July 2009

Q&A: Michael Young

President/CEO Grady Health System

Michael Young is a numbers guy. He started doing the math even before he took office last September—examining, from his room in Buckhead’s Embassy Suites, a week’s worth of every check over $1,000 that Grady issued. Once installed, he started keeping track of bills that were never sent, lengthy wait times in the ER, phones that were never answered, delays due to outdated or broken equipment.

It didn’t take long for the Harvard Executive MBA to conclude Grady would never save itself into solvency. To recoup some of the $300 million it will dole out in free care this year and offset some of its $50 million deficit, Grady needs more money. Young asked area hospitals to contribute $30 million and discussed the idea of new state hospital taxes when they didn’t come through voluntarily. To little avail, he billed surrounding counties $75 million for care that Grady provided to their residents. And he raised nonemergency fees for patients from outside Fulton and DeKalb, the only two counties that support Grady financially. Though none of these possible stakeholders seems anxious to chip in, Young warns that everyone will lose if Grady closes—as almost happened in 2007.

But at the same time, Young also started spending money—replacing all the radiology equipment, buying new echocardiogram machines, and overhauling the burn unit. He has hired multiple six-figure-level executives. The mind-set is more stimulus than bailout.

His approach takes bravado, even arrogance, and he’s got both: “My colleagues would probably tell you that if you were in a war, I’m the CEO you would want in the foxhole with you.”

Grady has 900 beds and is metro Atlanta’s only Level I trauma center. Its poison control, burn treatment, perinatal care, stroke rehab, and mental health centers are just a few of its dozens of unique services. Twenty-five percent of Georgia doctors are trained here, and if there is a flu pandemic, Grady is the hospital that will coordinate the city’s response. It’s not an exaggeration to say every Atlantan has a vested interest in Grady’s survival.

Yet the institution’s culture is notoriously inefficient and resistant to change. The sixth CEO in three years, Young is hardly the first to promise miracles. The board members who ponied up his annual salary of $615,000 (plus 50 percent potential bonus) have pinned their hopes on Young’s miraculous $32 million turnaround at Erie County Medical Center, a smaller urban New York hospital with similar historical operating losses. Young left there after a contentious merger and was lured south by the challenge of a lifetime and great golf weather.

With layoffs, new executives, state-of-the-art equipment funded by Grady’s nonprofit board, and a lot of accountability, Young is making Grady more efficient—he’s got the numbers to prove it. But with the amount of free care rising and public funding declining, can Young save Grady from itself? He discussed the hospital’s future with executive editor Betsy Riley.

Before you ever thought about coming to Grady, what had you heard of its reputation?

In graduate school in 1979, you hoped you could get a job at Grady. It was big, high tech, cutting edge, moving fast. And then I never thought of it much [after graduation]. I read about it in the journals, and I knew they were struggling a little bit. But I didn’t think about it much [until] the merger went through in Buffalo . . . and I could start looking around. It was clear to me that Grady needed a lot of work, a lot of help, a lot of luck. You know, I ran a big, rich hospital [in Pennsylvania]. I ran a hospital a little bigger than Piedmont with almost a billion dollars in cash, a brand-new women’s hospital, a brand-new orthopedic hospital, a brand-new trauma center. My wife would say, “What was your hard decision? Did you buy marble floors or granite floors this week?” It was like the Four Seasons. But some things happened in my life. [Young underwent a three-month stay at the Betty Ford Center for alcohol dependency and still attends Alcoholics Anonymous meetings.] And I decided I had a responsibility to give back more than I was doing, and that’s why I chose Buffalo and then, after that opportunity was coming to an end, I decided I would do something here.

Why Atlanta?

Atlanta is like New York, only the traffic’s better. It’s got everything you could ever want. Who doesn’t want to live in a wonderful place? My house [here] would cost a million bucks in Philadelphia. In New York it would be two million. We wanted to be in a major city. The people here are wonderful and warm. They’ve taken [my wife] Karen to parties and shopping, and everyone’s taken me golfing. If you’re going to have a really hard job, it helps to have a wonderful city.

