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In Defense of a Healthcare Slasher

Philip Betbeze, for HealthLeaders Media, February 19, 2010

Listen to Michael Young talk for a little while, in his rapid staccato bursts, and you would be forgiven for thinking he leaves a little something to be desired in the "heart" department—and I'm not talking about bypasses or stents. But the CEO of Atlanta's Grady Health System is a man on a mission, and that mission is keeping the city's safety net institution from falling irrevocably into ruin.

He makes no apologies for the tough choices he's had to make over the past 20 months.

"Since we didn't have any money, getting money was our primordial focus," he says. So he looked at payroll and purchasing as two areas that could offer quick rewards. Grady faced a common problem among big safety net institutions in that its public perception was even worse than the very real and terminal financial problems it faced.

"The hospital was so bad no one wanted to work here," he says, while adding—all in the same breath—that given the right resources, his team was able to recruit 450 nurses in 12 months.

That allowed them to start with big costs first: As part of the nurses initiative, Young's team went after the $18 million Grady spent annually on "agency spend," services that provide temporary nurses, ultimately cutting it to $2 million. Agency nurses cost at least twice as much, hour to hour, than hiring nurses to work for you full-time—to say nothing of the inefficiencies—and patient safety issues—that are more likely to result from using nurses unfamiliar with the institution or its physicians.

Undercompensated by main payers Medicare and Medicaid, and neglected by elected politicians who seem to think big-city hospitals should perform double-duty as jobs warehouses, many safety net hospitals have become too far gone to save over the past 20 years or so. But Grady's not there yet. So Young has gone crazy. His team has partnered with IMS' S3 Management and Consulting Group to streamline the flow of instruments between the central sterile processing department and operating room, while dramatically improving communication between the two areas.

He's also gone so far as to install a modern Kronos labor management system that allows employees to clock in only by fingerprint.

"Mysteriously our overtime dropped," he says, quickly switching subjects, as is his wont. "The question I ask is would my mother come here as a patient? I know I'd come here now, and we just changed health plans so our employees are incentivized to come here."

You've seen teams hire nearly entire coaching staffs in football. In a football-mad state, that's just what's happened at Grady. Young brought his chief financial officer and chief information officer (who will permanently remove Grady from paper processes with an EMR implementation beginning a year from now) with him from Buffalo in a package deal. The big problems at Grady allowed him to take big risks.

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