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Prize-Winning Healthcare Journalist Mark Taylor on Saving Hospitals, Lives, and Billions of Dollars

 

 

Welcome to Strategy Skills episode 496, an interview with the author of Hospital, Heal Thyself, Mark Taylor. In this episode, we explore the challenges and potential solutions in the healthcare industry, focusing on Dr. Litvak’s methods. The discussion highlights the inefficiencies in hospital operations, such as overcrowding and unnecessary expenditures, and the reluctance of hospital CEOs and surgeons to adopt more efficient practices. Dr. Litvak’s methods, which involve optimizing surgical schedules, have been successfully implemented at many top 12-ranked hospitals to save hundreds of millions of dollars and countless thousands of patient lives.

Mark Taylor is a veteran healthcare journalist who has covered health and medicine for newspapers and business publications for decades. He is the recipient of Kaiser and Knight fellowships and is a co-founder of the Association of Health Care Journalists. Taylor is a former steelworker, taxicab driver, waiter, and lifeguard who lives in a Northwest Indiana suburb of Chicago.

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Hospital, Heal Thyself: One Brilliant Mathematician’s Proven Plan for Saving Hospitals, Many Lives, and Billions of Dollars


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Episode Transcript:

Michael 01:28
Hey, Mark, how are you?

Mark 01:30
Michael, I’m doing fine. Thank you.

Michael 01:33
And where are you calling in from?

Mark 01:35
I am calling in from Munster, Indiana, a suburb of Chicago, Notre Dame, territory, well, perhaps about an hour and a half east of us.

Michael 01:48
Yes. Okay, so are you a footballing man?

Mark 01:49
Ah, I enjoy football, but sadly, I’m a fan of the Chicago Bears, and they’re looking like another pathetic season ahead college football. My alma mater, Indiana University, was doing pretty well, but that usually doesn’t last long. Notre Dame is the big college football team in the state of Indiana. We’re kind of big on basketball in this state.

Michael 02:17
That is true. Yes, I had the privilege of speaking to some of the people that had been instrumental in setting up the infrastructure that made Indiana such a draw card to host major college and university events. Oh, that was really helpful, thoughtful they had been about it.

Mark 02:36
Yes, they are. It’s Indianapolis is kind of, I think, with the amateur athletics and college sports, one of the premier places in the country for that. So

Michael 02:50
We could talk a long time about sports, but I’m going to talk about,

Mark 02:54
Where are you from, Michael, may I ask, Where are you calling me from?

Michael 02:57
I am based in the wonderful city of Los Angeles, the pollution capital of America, air pollution at least. I mean, we are number one at that. So do you have any background in terms of how we’re going to run this? Or do you have any questions?

Mark 03:13
I probably have many questions. My guess is you probably haven’t had a chance to read the book yet, but if I’m not mistaken, you’ve already speaking with Dr Litvak, right?

Michael 03:26
I have. I have been through the book as well. Oh, you have, okay, well, great. Been through the book because it was personally interesting to me. So I’m going to follow up the discussion based on some of the points he made. But I wanted this to be a standalone conversation, because he raised certain Kris. And I think whichever direction we go in, I’m fine with that. I don’t have more than one question, because I like the conversation to be organic. I’ll ask the question, and then we’ll take it from there.

Mark 03:52
I understand, obviously, I wrote a book. It’s taken six years of my life, but the topic of the book, I think, is, is a fascinating one, because it’s flown under the radar for so long, and that, to me, is really intriguing. And as a journalist who’s been I’ve been a healthcare journalist for the last 30 years, but before that, I covered crime, and before that, I covered entertainment. And in all of those stories, the ones that I enjoyed the most were the ones where people go. I didn’t know that. I’ve never heard of this guy. What the hell is surgical smoothing? And why would I even care about that? And to me early on, when I first interviewed Dr Litvak for stories that I wrote for my former employer, cranes, modern healthcare, which is kind of the Bible of the healthcare industry. Yes. Um and and for newspapers, I sold stories to and online publications and healthcare trade magazines and business magazines people that were totally unfamiliar with this, and it’s astonishing to me that it is not much more widely used by now because of its proven efficacy. But gosh, I think it takes something like 15 or 17 years for new ideas, innovations practice. Practices to actually take root, and it’s been longer than that for this.