When you started in September, you predicted you’d have the budget balanced in three years. Do you still think that’s possible?

I think that’s still possible. We’re getting our hands around our expenses. We understand them. We have reduced them. So I think the control is there. The real question is on the revenue side.

This year we’re going to do [more than] $300 million in free care, of which we get paid $240 million between all the federal programs and the counties. So we have to come up with $60 million somehow. Heretofore no one’s figured out how to do it . . . If that $300 million were only $200 million, which is more than just about anyone else [provides] in the country, we’d be running on all cylinders. Even at $250 million, man, this thing would be a layup.

Is your patient volume up or down?

The volume is up everywhere except OB, and OB is flat. In paying patients it’s declining because there are 85,000 more uninsured people [in Atlanta than last year]. A year ago, there were 25,000 unemployed people. That’s a small town, and their only opportunity for care is to come here.

How are you planning to attract more paying patients?

We’re getting openings in our clinics down from six months to six days. Seven months ago when I came, we had a centralized scheduling system that was circa 1842. The phones were picked up half the time. Now it’s like 96 percent of the time.

How did you make that happen? Did you have to hire more people?

We have less people. You had to change the process. You had to change management. You had to change the computer system. You had to change how the model worked. You measure what the process is, you find out where it’s broken, and you fix it. GE calls it Six Sigma. Toyota calls it Perpetual Improvement. That’s what we do.

The first month [in the OR] we found out that anesthesia didn’t show up on time. We went to anesthesia and said, “Look, 66 percent of the time we’re late because of you.” They started showing up. Then we said to the surgeons the next month, “Sixty-six percent of the time we’re late . . .” So they started showing up. And now, guess what, all the lateness is [supposedly] the hospital’s fault—the patient wasn’t prepped, the X-ray wasn’t ready, etc. So then you change [the hospital] process, and now we have three rooms that start early so we can get more cases through. That makes the doctor happy. It used to take an hour and ten minutes to turn around a room, and now we’re down to thirty-two minutes. When I was up there yesterday, a nurse said, “Yesterday we had three cases where the turnover was twelve minutes!” People are excited about it. We measure things. We reward people. Doctor satisfaction is up, patient satisfaction is up. Our length of stay is down from 8.2 to 5.5. That means we get everything done in your hospitalization in five and a half days instead of eight and a half days.

Three or four patients used to stay in the ER every night. Now we haven’t had any in weeks. Once you fix operations, people start to have good experiences—which is what we’re starting to see . . . We’re not 15 percent of the way there yet. It takes ten years. But . . . people will want to come here because we’re not crazy anymore.

How do you respond to recent newspaper reports about the consultant who cost Grady $1,600 a day in fees and expenses over the last year?

In the last three months, she brought in $4.5 million . . . So, yeah, we probably overpaid by $100,000 [last year]. I have somebody [permanent] hired. Unfortunately, I couldn’t really tell that to the reporter because I didn’t have it fully consummated at the time. I’ve been here six months, I’ve hired an executive vice president, I hired a senior vice president, I hired a vice president of marketing and planning. Now in six months I’ve hired two more strong finance people. You can only do so many things.

Our biggest issue is cash flow. Fulton County has reduced their payment to us. Trauma funding went down to us. Cash flow is really important. So, yeah, [the private consultant] looks really exciting on the front page, but the reality was no serious businessman would take the risk of changing the leader of the revenue cycle when cash is your key issue. It’s like you have one scientist who knows how to work the nuclear reactor in a nuclear submarine. You’re not going to say, “Well, I’m going to get rid of the nuclear engineer because she costs a little too much money. We’re just going to run the submarine without one.”

Like MARTA, Grady has historically experienced some power struggles between groups that are predominantly African American and interests that are more white. Most recently, that came to a head when the Fulton–DeKalb Hospital Authority turned over operations to a private, nonprofit corporation endorsed by the Metro Atlanta Chamber of Commerce. How has that played into your experience here?

