After a devastating failure, the CEO of the largest health system in New York wants to get back into the health insurance business
- Northwell Health in 2013 launched a health plan for the Affordable Care Act's market in New York.
- A few years later, the largest health system in New York decided to exit the market, after experiencing major financial losses.
- Even so, CEO Michael Dowling hopes to one day operate a health plan again as a way to allow the health system to care for patients in a different way.
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Michael Dowling has tried his hand at operating an insurance plan.
Dowling is the CEO of Northwell Health, which operates 23 hospitals and 750 other healthcare sites. The health system made $11.5 billion in revenue in 2018, making it the largest by revenue in New York.
Northwell's insurance plan, called CareConnect, got its start selling plans in 2013 on the health-insurance markets set up under the Affordable Care Act, otherwise called "Obamacare." In 2017, after 3.5 years of operations, Northwell decided to wind down the insurance unit, citing heavy financial losses.
Eventually, though, Dowling said he wants to get back into the health-plan business.
"Would I love to be in the insurance business? Yes. Will I be in it at some point in the future? Yes," he said.
Because Northwell shut down CareConnect, the company will have to wait several years before it can start a new insurance operation.
In the interview, Dowling didn't get into details on how a future insurance effort would differ from the company's failed attempt. In the meantime, Northwell's looking to strike up more contracts with employers to manage the health of their employees, a venture that can be similar to insurance because it requires the health system to take on financial responsibility for caring for big groups of people.
Northwell has blamed ACA regulations for its financial losses and the decision to shut down the insurer. Northwell has said that rules in the ACA that were supposed to stabilize the insurance market and help insurers that signed up the sickest and costliest members ended up putting it at a disadvantage.
"Obamacare had components in it that were ridiculous," Dowling told Business Insider in a recent interview. "Obamacare forced us to lose money we shouldn't have lost."
Dowling said his experience with running a health plan as the ACA was getting off the ground has led him to oppose single-payer healthcare, or the idea that all of healthcare will be paid for by the US government. The idea has been gaining traction among Democrats ahead of the 2020 presidential election.
"Think of anything the government completely runs and tell me if it goes well," Dowling said, pointing to the health system run by the Department of Veteran Affairs, as well as public hospitals. "Any hospital that is completely government paid is underwater, losing its shirt."
Northwell generated 65% of its revenue from the government-funded Medicare and Medicaid programs last year.
Why Dowling wants Northwell to operate a health plan
Northwell currently offers a lot of services that are aimed at keeping patients healthy, such as employing a Michelin-star chef to provide better nutrition for patients and telemedicine appointments.
Currently, Northwell doesn't benefit financially from keeping patients healthy. Instead, it largely makes its money when patients see a doctor or get an operation.
Running an insurance company would change that, because insurance companies are more profitable when their patients stay healthy or get care at a lower cost.
In the meantime, Dowling is also working to more directly manage the health of self-insured employers, a move that health systems across the US have been doing as a way to get paid more based on how healthy they can keep employees, rather than how many times those workers go to the doctor.
Employers like Walmart, General Motors, and Boeing have been using the approach, working directly with doctors and health systems rather than having health insurers manage those relationships.
Right now, Northwell offers injury management programs, preventive services like flu shots, and will run clinics for big companies at their offices or nearby. It's working to contract directly with employers in New York to manage the healthcare of their employees to keep them healthier and out of the hospital.
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