Michael 05:52
Well, it’s pretty normal, if you think about it, right? So I used to be a senior partner in corporate strategy and corporate finance at these big consulting firms, and I’ve been in many situations, obviously, the clients we work with are incredibly smart people, really talented, capable people. Sometimes we will offer an insight that is so counterintuitive, and that’s really the definition of an insight, isn’t it? It’s something nobody thought about before, something nobody saw before. So it takes time for people to accept the insight, use it, implement it. And that’s the thing. With ideas that are unique, the mere fact that they are unique means it’s going to take a very long time for them to be accepted and propagated through the system. But maybe that’s a good starting point here, right for the audience, let’s talk about the central premise of the work you’ve done, which you’ve kind of captured and packaged into the book, hospital healed ourselves. What’s the central premise?

Mark 06:49
I think that the central premise of the book is that we don’t always need more resources, more dollars, more investment, but sometimes there exists ways of accomplishing things that are cheaper and more effective and have a far greater impact if we only knew about them. And in the case of Dr Eugene Litvak and and his methods for improving patient safety and patient care, that’s the case. New hospital beds are between 1 million and $3 million a piece. So if you’re building a new 100 bed wing, you’re going to spend 100 to $300 million to expand your capacity and each bed, it’s an estimate of something like $250,000 a year to maintain and multiply that by 100 and and you find, very quickly, you’re you’re spending hundreds of Millions of dollars that perhaps you don’t need to spend, and that if you Marshal your resources more effectively, more intelligently and more efficiently, you can get a bigger and better bang for Your buck, as I’m sure perhaps you heard about Cincinnati Children’s Hospital. It’s, it’s sort of the poster child for my book, in that they were prepared to spend $100 million Oh, I think it was 15 years ago to expand their capacity, because several days a week they were overcrowded. And when hospitals get overcrowded, a whole litany of bad things can and do happen, and the hospitals, for decades, hospital CEOs have kind of blamed this on the gods. They’ve said, Well, we had unexpected surges of patients coming through our emergency room. What can we do about it? It’s, it’s, it’s the gods. It’s not us. But Dr Litvak proved, first of all, he found the cause of it, and then, second, he found the cure for it, and Cincinnati Children’s Hospital adopted it and saved over $100 million a year, and were also able to forego for more than a decade. Uh, the planned and budgeted expansion money that they were fully prepared to implement.

Michael 10:09
When I was reading about the work in your writing and so on, and the solution you had written about of the work Eugene Litvak had done. One of the thing that struck me is this is very common across industries, because when we would do work, for example, in the resources sector and so on, and we’d be looking at whether you needed to expand a oil refinery, for example, before expanding all that capital expenditure to expand the facility, the first thing you have to look at is whether you are making maximum use of facility by making sure it’s operating in the best way possible, whether you’ve de bottleneck the operations and so on. It always surprised me that when I read about things, or mainly in the United States, because I’m based here, Americans tend to assume that if you throw money at the problem, adding more bets increase the education budget, things will get better. To me, increasing the education budget doesn’t change or improve the way we train students. So there’s a big disconnect here. Why do you think that disconnect took hold in the hospital or healthcare sector, whereby people were looking at expanding without thinking of ways to better arrange their facilities.