I think both boards have stepped up. The Authority board is probably more active in doing the things that the counties are having them do than they thought they were going to have to do. [Fulton County has recently made a significant amount of its annual funding contingent on closely monitored financial and performance benchmarks.] They meet, they get it done, they cooperate. It shows they want to make Grady work, and their heart is in the right place. And the new board, they are working all the time for Grady. It’s another bullet for the gun. It gives us more horsepower. You see it in the fundraising. I got $1 million today. We’re pushing $270 million now, so I think we’re going to do $325 million [the goal of Grady’s five-year capitalization campaign] in the worst economy of any of our lifetimes . . . The new board has facilitated that, and without that we’d be dead, we’d be dead as a doorknob. There’s no way the counties could come up with $300 million to recapitalize the hospital. And there’s no way the public sector would have given $300 million to a governmental hospital. It was not going to happen. It was impossible. Everybody rose above the racial issue and decided to address the purpose issue. The purpose of Grady is serving the million people who don’t have insurance in Atlanta.

How many people have you laid off?

About 115. We eliminated about forty unfilled positions. We also had about fifteen out of sixty registrars flunk their registration test, so they [were let go]. We measure people’s performance. When they fail, we retrain them. Then we retest them. Sometimes we give them a second retraining and a third test. But we need people here who can do the job.

You have spent a lot on upgrading technology.

The old cardiac catheterization lab was a mess. Our old [echocardiography] machines were ten years old. We have new echo machines. We have new nuclear medicine machines. The technical stuff. Everything in cardiology will be brand new and cutting edge. Nobody has anything better or newer. The walls need to be painted, but the technology is world class. By the time the magazine comes out, the entire radiology department will have been replaced.

How have you been able to pay for all these upgrades?

It came from the Woodruff Foundation money and some other foundation money. For example, the burn-unit upgrade is coming from a major donor. With those [improvements] will come new revenue. It’s all been possible because of the private board. Without the private board, they never would have found a candidate to take this job, because there was no money. Without money, there was not any chance to fix it. With the money, we have a good chance to fix it. The definition of insanity is doing the same thing over and over and expecting different results. [The donations are] what made the opportunity doable. It’s like a free agent going to a baseball team. He or she wants to go to a team where they have a chance to win the World Series.

What is your prognosis for the state trauma system?

[With the trauma funding provided by Georgia’s new “Super Speeder” fines,] I think we’re starting to get traction. Three years ago, the legislators thought it was a scam to get more money. Two years ago, it was half and half. This year it was, “Yeah, we really need to do this, but the budget’s lousy and this is the best we can do.”

In what sense is Grady a microcosm for the nation’s healthcare issues?

We’re the quintessential model of the healthcare delivery system. If you have money, there is no healthcare problem. If you’re middle income or below, depending upon whether you have insurance, your life is iffy and this recession has shown that for the first time. How do you fix that? I’m not espousing any one model. There is access to care for everybody in this country. The access to care for all of Georgia is Grady. If you come here and you’re sick, you’ll get world-class care. The problem is we don’t get paid for it.

If you’re an uninsured person anywhere in the state, or in the country, for that matter, it’s really hard to get into a doctor’s office. Really hard. You call ten doctors’ offices, and the third question is always, what’s your insurance? You say, “I don’t have any,” and they say, “We don’t have any appointments until November.” You have two alternatives. Your local ER, and you’ve already been there, that’s how you got the list of the ten names. Or you go to Grady.

I could take you down to the ER, and I could point out the recently poor and uninsured; it’s the guy in a suit hanging his head because he’s never been uninsured before and doesn’t know the system. He’s embarrassed, but he’s bleeding in places he doesn’t want to be bleeding from and so he’s here.

The good news is that they’re coming here and finding out, “Wow, I thought Grady was this lousy place, and it’s not too bad.” Hopefully, when they get their insurance back with their next job, they’ll say, “Grady was there when I needed it.” And when people go to the stroke center, they’ll say, “I had no idea. I thought Grady was a mess.” And that’s how you get out of the cycle.

Photograph by Jonathan Hollada