Name: How This Massive NYC Health System Changed Its Business Model
Uploaded: 2025-07-03T15:33:00Z
Duration: 19 min 57 s
Description: Dr. Robert Grossman, CEO of NYU Langone Health, spoke to At Barron's about how the health system has transformed and changes he made along the way.

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Dr. Robert Grossman, CEO of NYU Langone Health, spoke to At Barron's about how the health system has transformed and changes he made along the way.

https://m.wsj.net/video/20250703/c25a5233-a5a6-48c9-bf10-ea3948ab7d7b/1/hls/manifest-hd-wifi.m3u8

How This Massive NYC Health System Changed Its Business Model

Hello, everyone, and welcome to "At Barron's." I'm Andy Serwer, and welcome to our guest Dr. Robert Grossman, CEO of NYU Langone Health. Great to see you, Dr.

Pleasure to be here.

So everyone knows about this healthcare system, I guess, or hospital system in New York City, but maybe people around the country don't know it as well. So why don't you give us the lay of the land. It's one of the biggest and best hospital systems in the United States.

Thank you. Yes. So NYU Langone is a hospital system. It's composed of six hospitals, including the Tisch and Kimmel Hospital Pavilion, Hassenfeld Children's Hospital, Langone Orthopedic Hospital, Langone Long Island, which is in Mineola. Langone Brooklyn. And then we just had a recent hospital acquisition in Suffolk County at Langone, NYU Langone, Suffolk County.

Right, and that's must be thousands of employees as well, right?

We have 53,000 employees. Our revenue this year is over $15 billion, and we're the number one health system in the United States for quality and safety.

What's interesting about revenue, and I saw that in your financial report, that maybe people don't think about those types of numbers in terms of hospitals, but you have a P&L just like other businesses. How does a hospital's P&L work?

Works like other P&Ls because it is a business, even if we're not for profit, but instead of paying shareholders, we invest in research and education and in our clinical mission.

Right, where do the revenues come from then, for instance?

The revenues come from clinical revenue, both inpatient and ambulatory procedures. That's the biggest share of the revenue. And then we have obviously philanthropy and grants, things like that.

Right, okay. You became CEO in 2007, and my understanding is you're gonna be stepping down at the end of the summer. Congratulations on your great long run.

Thank you. I wanna read what someone wrote to me when I told 'em I was gonna be interviewing. They said, "NYU Langone story is incredible. Hospitals don't usually grow and improve at the scale his has. And he did it by pretty much breaking every rule there is in hospital management."

That's true.

Okay, so talk to us about what your plan was over the nearly 20 years you were CEO.

Yeah, so just to put it into perspective, we started with a revenue of about $2 billion at no margin. And we changed our business model. The traditional hospital business model is inpatient, and we biased our model to our ambulatory. So we have 320 ambulatory sites in the New York metropolitan area, only six hospitals, so very different.

Outpatient, is that?

Outpatient, ambulatory, correct. Less than 24 hours stay. So that was one thing. We focused on transparency. So we created a, so we invested in Epic and in PeopleSoft, and then we created a dashboard with one source of truth, and we managed that, and we focused on accountability so that, and we set metrics and benchmarks for excellence, and we thought quality goes right to the bottom line.

So those were your sort of strategic north stars, right?

Correct.

But it must have taken a lot of work in breaking some eggs as this person was suggesting.

Yes, so the other thing-

What was the resistance then?

Well, the first thing was, traditionally academic health systems have a school and a hospital. So I'm the dean and CEO, and I eliminated one layer of management and combined the two, hospital and school. So saved expense, but also created agility and porosity around the entire system. And then we held everybody accountable. So he probably heard, I fired, or let me change that. We managed out a lot of people, and at the end of the day, we created a system with one culture, and the culture was about excellence, about agility, transparency, all the things that go into running a good business. And it worked.

Is there any specialty areas for your hospital or you do sort of everything?

We do everything, everything. And I'm sure you saw the face transplant, the eye transplant, the pig kidney transplant, things like that. So we've been on the cutting edge of medicine on the clinical side.

And as a doctor, you were a neurologist, a radiologist. Right?