Mark 11:21
Well, I think one of the reasons is that hospital CEOs, their average lifespan on the job is, I think it was 4.5 or five years, not a long time. So they have to establish themselves. And much like the way I was raised, a Catholic, a Catholic priest, in order to get promoted up the chain, pretty much has to build a new church and a hospital has to either expand the hospital or build a new facility in order to be seen, and views that as a dynamic leader. Plus, you know, everybody, everybody seems to make money when they, when they expand capacity, at least for a while. I mean, it works for a while. It’s, it’s not the worst solution on Earth, but I think they get rewarded for it, they probably get bonuses. They their career options are expanded and and their jobs become more secure. What Dr Litvak is suggesting that they do puts their jobs at potential risk. They they would have to the in any hospital, the rain makers, the people who bring in millions of dollars per year are the surgeons. Could be heart surgeons, orthopedic surgeons, all kinds of surgeons. That is the bread and butter of hospitals. That’s where they make their they make their money. And so for since World War Two era, surgeons have kind of run hospitals, even if they aren’t in executive positions themselves, they have the power, plus they could leave, they have the independence. They can go across the street to your competitor and not just drain the five or 10 or $20 million they contribute to the hospital’s revenue, but take it to a competitor. So they’re not only hurting you, but they’re also helping your competitor. So hospital CEOs are certainly aware of this, and from the beginning of their job, they cultivate the favor of surgeons. They have special rooms, break rooms, they have contests, they have vacations, they have all kinds of things that hospital CEOs do to earn and win the loyalty of their surgeons, and they’re really loath to challenge that status quo. The surgeons, from their perspective, have a great life. Their average annual income depending on the where they practice in the United States and what their specialty is. At the low end, it’s 350, or 400,000 a year. And at the high end, if you’re like in Los Angeles or New York, and you’re a neurosurgeon or a cardiac surgeon or a sub specialist orthopedic surgeon, you can make 750 to a million and a half, and that’s without investments or. Anything else so so they’re in a really great position, so they call the shots, and most surgeons practice by claiming what’s called block time. Yeah, it’s a few hours, somewhere between two and four hours, typically on a Monday or a Tuesday, when that time is inviolate. No one else can operate in the in the operating rooms during that period, except for the surgeon who has that block time. And this would probably work well, except that, you know, sometimes surgeons will go on vacation and not tell the hospital because they don’t want to risk losing that block time when they come back. It’s very inefficient, and it pauses at the beginning of the week. Real conflicts in scheduling and surgeons several days a week might work, 10, 1214, hour days, because at the same time, as you probably have have ascertained by looking at the book, is is you’re meeting demand through the emergency room of the hospital. There are always automobile accidents. There’s, sadly, this is an America so there are gunshot wounds there. I live outside of an industrialized area of Northwest Indiana, where there’s steel mills and oil refineries and lots of factories, and there are lots of accidents that come from that, and that’s not counting the typical heart attacks and strokes and everyday accidents that people have in their homes and yards and work so so you’ve got planned surgeries coming through the operating rooms. Those are scheduled surgeries, and you already know that you’re going to be well compensated for that, because otherwise you don’t get to plan a surgery in the United States, if you’re not covered by insurance and you’re you’re probably going to have to come in through the emergency room. So So hospitals depend on this stream of revenue, and they like it when their surgeons are working hard and have lots of surgery scheduled. That works well for the hospital’s bottom line when they come through the ER, some of them have, have, actually, maybe quite a few, have insurance, but it isn’t always the best insurance. Yes, I mean, private insurance compensates physicians and hospitals better than Medicare does. Medicare compensates better than Medicaid does. And and then there are the people who come in who are uninsured, have have no insurance or very poor quality insurance, and and as a result, they might come into your emergency room, and they will bump somebody who has a scheduled surgery. So the hospitals, in some ways, if you’re looking at it, just purely from a financial perspective, you know, they get they get burned twice, one their scheduled, lucrative surgery is bumped, either postponed or canceled. Yes, and the surgery through the emergency room comes in and not infrequently, they’re not getting compensated for it at all. So so they they get hammered by those what litvac did was took a look at that applied his mathematical mind in the in the Soviet Union, he was a a well regarded, internationally known mathematician, applied mathematician and and he applied those techniques, and frankly, in in much of the world, if you were a consultant you, you’re certainly familiar with, with the Toyota way, with with six sigma, some of these, these programs for improving process. Lit vac also believes in that and came out of that background, but kind of approaches this from a different perspective and and in other industries as you’re certainly aware of, the fast food industry, the hotel industry, right? Manufacturing, airports. A lot of these are seven days a week. Many of them are 24/7 operations, where you’re maximizing the infrastructure and hard resources that you have in hospitals, most surgeons, most surgeries are performed Monday, Tuesday, Wednesday starts to slip by. Thursday, there are very few surgeries being performed, hardly any, if at all, on Friday, Saturday and Sunday, they’re not no scheduled surgeries, typically at at most hospitals, yet, you’ve got all of this infrastructure on weekends. You can’t get physical therapy in hospitals. You can’t get other kinds of therapies. They’ve got, I wouldn’t say they have skeleton crews, but, but the size of the nursing staff and everything else is is much lower, just because they know that’s the way it’s always been and and that inefficiency is not just costly for the hospital, but it’s costly for patients, because people get sick and injured seven days a week and and they need those services seven days a week. And what Litvak found was that in the places that adopted his methods of what he calls surgical smoothing, where, rather than having a surgeon just operate two or four hours on a on a Monday morning, maybe that surgeon operates another day, perhaps even even a third Day, perhaps. And if they do that, the demand for the for the patient beds and the conflicts that result from the emergency room patients butting heads against the scheduled surgery patients that that goes away there the in some cases, they recommend one or more additional emergency rooms or operating rooms that are solely dedicated to to emergency surgeries, so that the doctor who has scheduled surgeries doesn’t have to have all these cancelations and postponements. I’m not sure if, if you recall this from the book, but Jack Kitz, who’s the CEO of Ottawa Hospital in Ottawa, Canada, the largest hospital in Canada. Yes, I remember think it’s a 1000 bed to hospital. He told me that what really made him welcoming towards lid Vax ideas was the fact that they were canceling six or 700 surgeries a year, millions and millions of dollars, even in Canadian dollars, millions and millions of dollars of of lost revenue and and he told me about the case of this 80 Something woman from Quebec who was having a surgery. I think it was an abdominal surgery, stomach surgery. And she had her daughters come in from France, from Western Canada, from the United States, all to be with her, she had to take this horrible medication, that they gave her to clean her out so that you know the surgical site would be clean. And at the last minute, kits had to go tell her that her surgery was canceled. And she said, Well, when will it be rescheduled? And he said, I don’t know. I can’t tell you that now, he said, but we planned this for six months. My family’s with me. She started crying and and it was just the the worst, most, most horrible feeling. And they, I think it was 641 surgeries canceled the year before, after they adopted lit vac system. I don’t even think they had a dozen canceled surgeries and and that resulted in millions of dollars in additional revenue, many of these patients. You can postpone or cancel a surgery for a little while, but as we saw during COVID, there were a lot of cancer patients and heart patients that died prematurely because surgeries were canceled and with lit Vax program at Toronto General Hospital. They they had to do that very, very infrequently. Despite being hammered by COVID, they were able to really rationalize and categorize the surgeries that they were taking the the planned or or scheduled surgeries.

