Scrub In Podcast | Piedmont Healthcare: Stabilizing Anesthesiology at Scale

0:13 The opportunities at Piedmont that directed us and connected us with Surgical Directions was an evolving and

0:19 changing anesthesia landscape. We have a very large system

0:26 About 17 acute care hospitals and we had nine different anesthesia provider groups

0:32 supporting our hospitals from an employee group to community groups to groups that are now national sized groups

0:39 that are primarily private equity backed. And over the last few years, we saw that

0:45 our hospitals that were covered by groups that were primarily backed by

0:51 private equity were in a position where they were being asked to pay more and

0:56 more for services and those services were not performing at the

1:03 level that we expected in many cases or in some cases. But also, the threat of

1:11 disruption to our surgical services footprint by contract negotiation,

1:16 potential threats of termination of our contracts really forced us as a system

1:22 to ask ourselves, well, why aren’t we doing this ourselves, in order to

1:28 minimize the potential impact of one of our key profitable service lines and also to ensure that we have

1:34 procedural and operational continuity throughout the system. So, we were able to connect with Surgical Directions’

1:41 great expertise in the space and we early on knew it was people

1:47 that we should work with and we engaged, what now Jason, maybe about two years or

1:53 so ago. About two years. Yep. Yeah. Yeah. This winter. Yeah. And Steve and you

1:59 know I thought and you said it so well but really your main question that you

2:04 had in the leadership there at Piedmont was you know there are some gaps

2:10 in our anesthetic service. A lot of questions about value. We have escalating cost and we don’t feel like

2:17 we’re getting the value from that service. Bottlenecking of procedural care multiple of your

2:23 centers. And then really, I think a big part of the project was not only those questions and validations of is

2:31 employment right for us but also doing a high-level inventory and gap analysis of

2:36 some of your other practices as well whether it be a national vendor or a small local community and then comparing

2:43 and contrast that with some employed services you already have. I agree 100% and I think too with that is how we

2:50 brought operational performance of our hospitals into the equation as well

2:56 because our cost of anesthesia may have also been increasing due to or

3:01 performance or opportunities to improve the performance of our operational services. We always said

3:08 from day one Jason that you can’t optimize anesthesia without optimized

3:14 operations. So, how do we bring the two together? Right? And I think a big part of our work early on when we had this question

3:20 of what would the financials and care of our patients look like if we were to transition to other services was a big

3:27 part of that. Taking into account your surgical volume at various places. Communicating you and other leadership

3:33 where you were, you know, where was normal, what was below normal, what was, you know, doing very well in that

3:40 space. I think another big part that we looked at early on was some of the variable contracts you had and you had

3:46 different vendors, but even with employed sites, there were contracts and some legacy contracts that we found

3:53 um some opportunities for um financial and alignment improvement with the

3:59 providers in those groups. Yeah, I think you’re completely correct. I mean, if you think about it, even on our employed side, those sites became

4:06 employed out of necessity. Either the groups were unstable or we acquired an employee group through merger or

4:12 acquisition and there was no consistent process for how do we pay positions, how

4:18 do we pay anesthetist and what are the expected needs from a coverage model

4:24 perspective. It was piecemeal and we were working closely together to standardize as much as we could across

4:30 the system. Right. I mean, I know one location early on, the physicians and the

4:36 providers practicing there, you know, they really weren’t giving you the value as far as what their call schedule

4:42 was. And, you know, looking back at the contract, talking with you all about best practice, amending some of that was

4:49 really something I thought was important early on to look at the locum’s, cost mitigation strategy that you all had.

4:55 And you know, finding out and doing that initial inventory of where you stood at all of your practices, I think was a

5:01 really key first component of this to see where you wanted to go after several

5:06 months of looking at this. What is the strategy, goals, and tactics we’re going to use to get there. Very much so.

