The writer, a Los Angeles freelancer, is a former Detroit News business reporter who blogs at Starkman Approved.
By Eric Starkman
If something sounds too good to be true, it probably is, goes the old saying. Carolyn Wilson, Beaumont Health’s COO, might be wishing she adhered to the ancient wisdom.
In a “bet the farm” move, Wilson recently awarded sweetheart contracts to a deep discount outsourcing firm called NorthStar to staff and manage all the anesthesiology services at most of Beaumont’s hospitals. Under the terms of the contracts, NorthStar has until Aug. 20 to find 30 anesthesiologists to staff Beaumont’s four southern area hospitals. It has until Jan. 1 to staff Beaumont’s nationally ranked Royal Oak, Troy and Grosse Pointe campuses with more than 70 anesthesiologists.
It typically takes 90 days to obtain hospital credentials for an anesthesiologist. It’s understood that NorthStar has yet to credential even one anesthesiologist to work at Beaumont. That means if you have surgery scheduled at Beaumont’s Dearborn, Wayne, Taylor and Trenton hospitals Aug. 20 or later, you would be wise to ask your surgeon if it will proceed as planned.
You’d also be wise to ask about the credentials of the medical person putting you under.
As things stand now, it will be someone new on the job. It quite possibly could be a certified registered nurse anesthetist (CRNA) working without the degree of supervision that Beaumont historically has mandated.
Beaumont CEO John Fox has been crying the blues that the Covid pandemic has devastated the hospital network’s finances. Beaumont in April laid off 2,500 employees and eliminated 450 positions despite receiving more than $323 million in federal aid intended to help preserve these jobs. Fox claims about half the laid off employees have been recalled, but Beaumont insiders say they are still very short staffed.
In a WDIV interview Sunday, Fox admitted that Beaumont’s surgery volumes are already at 90 percent capacity, which industry experts say is ideal. Some Beaumont surgeries were cancelled last week because of a shortage of support staff to sterilize equipment. If additional surgeries are cancelled because of a shortage of anesthesiologists, the blame will rest entirely on Fox’s and Wilson’s mismanagement.
Judge's Critical Ruling
NorthStar’s ability to provide Beaumont with more than 100 anesthesiologists in less than six months was widely considered a longshot unless the company could poach the specialists working at Beaumont hospitals. Washtenaw Circuit Court Judge Archie C. Brown quashed that possibility with a temporary restraining order late Monday preventing NorthStar from hiring doctors working at Beaumont’s southern area campuses. The injunction could set a precedent preventing NorthStar from recruiting anesthesiologists at Beaumont’s more prestigious Royal Oak, Troy, and Grosse Pointe hospitals.
A hearing is scheduled Aug. 11 on whether to make Judge Brown’s injunction permanent.
Anesthesiologists at Beaumont’s southern hospitals are under contract with Anesthesia Associates of Ann Arbor (A4) and anesthesiologists at Royal Oak, Troy, and Grosse Pointe hospitals are under contract with Long Island-based North American Partners in Anesthesia (NAPA).
A4’s and NAPA’s contracts prevent their anesthesiologists from working at any health care facility within a 15-mile radius of a Beaumont hospital. A4 and NAPA are backed by deep-pocketed private equity firms with the financial wherewithal to enforce the non-competes, which Wilson and her boss, CEO John Fox, were well aware of when the NorthStar deals were signed.
NorthStar, which more than a dozen student doctors refer to as “Deathstar” on an industry message board, reputationally is known as a deep-discount outsourcing provider. The company can outbid many competitors because it leverages CRNAs to provide more extensive services with less anesthesiologist supervision.
Gregory Bock, CEO of A4, said that his firm lost out to NorthStar because Wilson “prioritizes cost over patient care.” He said A4 wasn’t prepared to leverage CRNAs to the same degree as NorthStar because “we believe in putting the priority on patient care.”
Wilson earned more than $2 million in annual compensation prior to the pandemic.
Despite the non competes, NorthStar has been aggressively trying to recruit A4’s and NAPA’s Beaumont doctors, even managing to land a few with promises of indemnification and signing bonuses of $130,000 per physician.
NorthStar inducing A4 and NAPA doctors to breach their noncompete agreements appears to have Fox’s blessings. On a Zoom call with Royal Oak doctors last week, Fox said he hoped that NAPA’s anesthesiologists would join NorthStar knowing it would be a breach of their contracts.
On the same call, Fox touted that NorthStar wasn’t requiring its anesthesiologists to sign restrictive non competes. Yet Beaumont is requiring some of its doctors to sign non competes that are considerably more restrictive than is common in the medical field.
Fox, who earned nearly $6 million in compensation prior to the pandemic, and Wilson are extremely unpopular among the medical and support staff. A petition circulating among Beaumont doctors declares “no confidence” in Fox and medical director David Wood Jr.
My understanding is that Beaumont’s board held an emergency meeting Monday night, but details couldn’t be learned. Mark Geary, Beaumont’s spokesman, declined to comment except to send me a link to a published story about Judge Brown’s decision.
Separately, U.S. News and World Report Tuesday released its hospital rankings. Beaumont again had 19 nationally ranked adult specialties. Advocate Aurora, which Fox wants to merge Beaumont into, had two nationally ranked specialties. A year ago, Advocate Aurora had none.
The cutoff for U.S. News’ rankings isn’t clear. Beaumont late last year lost two nationally renowned cardiac surgeons; two other prominent surgeons are planning on leaving and dozens of Beaumont specialists are known to be actively negotiating to join rival hospitals or planning to perform their procedures at area ambulatory surgical centers.
For many of Beaumont’s top surgeons, whose dissatisfaction with Beaumont’s management has been building for years, the final straw was Wilson’s decision to award NorthStar with a contract resulting in the displacement of elite anesthesiologists, the majority of whom have advanced fellowship training.
Beaumont’s anesthesiologists are from Michigan or have strong ties to the area. Fox and Wilson are expected to leave Beaumont if and when its merged with Advocate Aurora and return to their respective homes in Atlanta and Minneapolis.
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