Michael 25:43
What’s interesting about that is that I remember in my previous life doing a lot of work for governments, state owned enterprises, government owned banks, and one of the biggest pieces of infrastructure they would invest in would be airports. And you gave the example earlier of how CEOs of hospitals who have a four to five year tenure tend to look at expanding the hospital as their big send off. The great thing they’re going to do for the hospital, because they assume more beds, bigger volume, means more revenue. And one of the most common things we would see when we advise governments is that just about every government would advise they would have a plan to expand the airport or build a better, bigger, newer airport. And the logic always was that, well, our current airport is working at maximum capacity, but it was working at maximum capacity for the operating model you chose. And if you change the way you bring in planes where you process passengers, there’s many things you could do to reduce it and make it a more pleasant experience. But of course, most people end up building bigger airports and taking those sub optimal operating practices to the Larger airports. It’s a similar concept, isn’t it?

Mark 26:53
No, I agree, and it’s an unfortunate one, because I think there was an interesting report this past week by the Commonwealth Fund. I’m not sure if you heard about it. I sent something to Christina about it, because I’m Dr Litvak tells me you have a large international audience. Yes, and, and, I thought that this would be interesting to them, but probably not surprising to many of them that they took a look at 10 of the top industrialized nations, wealthy developed countries, France, Netherlands, Australia, New Zealand, UK, Canada, US, I forget they’re in another four or five, and the US placed last, both in quality of care and in and unfortunately, overpaid for for the cost of care. I mean, we spend one getting less any other country in the world, and we’re and our outcomes are worse. It’s a it’s a stupid system. It’s a system that kind of cries out for a dictator to come in and say, okay, all right, and I’m not talking about Trump, but somebody who could come in and just say, one day, here’s what we’re going to do. We’re going to do things smart, and you’re all going to adapt these programs that are going to lower the cost of healthcare and to prove the quality of it, and it’s going to be a lot better. And in other countries around the world, they’ve done many of these things, I think they’ve approached it much more intelligently than we have. The United States, as you probably know, we’ve we’ve been moving towards a for profit healthcare system for a long time, and hospitals right now, I think of the five or 6000 acute care hospitals in America, only about 1200 of them are for profit, but that number is growing. And when you look at other areas of care, hospice, nursing homes, dialysis care, many of these are outpatient care, mental health services. All of these are moving towards for profit ownership, and when they move to for profit ownership, the patient isn’t the center focus anymore. The bottom line is, and look, I’ve grown up in a capitalist economy. I suppose I’m a I’m a capitalist as well, but, but, but maybe a little more rational capitalist than some, not a completely unfettered capitalist. Ism and our healthcare system, sadly, is moving that way. You you look at, you look at all of these other areas of healthcare that I was there. I was a healthcare reporter for a newspaper when, when it was the exception, not the rule, that a doctor’s practice a doctor worked for himself or herself as a as a kidney specialist, nephrologist. Well, these for profit, dialysis companies, Fresenius was, was, and still is, one of the big ones us dialysis. They started acquiring physician practices. The cost of providing dialysis care just expanded exponentially, particularly when Medicare began paying for it and reimbursing for it. And this has happened up and down our healthcare system, unfortunately, and that’s one of the reasons why healthcare costs are so expensive, because nobody really cares. Somebody’s going to pay for it