5:11 Yeah. Looking back in almost two years ago, you know, we kind of sorted it as to

5:17 where were the best opportunities to improve patient care and financial situations, right? So, first and

5:25 foremost, it was a long hard look at the vendor-backed staffing

5:30 companies, that were involved in some of their larger hospitals.

5:35 Looking at where the options would be to part ways with that group, what would it look like on the other side,

5:42 what would other vendors or employment look like, and doing a lot of the dirty work there to find out what that

5:48 situation actually looked like in reality. I think another big part

5:54 that we looked at early like we just spoke about was a lot of the contracting. But I think one big

6:00 thing also was trying to bring in and some of the early work we did for

6:06 standardizing some of the ways that anesthesia’s practice within Piedmont.

6:11 There were a lot of silos and everybody was speaking the same language but it was a little bit of the different

6:18 dialect. How PTO was done, how schedules were done, how we do staffing

6:23 ratios, what is the scope of practice for CRNAs, and while we worked on the

6:28 immediate need of making sure that they had the best relationship with a vendor or employment, we started working in

6:35 some of those things about a larger picture, a longer strategy as far as aligning anesthesia services with best

6:42 practice and procedural care operations. Yeah, Jason, I don’t disagree. I think

6:48 too what we did is we had to become educators. The hospital operators themselves

6:55 really you know were running operations but they didn’t understand the role anesthesia can play in that the cost of

7:03 what is the cost to run an OR, what’s the cost to run an OR if you’re

7:08 only utilizing it 50% or 40% how we need to bring in it’s not just

7:15 an OR issue it’s a procedural issue it’s anywhere in the hospital that is supported by anesthesia and the roles

7:22 that they can play, the type of care models they were demanding when, hey, you don’t really need a physician for

7:27 this piece. It probably would be better to use an anesthetist in this area. So,

7:32 looking at that was incredible, but also as we were trying to figure out options, you know, we went through kind of a

7:38 prisoner’s dilemma process, you know, everything. Is there a way to change the relationship with the current vendor to

7:45 be more aligned with the facility or the systems needs? Is there a different partner out there

7:50 that we could bring in and actually look at maybe creating a joint venture model? We talked to one or two companies out

7:56 there. And three, what is it? Do we really understand what it means to take on an

8:01 employed model? When we talk about an employed model, we’re talking about possibly building a group of 600

8:06 providers, right? And that’s a that would make us one of the largest anesthesia groups in the US.

8:13 And are we able to do that? So that was the more long-term vision. You know, do

8:18 we need to take interim steps through A, B, and C to get to that or do we just I

8:24 think we had a very open direct conversation about do we just go ahead

8:29 and pull the band-aid off now and just do it, which is what we ended up doing. Yeah. And I think along that path, we

8:36 also talked a little about MSO or managed services, you know, options there. And you know are there groups

8:43 out there that could help us manage because one big part of this was leadership and organizational structure

8:50 and making sure the infrastructure was there to carry this out successfully. You know what are we going to do about chiefs

8:56 here right? What are we going to do for scheduling? What are we going to do with payroll? What you know all these

9:02 things to make sure we had everything lined that we eventually were able to say Steve Piedmont I think we can pull

9:08 this off successfully. And those were just again it was two years of work wrapped up into this short podcast. But

9:15 those were big parts. I think leadership and finding the right leadership was also really key for the

9:21 long-term sustainability of this and thankfully you guys found one. You know it’s proving to be pretty

9:27 challenging out there in the world of anesthesia. And then you know the other thing that

9:33 came to mind was the revenue cycle. You know, I think that was a big factor in, you know, bringing that in house, maybe

9:39 finding the right partner. What is that improved performance of, you know, revenue cycle and how can that offset

9:45 some of the costs that we may incur for this um transition? Yeah, that tied in part of the

9:50 standardization as well. We had three different r anesthesia revenue cycle companies covering a small footprint and

9:58 how do we consolidate down to one or two in order to drive revenue cycle

10:03 performance and which has been fairly dramatic for us in many ways in terms of the better performance uh goals that