I started my career in neurosurgery. And then I switched careers when I saw the first CT images and I thought imaging was gonna change neurology, neurosurgery and medicine. And I was fortunate to be at the front of the imaging revolution. And then I was chairman of radiology, became chairman of radiology at NYU and then became the dean and CEO in 2007.

But what has it been like going from being a doctor to the chief executive? I mean, often you think of those jobs being at odds with each other, right?

No, you're exactly right. I think doctors are traditionally risk averse, and that's important for patients. And being a CEO, you have to be willing to take risks. But I was always a risk taker in my career, so I felt pretty comfortable managing risk and taking it.

That's interesting when you talk about risk in a healthcare environment, because you're right, I mean, there are places where risk is appropriate, right? But there's places where it's not. So how did you sort of balance that out? In other words, you weren't saying, let's take a risk, we're gonna cut safety and these patients will suffer, but it's a risk we can take. I mean, those weren't sort of the calculations you were taking? No, I think the risk, the big risk was number one, going from an inpatient to an ambulatory model, which was against what everybody thought. Second risk was taking a chance on Epic as an enterprise-wide electronic health record before a lot of systems were investing heavily, and we invested heavily. We didn't have much money, but we put that money into Epic and getting the data to be able to manage appropriately.

I wanna ask you follow up a little bit on ambulatory or outpatient care, because, you know, some people say, oh, these hospitals, they don't, you don't even go in anymore. You just, they just go there and then, you know, but I think over time people have started to realize that actually it's a good trade off, right?

It's a great trade off because you're bringing medicine to the people as opposed to having 'em come to a hospital. So hospitals are not as efficient, not as patient centered generally as ambulatory facilities. Also, the expense level is much lower on the ambulatory side because you don't have to run it 24/7. And you can deliver high quality care, that is in hospital based ambulatory centers. Not what happened to Joan Rivers, but in very safe environments.

And then what about criticism from people who say, well, you look at a big hospital system like yours, and boy, I miss my standalone hospital, and it was much better and these hospitals are too big?

Yeah, I would say that's not true. The most important thing about a hospital is the quality of the hospital, bar none. And I always say there's no equity without excellence.

Right, right. Ken Langone, who's been a great benefactor of your organization, what is he like, and what has it been like working with him?

He is the greatest person I know, so many ways. So he's highly intelligent, incredibly dedicated, decent, cares deeply about people, and NYU Langone. So has been, I think he's changed my life, and he changes people with whom he's had contact also would say the same thing about him. He's an amazing, amazing person.

And can you explain to us, Bob, about how hospitals compete with each other. In New York, there's a number of high-profile excellent hospitals besides yours. How does that work?

Yeah, well, the good thing about New York is it has 10 million people. So there's plenty of volume for the hospitals. And hospitals, yeah. There's some ego and some competition, but I think it's more about what's best for a patient and how the patients are connected to the institution. So at NYU Langone, the patients are really connected through the electronic health records. So we have very, and it's all on your iPhone, and you get all the information contemporaneously, you get your x-ray reports and all your patient data and how you interface with your primary care physicians and your specialists, et cetera. Other systems do things a little bit differently, but the systems in New York, by and large, are really quite good.

Right, and what is the connection between your organization and New York University?

So we are connected to NYU, we're part of NYU. The school of medicine is really in NYU. Our hospital bonds are separated from the university bonds. So there's a separation. We have our boards work, we have overlapping trustees.

Right.

And it works out very, very well. I don't report to the president of NYUI. I report to the board chair.

Got it. All right, there's kind of an elephant in the room here, Bob, and that is people are not happy with healthcare in America, and they're not happy about the quality of care, the cost of care, the red tape. What's wrong with American healthcare, and what can we do to fix it?

Yeah, well-

Small questions.

Well, there are a lot of opinions about it. I actually think the quality of care, by and large, is quite excellent. If you look at outcomes and compare 'em to other countries in terms of diseases, it's quite good. And you see people coming to the United States for their healthcare. Now, what needs to be improved perhaps is access to healthcare. But access alone doesn't do it without quality. And I think one of the things the government could do to make healthcare better would be to steeply incent quality.

How would they do that?