Michael 31:19
In your research and your work, in your interviews, have you seen the arrival of private equity firms or these exotic financial firms? Yes,

Mark 31:28
unfortunately, yes, I have seen it and and recently, in the last few years, maybe just the last five or 10 years, they’ve gotten into the hospital business, and typically, the way it’s worked is something like this. They’ll buy in a in a city or large suburban market, they’ll buy the number three or four or five player in the market, someone who hasn’t been doing very well. It might be a Catholic order of nuns that owned it, and their good work, unfortunately, they weren’t well managed financially. And so these companies will buy it. What they’ll do is, first of all, they’ll sell the property that the hospital has been on for 2050,

Michael 32:23
or 100 years, on all the debt, right? Yeah, yeah.

Mark 32:27
And they and they and they, that money goes, typically, to the partners and whoever the investors are, yeah. And then the hospital sees something that, you know, they haven’t had to pay for years rent, and the rent goes high and and they typically don’t invest very much money in new equipment or or hire new doctors. One wonders if they really want to succeed. I don’t even know if that’s what their goal is. It’s just to maximize the payouts, it seems like. Because then, after a few years, they end up closing it down. In some cases they sell it, but in a lot of cases, they’ve exhausted all the value from it, and they end up selling it, or, if they can, or they just, they just close it down. And what used to be a vital community resource, and often in poor neighborhoods, no longer exists. And we’ve seen that around the country. I used to write about that for modern healthcare, and I’ve seen it. I think 60 minutes just did a piece. Within the last month or two, they’ve gotten into the hospital business. It’s, it’s a terrible business for patients of those hospitals, because usually their costs go up and their quality drops. It shouldn’t be that way, because I think that if, if, if, maybe some of these private equity firms were thinking a little differently about it, thinking of this as a community resource, that you could still make a decent profit on. I mean, the for profit hospitals do pretty well. The big chains do fairly well. You can make a good profit, but it’s it’s not as good of a profit as they demand.

Michael 34:37
Well, it’s the way they work. Right? Private equity firms work on a roll up model. That means, if they’re buying one hospital, they are buying other hospitals so that they can get the volume economies when they do bulk purchasing and so on. But what that ultimately means is that a community hospital is just one component of a broader portfolio of hospitals at the private equity. Firm holds, and sometimes, because they can make money in other parts of their portfolio, they are willing to exit or cut their losses in one place, whereby, when the hospital was stand alone, the hospital had to survive by itself and had to be viable. I’m not defending it, but that’s what’s happening here. When you’re part of a portfolio, sometimes the portfolio owner cuts you down.

Mark 35:22
Yeah, I mean, and that happens. I’ve done stories about nursing homes as little as 2025, years ago, just like 90% of dialysis care was provided within hospitals, but typically by not for profit hospitals and then it became for profit. Nursing homes have dramatically swayed in the for profit direction and and you get private equity firms. You get families that start acquiring them. And very seldom are these top hospitals. I mean, yeah, when they’re purchased and when they’re sold or closed, the typically, the quality doesn’t improve, or it doesn’t improve much, or it or it doesn’t last long, because that’s not really what their goal is. Their goal isn’t to serve patients the best, to have the best, the best quality system in your state or in your region. It’s to make a profit. And I don’t have a problem with making a profit. I just think, you know, when it comes to healthcare, it’s a little different than making widgets.

Michael 36:46
Yes, one thing I always point out to people I know is that in any industry, anywhere in the world, when a transaction takes place, when an acquisition takes place, it’s typically going to be done at fair value, which means that unless the acquiring company does something to increase the cash flow so it’s a healthy return for them. The deal doesn’t make sense. So every time an acquisition takes place, you have to expect the acquirer is going to do things to make this a good deal for them, at least in the short term. But some of them don’t think long term.

