Michael Dowling: 4 lessons learned from a CEO who oversaw the launch of a health plan

Under the leadership of Michael J. Dowling, in 2013 New York-based Northwell Health launched its own health plan. CareConnect was the first provider-owned commercial health plan on the New York state exchange, made available to individuals, families and businesses on Jan. 1, 2014. It now has more than 100,000 members.

Here, Mr. Dowling shares lessons learned from launching CareConnect.

Shifting reimbursement models to reward value over volume reflect the need to reduce utilization and focus on prevention and wellness. This is something we can all agree on.

The trouble arises when it comes to engaging providers who aren't able to share in the value created through this shift. Under a fee-for-service Michael Dowlingreimbursement model, organizations are rewarded for providing a high volume of services. While we recognized that transitioning to a value-based care delivery model would create the infrastructure to promote population health and reduce utilization, the incentives required to engage those who actually deliver care were not in place. Insurers reap the financial rewards, while the providers take hits to reimbursement.

By launching our own health plan, we've gained access to the full premium dollar. Now we can become a truly value-based organization because our incentives are aligned.

We thought long and hard about launching a health plan before committing to do so. It's a risky venture. Creating an insurance product requires building an entirely new infrastructure, hiring the right people and a significant investment in data analytics.

From our research into other provider-owned health plans — such as those of Kaiser Permanente, Geisinger Health System and Intermountain Healthcare — we knew it would take many years with hurdles for us to overcome along the way. But this is the nature of progress in any endeavor. I found it interesting that so many people asked me — right after we launched it — if CareConnect has been successful. You don't call newlyweds six months after their wedding to ask if their marriage is a success!

Hire the right people. Recruiting leaders and experts from the insurance world is critical. You can't just turn to the smartest people you already have in your hospital network and say, "Now you're going to lead an insurance company." It's a completely different business, and those leading the insurance arm must have the right experience.

In addition to hiring seasoned insurance leaders, you need to hire data analysts, especially actuaries who know where to set prices and assess risk. You also need to create an efficient call center with highly customer-focused employees.

Recruiting the right kind of leadership was my primary concern. We were fortunate that we did, because it's a competitive world out there. Good people are picked up quickly.

Give the health plan CEO a seat at the table. Once you've built a strong leadership team for the insurance business, it's time to mesh them with the health system leaders. We included the president and CEO of CareConnect on the Northwell Health senior executive team, which has enabled him to work closely with the health system's administrative and clinical leaders.

Ensuring the heads of these areas understand one another early in the process of creating a health plan helps prevent miscommunication. Additionally, by carving out a spot for the insurance company CEO on the executive team, you are automatically exposing him or her to the strategies the health system is pursuing outside of the insurance business. If the leader doesn't have the opportunity to learn what the provider side of the organization is all about, he or she will inevitably make decisions that do not align with the health system's best interests.

Integrate insurance and provider cultures. It is more or less tradition in healthcare for the providers and insurers to be pitted against one another. But that's a recipe for failure for a provider-sponsored health plan. You bridge the gap with lots of face-to-face communication, constant coaching and time.

The educational component of launching a successful health plan is rather substantial. You achieve this by bringing everyone into the same room — creating opportunities for the health plan employees and providers to understand the inner workings of both business components now housed within one health system.

Believe me, nothing changes the culture of an organization faster than launching a health plan — and it's a positive change. Physician leaders begin to understand risk. They understand the importance of categorizing patient membership, insurance membership and the value of data analytics. The more you integrate the healthcare delivery side with the payer side, the more they educate each other.

Be resilient. Launching a health plan is not for the faint of heart. In the beginning, everyone told me other insurers in our region would not be fond of a competing health plan and try to hurt us. But I knew I had to do what I thought was right for our organization. Furthermore, insurance companies are equally interested in transcending the boundary between provider and payer. Some insurance companies own physician practices, including practices within our service area. As it turns out, we actually have a good working relationship with other insurance companies.

If you decide to launch a health plan, you must understand that you're in it for the long haul. You have to think in five-year spans of time, and expect some issues and setbacks in the beginning. So far, we've been very fortunate: CareConnect has been successful and is growing. But that doesn't mean there isn't the potential for problems to occur in the future — it is still a young company.

Although it requires massive efforts in planning, recruiting and education, launching a health plan is incredibly exciting. No matter how much you think you know, no one on the provider side fully understands how the payer side really works. You can't understand until you actually become one.

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