10:11 we have met. So I just want to chime in. I think another thing came to mind that was really crucial to the success we had,

10:17 especially with the three um sites that were run by a large national vendor. Um

10:22 Steve and Piedmont, you all made a huge investment um for some of the legal

10:27 restrictive covenants to allow those providers to stay at Piedmont, which was from the start one of the most important

10:34 things you all wanted and pointed out. Yes. a retention strategy to make sure

10:39 that that investment wasn’t wasted was a huge part of the work we did and ultimately I believe one of the most

10:46 important things to the success of this transition and frankly for how Piedmont

10:51 is perceived in the market you know there aren’t not everybody decides to pay out these restrictive covenants

10:58 really and retain in an aggressive manner uh the providers that are there

11:03 that have been caring for their community have been at their hospitals and know the administration that know the surgeons. Um, and that was a

11:10 really big piece of this and the success that followed. Well, we were able to retain 98% of the

11:16 providers, which was it’s really unheard of when you’re going through these transitions. So, Right. Right. And that was with

11:25 salaries and compensation packages that were um that were at market rates. I

11:30 mean, we did a lot of work to make sure that the compensation packages were appropriate and would be able to not

11:36 only retain but recruit. And I think it’s a real testament of the fact that, you know, the culture that was there and

11:42 within Piedmont is a big factor in keeping people in their seats in this really dynamic um anesthesia world right

11:49 now. I was going to just say that I it wasn’t the money. No, that but it was people wanted to remain

11:56 in the culture that has been developed and we just we didn’t want that to change either. So it was a big

12:02 investment but at the end of the day we’re going to save

12:07 save a fortune because again we retained 98% and the

12:12 cost to replace 50% would have far exceeded what we had to pay for those

12:18 providers to be able to stay here. Yeah, we did have a concern about safety. If we had to bring in

12:25 50 60% of the workforce as contractor locum that always introduces a risk to

12:33 the environment. It’s a new environment. You create more holes in the Swiss cheese where things could reach where

12:40 harm could reach the patient. We have a very high quality anesthesia team across

12:46 all of our hospitals and the ones that we just transitioned over

12:52 were our top performers in the country in terms of anesthesia quality and safety. So yeah, we did have a concern

12:59 that if we didn’t retain as many as we could, we could have introduced a

13:06 an opportunity for harm to reach the patient. And so that that did factor into our decision.

13:11 I think the calculus in that decision has changed a little bit over the last maybe five or six years. Um you know the

13:19 locum’s pool is different now than it was 5 years ago. And you know one of the

13:24 um calculations we had done when we were figuring this out is attrition and locums replacement rates and where are

13:31 those thresholds? What does it look like? What does the cost look like? What does it mean to patient care? So those were all very thoughtful factors that we

13:38 weighed in and talked to Steve and the rest of Piedmont leadership. Um and then we also had a plan if there was a

13:45 fair amount of locums, how they were going to be vetted, how you know what companies were going to serve us uh the

13:51 best way um and other factors like onboarding that were trying to make sure

13:57 that we ensure um great patient care. And I would put on top of that that was

14:03 one of the reasons we have had a business reason and a quality and safety reason to create our own internal 1099

14:10 locum’s company. If someone wanted felt they needed to leave because of X Y or Z

14:16 well here’s an opportunity for you to stay part of our team through a 1099 relationship so you don’t have to go out

14:23 to a local company or go to another company. Um, we want to provide opportunities for our prov wanted to

14:29 provide opportunities for our providers to know that we want them here. This is their home and we made we put various

14:37 options on the table to allow them to do that. Yeah. And I think that was really smart.

14:43 I mean, the anesthesia market right now we’re seeing everywhere, not just in the metro Atlanta and Georgia market, is a

14:50 big want for 1099. Most people are going that locums route and you know Piedmont

14:55 and Steve and the rest of the leadership set up a viable um offshoot that would

15:01 allow people to be 1099s and still uh be there for Piedmont providing for their patients.

