politics of it. Leadership is not about having a title. If I sit around and say, "I need this done because I'm the CEO," nobody cares. I mean, they will listen to you for a while, but once you turn your back, you know they've gone the other direction.