Mark 37:19
No, that’s that seems to be the problem. And the thing about healthcare and the provision of healthcare services is it is a community resource. People are expecting it. It’s in their neighborhood. Hospitals are typically except if you’re in large cities, Top Hospitals are the biggest employers in town. Hospitals are the biggest borrowers in the state. You know?

Michael 37:49
Explain that to me, hospitals are the biggest borrowers in the state.

Mark 37:52
Oh, yeah. Well, bond issues, right?

Michael 37:55
Yeah.

Mark 37:56
So, let’s say, you know, I want to build that new 100 million dollar hospital wing 150 beds. So what I have to do is I have to, you know, go to to Fitch or Standard and Poor’s, and they’re going to rate my my bonds, rate my credit. And I have to borrow that money because most hospitals, you know, they’re most not for profit hospitals. That’s the majority of hospitals. Their profit margins are, you know, if they’re lucky, three to 5% during COVID. A lot of them operated in the red negative percentage. That is net profit margin of three to five.

Michael 38:44
Yeah, yeah. I mean, that’s never gonna buy a hospital. Thank you for talking me out of it. The for profit

Mark 38:50
hospitals, you know, they, they’ll make larger they’ll make larger profits, um, typically because, you know, they’ll have one human resource department for, you know, 50 or 100 hospitals. They’ll, they’ll do their financing at the corporate level. They do impose a lot of efficiencies on the market, which which is good. Unfortunately, they don’t always invest that in improving quality of care, but they do, to their credit, they generally make a decent profit. And if their hospitals aren’t performing well, as you pointed out, you know, they will sell them or close them. Generally speaking, they prefer to sell them. Whereas some of the private equity hospitals, some of the worst ones that I’ve been hearing about, they they’d rather just dump it. They’ve taken everything out of it, and nobody else wants to buy it.

Michael 39:54
Yeah, you know, in reading some of the numbers that you gave in the book, in your writings, you gave in. Number earlier, where you said it costs about $250,000

Mark 40:04
I think, to add a new bed, yeah, and well, that’s to know, that’s to maintain, that’s to me, to build, to build a new wing is a minimum a million dollars a bed. So under a new 100 million dollar wing is going to be 100 beds, but let’s say those are surgery beds. It depends on the kind of bed, or telemetry beds, where you have to have a lot of equipment in there. So it depends. And plus regionally, there are also big variations. So cheaper down south, much more expensive in the northeast and California. West Coast Midwest is you know about in the middle as as you would expect, but typically, to operate one hospital bed a year is about $250,000 that’s equipment maintenance, nursing staff, you know, to provide for it. So it isn’t just the bed itself. Once you’ve made that there are other costs. And then, of course, there are borrowing costs.

Michael 41:15
I was digging through those numbers because I am one of those private equity guys, as well as trying to understand the economics of this business. And I was going through the different numbers, the labor costs, the operating costs, where’s the capex, what’s the supplies, who the suppliers are, and so on. The thing that struck me is how much of a shortage of nurses there are,

Mark 41:36
oh yeah,

Michael 41:37
and how that impacts everything. Because I was really surprised how much of the cost of running a hospital goes towards nurses, and how little there are of them in America.

Mark 41:49
Yeah, and, and we’re, oh, every five or 10 years there’s another nursing crisis, and generally speaking, improving the pay was the way to get more nurses, yes, but during COVID, things changed. A lot of nurses quit the profession, or they left hospitals for physician practices or less stressful environments because they were just being burned out. And I, I can’t blame them, um, you know, particularly it depends on where you’re a nurse, but in emergency rooms, in operating rooms, uh, and on certain floors, uh, surgical recovery wings, cardiology wings, intensive care wings, you know those are high stress positions. Nurses get paid fairly well, but because of the nursing shortages, because of the overcrowding that Dr Litvak and and my book kind of detail, it’s it’s just gotten worse. And then had COVID, where nurses were dropping like flies in the beginning, doctors and nurses were working ridiculous schedules. People were having to call off because they were sick. Patients were dying around them at numbers that they’d never seen before. And all of this was happening, and a lot of these nurses were just, you know, this isn’t what I got into this profession for. I want to help, but I think I’m going to die soon, you know. And so nurses started leaving and and nursing schools started reporting lower class sizes, fewer people trying to become nurses, and physicians were leaving the field in record numbers. So, so you’ve got this terrible situation where and and and it’s even worse, believe it or not, like in nursing homes, it’s even worse, because, you know, those are higher stress, fewer nurses, harder work, longer hours, less help and lower pay. But so, so, so nurses are. Nurse shortages are probably right up at the top of a hospital CEO’s biggest problem like, how can we recruit more? How can we keep more? And interestingly, the Mayo Clinic in Florida, which adopted Dr Litvak methods found among saving millions of dollars and improving emergency room and hospital. Waiting times and going on ambulance diversion far less frequently. Among those benefits, they also saw a 41% increase in nurse retention, which kind of proves that if you lower stress, make the job a little bit easier for the nurses that are already working their tails off and and have a harder time caring for more patients in more hours of the day. If you’re able to do that, you can keep your nurses and and maybe even have an easier time recruiting other nurses. And that’s a big selling point for the work that Dr Litvak does for hospital CEOs. When they discover that that’s kind of a bell goes off and it’s like, Oh, really. Okay. How’s that happen? How’s that work out? And and it’s been tested and proven.