15:07

One of the things we did once it became public and we could speak, we approached it with as much transparency

15:13 as possible. Um, we set up town halls. We set up opportunities for our leaders

15:20 to be out in the hospitals and answer questions real time. We didn’t we didn’t

15:26 want them to hear, hey, we’re making this change, and then they don’t know what their future is. So we invested

15:32 hundreds of hours to ensure that we had an opportunity to meet them face to face

15:38 for us to be able to look into our eyes and see that we were 100%

15:44 committed to this transition and to them and that we wanted them to be part of this family and part of this program. Uh

15:51 so transparency I would say was a big factor. you know,

15:56 emails pro emails going out for me and others to ensure that they understood where we were throughout the process and

16:04 really listening to them and following up with they had a question, we made sure that if we didn’t have the

16:11 answer then they got an answer within a timely period of time. So, just the

16:16 transparency piece was key to this as well. Well, I’m gonna pile on there, Stephen.

16:22 I’m not going to say it just because you’re on the line with us, but um I’ve got to say um the senior leadership at

16:29 Piedmont being as involved in this as you all were was really another key to success. And I think it shows in that

16:35 98% retention rate that you had. I mean, I remember being um the spring or the

16:42 winter of last year and we were at one of your largest facility at 6:30 a.m. in

16:48 front of a bunch of anesthesia providers just to sit there and talk and answer questions. You know, one of the biggest

16:54 mistakes I think organizations make when they’re considering or doing these transitions is that lack of transparency

17:00 and lack of communication plan because the rumor mill spins up really quick and

17:05 before you know it, there’s a lot of um false narratives that are going around that are causing people to look for other opportunities and they just didn’t

17:12 do that there. They probably looked, but um kept them in the loop. There wasn’t a

17:17 lot of negativity. Um someone was always available. you had weekly updates that

17:22 were being read. Um, you had leaders that you identified that you could speak to and hear from the group,

17:28 understand what’s going on, and it was addressed quickly, which I think was superb.

17:33 And that’s not saying we didn’t have naysayers. And so, you’re always going to have that 10%. And so, we really

17:41 aggressively manage that 10% as well. and to make sure we put the energy into

17:47 that 10% to show them that we wanted them to be part of this as well. We

17:52 lost a few people but you know at the end of the day that may not have been a

17:57 bad thing but we were able to you know just again to retain 98% was

18:04 incredible. Well, you know I tell a lot of clients retention of 100% not isn’t necessarily

18:11 a good thing. Yeah. Exactly. um from a from a business standpoint, it means you’re probably overpromising um something in that

18:18 compensation package. Yeah. So, we’re going through two phases. Um one with some of the providers that came

18:25 over, we assumed their existing contract and it was assigned to us and so we’re

18:30 now finishing a process to convert everybody to Piedmont paper and our standardized compensation model that

18:37 we’re now utilizing across all of our employed sites. So part of the tangible is um is just around that we have a

18:46 better way of measuring performance tying dollars to the work effort. Um you

18:52 know the comp may have gone up a little but at the end of the day it’s saving us money uh in terms of the way

18:58 uh it was being managed before. uh some things that we found in certain situations that all right that’s a that

19:07 we’re paying for we’re paying people for services possibly not being provided and so we’ve been able to eliminate some of

19:14 the waste there uh I think too as we’ve now are more

19:19 stabilized we’re able to sell a two future or potential uh employee I don’t

19:27 even like to call them employees anesthesia partners Um, hey uh with this you can come

19:35 in and have a career. If you want to come in early in your career and work in a very advanced hospital, we have that

19:43 for you. As you move further in your life cycle and now you have a family and kids and want to move out to a rural

19:50 area, we have or an urban area. We have hospitals there that match your

19:55 lifestyle. We have ASC’s. And so now we have something to really re recruit into

