Michael Dowling on Mergers

Crain's Health Pulse
December 29, 2014
Michael Dowling on Mergers

The chief executive of the North Shore-LIJ Health System thinks he probably has more mergers under his belt than anyone in the region.

“They’re hard,” he said, “and everybody always gets upset at the beginning.”

In an interview with Crain’s, Mr. Dowling laid out the criteria he looks for when assessing potential takeover targets. The hospital can’t be part of another health system. Its vision of the future must be compatible with NS-LIJ’s and aligned with what the system wants to become.
And it can’t be “a pain to deal with,” said Mr. Dowling.

While a financially weak hospital can be an attractive turnaround target, Mr. Dowling cautioned that “you have to be careful not to take on something that’s going to hurt you” and not to expect too much outside help. “I spent 12 years in government, so I know what government promises you today, they’ll conveniently forget two years from now.”

The past few years have seen a spate of mergers, with the Mount Sinai Health System absorbing Continuum Health Partners in 2013. Continuum racked up$56 million in losses  that year.

NS-LIJ was able to bring Lenox Hill Hospital into profitability after buying the hospital in 2010. This year’s results are not yet in, but the Manhattan facility has dipped back into red ink. In the six months ended June 30, it posted an operating loss of $12.8 million.

Mergers take a long time to look good, said Mr. Dowling. “It’s a lot slower than you think. My general rule of thumb is five years.”

That’s because the newly merged organization often needs a complete culture shift. “If I move the boxes around and don’t change the attitude, I don’t get rid of people, everything’s just going to be made more difficult.”

In previous mergers, Dowling has cut middle managers and front-line workers, as he did at Lenox Hill. “Some of those changes were made very fast. Some were made in a couple days,” he said. “All my clinical leaders, the heads of my clinical departments, have been completely, totally changed in the last seven years.”

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