Michael 46:06
Yes, because if you think about it, we’ve been talking about how hospitals, like most companies, they think that the solution to manage demand, to cater with spikes and peaks and so on, is to expand, in this case, build 100 bed hospital. But even if you build 100 bed hospital expansion with a new wing, and if you can’t find the nurses, and the ratio between staff and nurses go up, the health outcomes are going to deteriorate.

Mark 46:33
Yes, absolutely. And that’s happens too. I mean, it’s really to me. I think it used to be a sign, kind of like one of those things in the United States that we’re really proud of. You know that? Look at our local hospital, there’s a construction crane there. Yeah, every time you go by, every hospital’s got a crane or two in the skyline. You know, that’s progress. That’s those are construction jobs. Those are going to bring high skilled professionals, nurses and doctors and technicians and PhDs to our community. This is good. This is what we want. And and there are certainly elements of truth to that. But the problem is, you’re overcrowded, but you’re only overcrowded a couple days a week, and the rest of the week, you know, you’re, you’re, you’re sending people home because you don’t have enough patients. So in other industries, they would look at that and say, Well, gee, maybe we ought to rationalize the the demand to meet the supply, or the supply to meet the demand, and, and. But in healthcare, it’s like, no, no, let’s, let’s put more beds on our hospital. It’s kind of ludicrous. I’ve been seeing this for 30 years now and and some of these trends are almost cyclical trends, like every five or 10 years, you’ll hear, Oh, my God, we’ve got another nursing shortage. Well, okay, the Philippines are out of nurses. That’s where we used to go. Let’s go to Eastern Europe, or let’s go to Nigeria, you know? And they do, I mean, they go to places where there are a lot of nurses, and unfortunately, we cannibalize the nurses and doctors from those countries so to meet our demand, and it makes it worse for those countries. But, you know, we’ve got the money, and we’ve everybody wants to come to America and get rich.

Michael 48:49
We’ve seen this play out before, and we’ve seen this. We’ve seen this play out with the MBAs in America. There was a time when there were a few MBA schools, MBA programs, then they became these huge cash cows for universities, and everyone had an MBA program, and they tried to expand the MBA program, but the problem is, just because you have a bigger building doesn’t mean you can attract a star professor who’s able to put out brilliant students, who can get the jobs with an MBA. And now we’re seeing a shakeout whereby MBA programs are folding because there’s not enough demand and quality demand out there. It’s a similar thing. People always think bigger is better versus let’s stay the same size. Put the money into bringing in the best professors, put out the best students, versus more students that can actually meet the demand in the industry.

Mark 49:40
Yeah, I was around when MBA schools started coming and expanding, and, yeah, everybody looked at me like, you’re going into journalism. Why? Why aren’t you going into you know, get an MBA. You’ll make a lot more money. And years later, it’s like, okay. Now the MBA programs are closing.

Michael 50:02
They’re closing every single time I get an email, an alumni or something, they’re trying to raise money for a new building. I’m trying to think, why do we need so many new buildings? It’s not like a car. We don’t have to replace it every 10 years, maybe invest in something else. But the reason I mentioned the story is because it’s not something that’s unique to healthcare happens in just about every sector in the world,