20:01 that will allow us to move away from the locums uh the number of locums that

20:08 we have in the system or contracting providers we have in the system. So we

20:13 we are starting to see some of that change where contract people who were contract to us are now migrating to

20:20 either our 10 1099 program or coming back to us as W2s. So the savings

20:27 opportunity associated with that is very dramatic when you look at the scale and size of our system. And I think what’s

20:33 also happening is that other groups that are in the market

20:39 that support our hospitals are seeing what is occurring and they’re hearing

20:46 positive things uh from our from the providers who have gone through this. And so we now have groups that,

20:53 you know, may be a little unstable in their market, maybe they’re smaller

20:58 groups or whatever, who are reaching out to us and saying, “Hey, we’d rather be part of you versus selling to another

21:04 national firm or something along that line. So we’re seeing a lot of positive

21:09 in indicators. It’s still fairly early for us. I mean, we made this transition May one. So there’s been a lot that has

21:16 occurred between May one and now. and we’re about to bring on another hospital in on November one and we got two others

21:23 lined up. So that’s some of the positive outcome that we’re seeing by

21:28 offering the providers uh in our hospitals a a stable

21:37 consistent program to join where they don’t have to wonder, hey, are we going to have our

21:43 contract with the hospital renewed this contract term? Are they going to go out to market? are they going to try to

21:48 bring someone else in? There’s a lot of positivity and that’s associated with

21:54 what we have done. Yeah, I completely agree with that. I just wanted to go in a slightly different direction that I’ve seen over

22:00 the last few months um that maybe isn’t as quantifiable. Um but there’s a qualitative component to it. Having

22:07 anesthesia under a large portion of anesthesia under employment especially at your larger hospitals. Getting that

22:14 data, understanding the hows, whys, whens,  of anesthesia, why the costs are x,

22:19 y, and z. what can we do to um bend that curve a little bit and understanding

22:25 then going to those hospitals and explaining to them and kind of teaching them kind of going back to what you were

22:31 saying earlier Steve you know allowing that anesthesia service to almost be a

22:37 um a reason to engage some of the hospitals and leaders in understanding

22:43 how they can run the OS a little better. I think those are conversations that’s stemming a little bit out of this that

22:48 is also going to have a large impact very much so and that’s part of what we said about the educational piece and

22:55 making sure they understand how the entire book of business works and how they are relying on one another.

23:03 Um go ahead. I say the other thing too when we look at the value proposition and I

23:10 touched on it a little earlier, we probably focus more on stabilization

23:16 versus cost reduction. Um, and when you look at if you have an

23:22 unstable anesthesia network or provider group or it’s going to end up costing

23:28 you a heck of a lot more. Are you having to close ORs? Are you being forced to

23:33 reduce services if you know if someone were to just say we’re no longer working

23:38 in your hospital, we’re terminating your contract. I mean that’s 50 some

23:44

percent of your hospital’s revenue that it completely gets disrupted. So we’ve focused on stability first, optimization

23:52 second and this is all within the whole at the whole context of we wanted to

23:59 create a great work environment that people wanted to be part of and want to be part of a culture stabilization

24:05 opportunities for efficiency which will then drive the cost equation and then

24:11 just the opportunity for growth and development and how do we how do we

24:16 bring people in grow them and give them an opportunity to really have a very complex career with all types of

24:25 anesthesia sites and services that they could participate in from very large complex transplant hospitals all the way

24:31 down to ASC’s. Yeah, it’s kind of a if you build it, they will come scenario, right? I mean,

24:37 you know, and as you said that, you know, I don’t know what the latest numbers are, but I believe the cost of

24:42 locums and premium pay has been slightly decreasing as we’ve gone through this. And I think it’s just a reflection of

24:49 um the culture of place people want to work and you know, transparency and leadership that we talked about.

