The writer, a Los Angeles freelancer, is a former Detroit News business reporter who blogs at Starkman Approved.
By Eric Starkman
Beaumont Health COO Carolyn Wilson is best likened to the proverbial child who killed his parents and then pleaded for mercy because he was an orphan.
“Given the nature of the COVID-19 disease, anesthesia providers currently play a more crucial role in the delivery of healthcare to the community than ever before,” Wilson said in a sworn Aug. 5 court affidavit. “It would be disruptive to Beaumont’s operations if all of the anesthesiologists who have developed relationships with Beaumont’s surgeons and other medical staff simultaneously could no longer work at Beaumont.”
Wilson's dire warning stems from her June decision to award NorthStar Anesthesia, a low-cost outsourcing firm, with a contract to staff and manage anesthesiology procedures at Beaumont’s southern hospitals in Dearborn, Wayne, Taylor and Trenton, replacing Anesthesia Associates of Ann Arbor (A4), whose contract expires next Wednesday.
Washtenaw County Circuit Judge Archie Brown earlier this month issued a temporary injunction blocking NorthStar from poaching A4's doctors working at Beaumont southern hospitals. A4 argued that its anesthesiologists had signed noncompete agreements preventing them from joining NorthStar to work at Beaumont and maintained the company would suffer irreparable harm if NorthStar was allowed to lure its doctors away.
Admittedly, there was bad blood between Wilson and A4. Court filings show that A4 tried terminating its Beaumont contract several months early because servicing the southern hospitals was unprofitable. Rather than try to resolve A4’s issues, Wilson obtained an injunction forcing the company to complete nearly the entire duration of its original contract.
When A4’s contract came up for renewal, Wilson put out a request for proposals. In awarding NorthStar a contract to service Beaumont’s southern hospitals, she knew it was likely the company would have to poach A4’s doctors if it was going to hire the 25 anesthesiologists required within a two month time frame. Wilson knew about A4’s noncompete agreements and the probability it would seek to enforce them. She took this risk in the midst of the coronavirus pandemic, when by Wilson’s own admission anesthesiologists are critical in the care of Covid patients.
“Anesthesiologists provide coverage for trauma services and surgical cases that are emergent/urgent, including many COVID-19 patients requiring surgical care; intervene with life saving measures such as intubating patients; prevent, treat, and manage post-operative pain prior to discharge; and oversee Certified Registered Nurse Anesthetists ("CRNAs")," Wilson said in her affidavit.
For now, Wilson’s gamble has possibly paid off.
On Monday, judge Brown lifted his temporary injunction, clearing the way for NorthStar to poach A4’s doctors to help service its Beaumont contract when it begins on Thursday.
“The anesthesia services for these (southern) hospitals are fully staffed for August 20 and beyond,” Beaumont spokesman Mark Geary said in an email. In a follow up email, Geary said “many” of the anesthesiologists that NorthStar will employ are from A4.
Geary’s claim about hiring “many” A4 anesthesiologists was news to A4 CEO Gregory Bock, a veteran Detroit-area hospital executive who previously was COO of what is now Beaumont Dearborn. Bock said that A4’s doctors are required to give considerable resignation notice and to date only two have done so.
Regardless of how many A4 doctors Beaumont has hired, it’s far from certain they can permanently continue working at Beaumont’s southern hospitals. A4 is expected to appeal Brown’s decision and aggressively pursue other legal means to enforce its noncompete agreements. A4 is backed by deep pocketed Prospect Hill Growth Partners, a Boston-based private equity firm.
A bigger battle is looming over NorthStar’s attempts to poach the more than 70 anesthesiologists serving Beaumont’s more prestigious Royal Oak, Troy, and Grosse Pointe hospitals in the north. Those anesthesiologists work for North American Partners in Anesthesia (NAPA), which also claims its doctors have noncompete clauses preventing them from joining NorthStar and continuing to work at Beaumont. NAPA, which is backed by New York-based private equity firm American Securities, has filed for an injunction preventing NorthStar from poaching its Beaumont doctors.
NorthStar is slated to take over NAPA’s Beaumont contract Jan. 1, but already the company’s hiring has sparked the departure of more than six prominent surgeons and specialists who are fed up with Wilson’s cost cutting moves that many say harm patient care.
Declaring 'No Confidence'
Dissatisfaction among Beaumont employees with Wilson, CEO John Fox, and top management lieutenants is so widespread that doctors weeks ago began circulating a petition declaring “no confidence” in Fox and chief medical officer David Wood Jr.
At Beaumont’s prestigious northern hospitals, a physician anesthesiologist directs the critical portions of putting a patient under for surgery, including determining the appropriate drug cocktails. Once a patient is considered stable, a CRNA is responsible for monitoring vital signs and making appropriate adjustments.
Many CRNAs will tell you that they don’t need supervision. They have advanced training which is underscored by the lucrative salaries they command. The median salary for a Michigan CRNA is $187,000. However, if a serious complication arises during surgeries at Beaumont, an anesthesiologist is called to address the issue.
Typically, at Beaumont, one anesthesiologist oversees two to three operating rooms at a time.
Beaumont employs its own CRNAs, but Wilson said it’s an industry “best practice” to have anesthesiologists and CRNAs working for a single company. A4 and NAPA both agreed to hire Beaumont’s CRNAs but refused to agree to less oversight over them or handle more procedures than Beaumont historically has allowed.
NorthStar was able to undercut NAPA and A4 because it places a heavier reliance on lower cost CRNAs. NorthStar doesn’t require CRNA’s to have the same level of supervision that’s been the practice at Beaumont. It also allows CRNAs to perform epidurals, nerve blocks and other procedures which they are trained to do but are mostly handled by physician anesthesiologists at Beaumont.
NorthStar, which was founded by a private equity firm, has the financial wherewithal to legally take A4 and NAPA on. It is controlled by a holding company with offices in the U.S., U.K., and Germany, and was represented at the injunction hearing earlier this week by two lawyers from the Washington powerhouse law firm Williams & Connolly.
NAPA’s Beaumont anesthesiologists are an elite group, as most did their residency training at America’s top hospitals and can easily get hired at the nation’s most prestigious medical centers. While NAPA ultimately might not be able to enforce its noncompete agreements, the company’s anesthesiologists aren’t sticking around to find out.
More than a dozen anesthesiologists have already resigned or given notice. Dozens more are expected to leave before NorthStar takes over Jan. 1.
The real tragedy is that A4’s and NAPA’s doctors are loyal Michiganders whose Beaumont jobs are at risk because private equity firms have cornered the market on providing outsourced anesthesiology services. Wilson knew the risks hiring NorthStar, but yet chose to gamble with the livelihoods of the doctors she needs most.
If all goes according to plan, Wilson won’t have to deal with the potentially adverse fallout. Fox is hoping to merge Beaumont into Chicago-based Advocate Aurora before the end of the year. The deal would likely yield Fox and Wilson lucrative payout packages, despite the extensive damage their leadership has caused to what was until last year was one of the top hospital networks in the country.
Fox and Wilson are likely to return to their respective homes in Atlanta and Minneapolis once the Advocate Aurora merger is completed.
Reach Eric Starkman at firstname.lastname@example.org. Beaumont employees and vendors are encouraged to reach out, with confidentiality assured.
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