Running Health Care Like A Business

Barry Ostrowsky had one goal after he earned his law degree: establish a successful career in urban planning.  He accepted a full-time position at the firm where he was clerking, and got working on the projects that excited him – from mapping out city planning to organizing educational systems. But, early in his career, Ostrowsky experienced a life-changing moment when he was asked to help build a new kidney dialysis center.  

“I didn’t even know what a dialysis center was,” said Ostrowsky, the first speaker in the 2017-2018 MBA Executive Speaker Series.  From that point on, he focused on health care. 

Today Ostrowsky is the president and CEO of RWJBarnabas Health, New Jersey’s largest, most comprehensive integrated health care delivery system, with a service area that includes more than five million residents. It employs a staff of 33,000 and produces $6 billion a year in revenue.

After 15 years of practicing law, Ostrowsky found working on the dialysis center allowed him to do what lawyers typically don’t – provide trusted clients with business advice.  He was able to see all that could be accomplished in health care by merging business savvy with regulatory regiments, and soon earned a reputation as the “lawyer who gives business advice.”

Then a client offered him an opportunity to implement his own advice and run St. Barnabas Hospital with him. Ostrowsky left his law practice to help construct RWJBarnabas Health.

Since hospitals existed for 150 years as not-for-profit organizations – enjoying tax-exempt status because their core purpose is to benefit society – there was no incentive to run them like businesses. The terms “cash flow” and “EBITDA” were not familiar to hospital finance committees until 25 years ago.  When Ostrowsky entered the health care industry, he and his team decided to "run it like a business".

In 1991, they introduced the industry to the management of health care services. Between 1993 and 1996 they pursued acquisitions, running them like businesses, and creating the state’s first health care system, now RWJBarnabas Health. None of it would be possible, he stressed to the students, without teamwork.

“You can’t be successful without creating the chemistry with a team of employees who you trust and want to develop trust for others,” he said. “Teamwork doesn’t thwart creativity, ambition, or individual success. Teamwork in why people are successful.”

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