They could do it in several ways. They could set benchmarks that you had to achieved to receive a surplus payment, or in order to get the full Medicare payment, you could reduce payments. But I think incenting quality would be first and foremost. The second thing would be to prioritize ambulatory as opposed to inpatient, because you could take care of more patients and you bring medicine into the community. Things like that would be useful.

And what about a single payer system?

Well, I think you have a single payer system in the VA. It doesn't work. Right, that's a single payer system. Places like Canada have a single payer system approximately. They tend to have long queues for elective surgery and things like that, elective procedures. And the United States isn't, the people in the United States aren't like Canadians or people in England where they want their medicine now. They don't want to wait a year for a hip or things like that.

And just continuing a little bit here, but what about cost? Does it have to be the case that healthcare costs exceed the level of inflation?

Yeah, well, I think I would focus more on, are you getting value for your money? And in the United States, number one, we value human life. So we don't say at 80 years old, you can't have this or that. So if you changed the last six months of life and implemented policies about not treating certain conditions, you drive down the healthcare cost. But I don't think our country wants to do that. Second thing is medicine is very capital intense business. And that's good, because we have MRIs, and MRIs have changed medicine, and imaging has changed medicine, but it's very expensive. And we have robots, and we have all these different instruments that actually provide higher quality care with less morbidity, but there's a cost of that. And that's the trade off that the country maybe will make at some point. But if you look at Scandinavia, for instance, they make decisions not to treat certain conditions.

Right, interesting. A couple questions about Washington, Bob. First of all, what do you think about Robert F. Kennedy Jr running HHS?

You know, look, I'm not a politician, and I think that there are issues related to medicine that I probably disagree with, issues related to health that I probably agree with.

Alright. And then what about the Trump administration's cuts to the Nationals Institutes of Health and also to universities such as Harvard, Columbia, and Penn with big healthcare systems?

Yeah, so with respect to the NIH, you know, the NIH is, the money is like seed corn. If you look at what you put in and what you get out, I think it's much better. And the proof is in the pudding, because so many discoveries came out of seed corn from NIHI think. So it's a mistake, I believe, to cut the NIH budget significantly. Obviously, there are efficiencies that you can gain, but that takes a scalpel, not a sledgehammer. And maybe you change the administration a little about that. With respect to what's happened at other universities, again, you know, I'm not a politician, and my own perspective is these are complicated issues that relate to the economics, to healthcare, and maybe the politics should be separated from those funding decisions.

Do we have enough doctors in the United States?

We're gonna need doctors and specialists, so primary care doctors and specialists. And that's really important. And for us, one of the things we did to accelerate that was a three year MD. So we have a three year MD program, which has worked. We've had it for 10 years, and we have excellent results.

Right, and what about your successor? I understand you found one. He's gonna be filling your big shoes. How do you feel about that?

I'm delighted. I think, you know, like in business, succession planning is critical. And we spent a number of years trying to do appropriate succession planning. And I'm proud that we have a successor, and he's gonna be great.

What's so special about New York and urban areas as opposed to having hospitals in rural or suburban areas? What are some of the differences?

Well, I think earlier we talked about the competition. So in New York, if somebody's unhappy with NYU, they could take a cab and go up to Cornell. So there's no monopolistic opportunities here. Whereas in suburban situations and rural situations, you have one hospital, and that's it. And you have one payer, and that's it. So it's a very different environment actually.

Right, and final question, Bob, what are you most proud of in terms of your tenure there and also what are you predicting and what are you looking forward to going forward for NYU Langone Health?

I'm most proud of the fact that I think Ken and I changed the culture of an institution, and we took an institution that was meandering through the woods, and we provided a culture where people could achieve their aspirations and could feel very proud to be associated with a system, a health system that was number one in quality and safety. And I think that was quite an achievement. In terms of the future, I think NYU will continue on its path. I think we've given it a fantastic foundation on which to build. So proud and delighted, frankly.

Dr. Robert Grossman, CEO of NYU Langone Health. Thank you so much for joining us.

Thank you.

This is "At Barron's." I'm Andy Serwer. We'll catch you next time.

How This Massive NYC Health System Changed Its Business Model

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