24:55 I mean, before it was primarily through a middleman, you know, now it’s direct.

25:01 And I think that’s one of the things that the providers were shocked about when we were able to start talking

25:08 to them in in person that, you know, they didn’t realize that,

25:13 well, you what do you mean no one told you we were needing X, Y, and Z or no

25:19 one told you about our issues or concerns here? Um it was our

25:24 relationship was through a middle person you know basically whoever ran

25:30 the various groups that have become part of Piedmont and so the frontline providers were assuming that we weren’t

25:37 just listening and many times they’ve realized no one was telling us and I

25:43 think that has helped dramatically. I mean they I get emails directly. I mean I open up here’s my email address

25:49 Feels like most of them have my phone number based on the number of phone calls and text messages I received

25:55 too. So but that’s part of it. That’s part of the transparency and you know being giving them giving them the

26:02 ability to know that people are listening. Yeah. And I think it got even a little more granular and I don’t want to get

26:08 too many details about or specifics, but you know, there were stipends that were approved by Piedmont that never got or

26:16 potentially didn’t get passed down to some of the providers. And um I think those were some instances where

26:22 there was some trust uh that was lacking and some miscommunication I think was um

26:29 alleviated uh through the transition to employment. And again, we’re not talking about any

26:36 one group out there. We’ve got many groups that have come into Piedmont. Uh,

26:41 and so, but there are some commonalities in all those groups and that was a gap,

26:48 a perception that we were just not listening. And we’ve been able to, I

26:54 think, eliminate most of that thought. Again, not everybody is a is 100% uh

27:02 on board yet with I think there’s still an area of all right, this is nice.

27:07 And before you get all my trust, I need to see a few more months of this. It was an absolutely wonderful client to

27:14 work with. Leadership was fantastic and like I said before, it was a huge key to

27:19 the success and this frankly very risk heavy um decision that was made.

27:27 Yeah. Um, and again, I think it is what I’d say is if you’re contemplating doing

27:33 it, um, it can be done, it can be done successfully. It’s scary to jump into

27:40 it because of the potential disruption, but I don’t think the anesthesia market

27:46 as is going to get any better. So I find it and we found it much better to say

27:52 we’re in control of it and we’re controlling our destiny versus third parties controlling our destiny. I

27:59 think too Jason I’d like your thoughts briefly on this as well is what really also made it successful is this was

28:07 something that was supported from the board level of this company all the way down. uh our CEO uh Kevin Brown uh the

28:15 executive vice president for the system who over who was my partner and who I reported to with this Michael Mandal

28:22 once we said do it they threw all the resources to make sure it was successful so um it had to be done as a system and

28:31 the fact that the board the CEO the executive vice president were completely

28:36 behind it and once we said we’re doing it we’re doing it made it much more

28:41 seamless and um I don’t think we would have been successful if we didn’t have that level of support throughout the top

28:48 levels of the organization. I completely agree. I knew we’d be successful when uh early on we asked

28:55 about goals and it was you and some of the other leaders from there and you know you made your goals very clear and

29:00 made it clear that it was supported from high levels within Piedmont and I knew that um with the transparency

29:08 the uh goals being um agreed upon that you know we could do this successfully

29:14 with their support and I for me it really came out when the board and Kevin Brown the CEO we had

29:19 what was called a plan on the page which is our strategic priority for the next year. Anesthesia was listed as the

29:27 number one strategic priority for the system to ensure its success and to ensure that we were stabilizing

29:32 anesthesia. So that rallied the whole system around making it successful as well.

29:39 And to be honest with you, in order to make these things successful, there has to be the ability to um pivot um you

29:47 know, change course at times, take different tactics, and at all time and in no time during this um engagement did

29:55 I ever feel as though there weren’t um ears to be receptive to some of the

30:00 concerns we had as a consulting company or you had on your end that weren’t listened to and reacted to fairly

30:06 quickly. Um and that was also a huge factor in the success.