The columnist, a Los Angeles freelancer, is a former Detroit News business reporter who blogs at Starkman Approved.
By Eric Starkman
Adam Spiegel, CEO of the controversial outsourcing firm linked to the recent colonoscopy patient death at Beaumont Royal Oak, is fast learning that payback’s a bitch – especially when dished out by the hospital’s tough-as-nails nurse anesthetists.
Spiegel last summer thought he hit pay dirt when his low-cost NorthStar outfit landed a contract to handle all the anesthesia procedures at Beaumont Health’s flagship Royal Oak hospital, as well as its facilities in Troy and Grosse Pointe, beginning January 1. Beaumont Royal Oak is one of the busiest hospitals in the country, performing well over 200 surgeries a day.
The outsourcing deal, negotiated and touted on Beaumont’s end by COO Carolyn Wilson, gave Spiegel the right to hire the 200 or so certified registered nurse anesthetists (CRNAs) already working at Beaumont. Spiegel made the CRNAs a “take-it-or-leave it” offer, letting them know he was prepared to replace all of them if they didn’t sign contracts by his mandated deadline.
The CRNAs seemed to cave to Spiegel’s threat when most of them signed on at the 11th hour. Turns out, they played Spiegel like a three-string fiddle.
On Jan. 4, the first business day of 2021, more than 90 percent of the CRNAs at Beaumont Royal Oak, Troy, and Grosse Pointe signed union petition cards with the NLRB, signaling they supported the formation of an independent union called Southeast Michigan CRNAs & Associates, or SEMCA. Ballots to certify the union were mailed last week and will be counted on March 29.
If the CRNAs get one affirmative vote in excess of 50 percent, Spiegel will have a formidable union on his hands – one that almost certainly will derail NorthStar’s business model placing profits ahead of quality medical talent and patient care.
A successful union drive could also throw a wrench in Beaumont CEO John Fox’s possible interest in unloading the hospital network and likely allowing him to pocket millions before he returns to his luxury homes in Atlanta and North Carolina. Despite the pandemic, Fox still managed to gussy up Beaumont’s financials, virtually maintaining the hospital’s ambitious four percent operating profit margins and increasing the reserves of the “nonprofit” to $3.5 billion.
Although Beaumont CRNAs are NorthStar employees, even the whiff of a nurses union presence at the hospital could turn off potential buyers or cause them to demand less generous terms. A CRNA union could also rekindle Beaumont Royal Oak nurses’ previously unsuccessful attempts at union organization.
Nurses with union representation are paid 20 percent higher than nurses in non-union facilities, according to Registered Nursing.org, an industry website. That’s why Fox spent $1.8 million on union busting firms to prevent nurses at Royal Oak from organizing. The NLRB last year charged Beaumont with violating labor laws in more than 30 instances. The charges have since been settled.
The good news for southeastern Michigan residents is that if the Beaumont CRNAs are successful unionizing, it could staunch Beaumont’s declining standards of patient care. Studies show that patient outcomes improve when hospital workers unionize and negotiate better working conditions. Michigan Medicine, University of Michigan’s teaching hospital, has a unionized nursing staff and the hospital is ranked by U.S. News & World Report as the 11th best in the country.
There’s growing evidence that healthcare companies like NorthStar that are controlled by holding or private equity firms have poorer outcomes. A working paper just released by the National Bureau of Economic Research revealed that when private equity firms acquire nursing homes, patients start to die more often.
Bloomberg in May published an article entitled, “How Private Equity is Ruining American Health Care,” that highlighted the dangers of Wall Street muscling its way into patient care.
The death of Richard Curbelo, a 51-year-old who died in January at Beaumont Royal Oak from complications relating to anesthesia intubation while undergoing a routine colonoscopy, happened within three weeks of NorthStar taking over at the hospital. Anesthesia experts question why Curbelo was even intubated for a colonoscopy and speculate the complications should have been easily manageable.
Another patient in her twenties ended up in the ICU weeks ago after being given several times the recommended dose of lidocaine. Both incidents involved anesthesiologists and CRNAs visiting from other hospitals, a situation that wouldn’t have been allowed at Beaumont before NorthStar took over.
Not surprisingly, Spiegel, who holds an MBA from Wharton, is running scared. On Friday he sent an email to Beaumont CRNAs saying he previously wasn’t aware of their “historic challenges” and begging them to wait a year before deciding to unionize.
“We could have handled the transition better,” Spiegel admitted. “For that, I apologize.”
What’s driving the CRNAs’ union drive is a concern for patient care and the lack of trust and respect they have for NorthStar’s management and its business practices. NorthStar regards anesthesiologists and CRNAs as medical widgets and is said to have little regard or appreciation for credentials, talent, and experience. The company is pejoratively known as “Death Star” in anesthesia circles because of the perception that it only adheres to minimum requirements and standards. NorthStar insists the perception is inaccurate.
NorthStar’s game plan for Royal Oak, Troy, and Grosse Pointe – the so-called northern hospitals – was to hire away the anesthesiologists working there despite having signed non-compete clauses with the outsourcing company that employed them. Fox and Wilson both encouraged the anesthesiologists to violate their non competes, despite Beaumont aggressively enforcing non-compete agreements it requires its own doctors to sign. NorthStar would have eventually replaced the veteran anesthesiologists with less experienced anesthesiologists warranting more modest compensation packages.
The majority of the anesthesiologists working at the northern hospitals had advanced fellowship training at top tier medical schools and certifications in their sub-specialties. Although they technically weren’t Beaumont employees, they were an integral part of the hospital’s fabric and culture. Most of them worked at Beaumont their entire careers and had strong ties to Michigan.
Despite being offered lucrative signing bonuses and nearly the same salary and benefits, about half the anesthesiologists at Royal Oak chose to resign rather than work for NorthStar, underscoring the company’s poor industry reputation. The anesthesiologists weren’t comfortable with NorthStar’s model of increasing the number of simultaneous surgeries they’d be responsible for overseeing and allowing CRNAs do epidurals, nerve blocks, and other procedures that Beaumont historically allowed only anesthesiologists to perform.
The mass exodus of anesthesiologists sparked the resignations of more than a dozen prominent surgeons. A survey revealed that the majority of Beaumont doctors didn’t have faith in the management of Fox, Wilson, and chief medical officer David Wood Jr.
About 50 Beaumont Royal Oak CRNAs also resigned last year, leaving a huge staffing void. Many of the resignations predated Wilson’s NorthStar announcement and were driven by the realization that the hospital’s reputation for excellence was fast waning. The writing was on the wall when two nationally renowned cardiac surgeons resigned because they were fed up with Beaumont’s leadership. One of the departing surgeons was a major Beaumont fund raiser.
To meet Beaumont’s surgical demands, NorthStar has been parading anesthesiologists from its other Detroit area hospitals and around the country through Beaumont Royal Oak. Industry experts say that familiarity with a hospital’s procedures and personnel is critical to maintaining quality anesthesia care and that having a heavy percentage of outsiders is a risk in itself. The CRNA who tended to Curbelo, the doomed colonoscopy patient, was visiting from Beaumont Dearborn. The anesthesiologist overseeing her was from Detroit Medical Center.
Veteran Beaumont CRNAs and the anesthesiologists who joined NorthStar are aghast at the quality and experience of some of the anesthetists NorthStar has brought into the hospital. Many couldn’t get interviews at Beaumont prior to NorthStar taking over because they lack the requisite certifications the hospital previously demanded.
This includes Romeo Kaddoum, NorthStar’s regional medical director, who isn’t echocardiography certified, a critical tool for diagnosing suspected cardiac disease. The certification was required of all Beaumont cardiac anesthesiologists prior to NorthStar taking over. Kaddoum’s brother, who is visiting from Beirut and was trained in Michigan, is also pitching in to help with anesthesia services.
Beaumont Royal Oak is down about 30 CRNAs, meaning those that remain are expected to pick up the slack. It’s common from CRNAs to work eight hours straight without a break because there is no one available to provide even brief assistance. It’s widely known in healthcare circles that Beaumont is a less than desirable place to work, making it nearly impossible to attract experienced CRNAs. The hospital will likely fill the slots with fresh faced graduates, meaning about 15 percent of the CRNA positions at a major surgical center would be staffed by rookies, often overseen by anesthesiologists who are just passing through looking to make a quick buck.
Beaumont’s CRNAs say the situation is dangerous and unsustainable, and they view unionization as the only viable option to fix things. COO Wilson never consulted or asked for their input before pawning them off to NorthStar, and they are determined to get a seat at the proverbial table to ensure they have some control of their professional destiny going forward.
While compensation is an issue, it’s a secondary one. Beaumont employees historically were willing to work for less because the job came with bragging rights being employed by one of the most respected hospitals in the country. Working at Beaumont no longer carries much prestige.
Wilson told Crain’s Detroit Business last week that Beaumont is “pleased with the early efforts the NorthStar team has taken to manage our anesthesia services and provide an excellent experience for our patients, physicians, and CRNAs.”
Beaumont has prepared a script for surgeons on how to respond when patients express concerns about the quality of the hospital’s anesthesia staff. It also recently erected a billboard near its Royal Oak campus assuring patients “It’s Safe” to get care there. Perhaps the message refers to the pandemic, but several people who flagged the billboard to me immediately assumed it was intended to address concerns about Beaumont’s patient care.
That’s how far the once nationally respected hospital has fallen.
When John Fox arrived more than five years ago, the hospital’s marketing message was “Do You Have a Beaumont Doctor?” Now the hospital has to convince people that it’s safe to go inside.
Beaumont insiders tell me it isn’t, and that they wouldn’t entrust the hospital to care for their families as long as Fox and Wilson are still running the place.
Reach Eric Starkman at email@example.com. Beaumont employees and vendors are encouraged to reach out, with confidentiality assured.
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