Mark 50:24
Yeah, but I think I agree with you, but I think in healthcare, people there, yeah, people die. They get sick. Their lives can be ruined. Terrible things can happen to you when when a nurse’s patient load goes from four to eight, yeah, on the second shift, and maybe it’s her second shift of of that day, because they, they, they had somebody call off, so she’s got to do a second shift. And now she’s caring for four more patients. And you know that’s all right, if these are patients who who have mild conditions on their way out, you know, maybe, let’s say orthopedic patients that are recovering from a knee surgery with few complications. But when you get patients in there with sepsis and yeah and pneumonia and stroke and cardiac conditions. It it gets very scary. They make more mistakes. Not just the nurses make more mistakes. The doctors make more mistakes. You know, if you started performing surgeries at 6am and you thought you were going to be done by two or three, and it’s now seven or eight in the evening, because you had a couple of big unexpected surgeries come in through the er, you know, if you’re 40 years old, maybe that’s not a tough thing for you to do, but if you’re a 60 year old doctor or older, you’re much more likely to make mistakes and and who pays for that, the patients and and the insurers And then ultimately, the the providers with with bigger medical malpractice and insurance premiums. The same thing for the hospital and and harm to reputation. Unfortunately, with hospitals, they only seem to change when the latter occurs. You know, when some new you know, the Chicago Tribune does a story on the best hospitals in Chicago, and your hospital not only isn’t one of them, but they’re one at the bottom of the list the 10 worst hospitals in Chicago, and they’ll go over each one. And you know your hospital was on The 10 O’Clock News last night because somebody amputated the right leg instead of the left leg, and and now the person is going to have to be without both legs or arm or hand or any other appendage. Those kinds of reputational losses are just, are just horrible and but often it’s, it’s sad to say, it’s the hospital ZONE FAULT because they’re, they’re not really doing they’re not operating with the patient in mind. A lot of them will say they are, but they’re not fully staffing. They’re they’ve got older equipment. They’re not investing in that. They’re not investing in in in more cleanup crews, in the in the OR between surgeries. I mean, you know, there’s a lot of things that can go wrong. Hospitals are incredibly complex organizations that to work well and function well have really 1000s of moving parts and and they all have to have to work reasonably well. And it takes leadership, but it takes good processes too, and we’ve always been loath in America to look at processes as ways of improvement, maybe because we don’t understand it. Maybe because we say, you know, there’s a lot of art to Madison. It isn’t just science, it’s art and and this is why, this is why doctors, it’s kind of crazy. When you look there, there have been some fascinating studies over the year in the New England Journal of Medicine about, and I don’t want to quote this, but it’s a large percentage. You. You know, 30 to 40% of practices that physicians use, particularly if you’re older, physicians, have no scientific merit or basis to them. They might have at one time, but then they’ve been debunked, but they still use them because they believe in them. It’s kind of like Prevagen, right? Yeah, it’s, it’s made from squid, so it’s got to be good for your brain. And and at the bottom of the of the of the advertisement, it’ll say, you know, this is not FDA approved with this is not a cure for anything, and because it’s, it’s, it’s not a medicine. It’s being marketed as a medicine. It’s marketed as a food supplement. Well, there’s a lot of those kinds of things that doctors do, you know. An example might be, you know, fish oil, let’s say or or garlic, um, certain products that were thought to improve organ function, but then,

Michael 56:11
like smoking in the 50s, yeah,

Mark 56:14
and it was doctors in the ads. I didn’t know, with your accent, you would know that. But, yeah,

Michael 56:24
I used to see those, I don’t love America.

Mark 56:25
It was hilarious.

Michael 56:29
You know, I have a friend who’s always encouraging me to eat organic, buy this product. It’s healthy for you. And I always point out to them that this product is made in America. Are you telling me this CEO is the one CEO in America that is really cutting profits to put out the best product. It’s not about what the product claims. It’s about the management team behind it, yeah, and what the intentions

Mark 56:53
are. Yeah, products don’t stand alone. They are just an amalgam of everything that goes into it, and all the people who’ve made it, and if they took shortcuts, they’re not going to have it on the package exactly.

Michael 57:08
I always tell people, it’s not what you buy, it’s not what the advertising is, it’s who’s the management team and where they’re located, because it’s culture of a country says a lot about how people behave.

Mark 57:20
Yeah. Well, welcome to the USA.

Michael 57:28
Look, we just come up with a new marketing campaign.

Mark 57:31
Sadly, I think it’s it’s worse in healthcare. I mean, a local McDonald’s franchise operates more efficiently than a hospital or or a hospital, er, and it shouldn’t be that way. I mean, this should be like well oiled clocks, but, but they’re, they’re, they’re not because, you know, part of it is that we’re human. I don’t know. Maybe, maybe when they introduce robot, nurses will be doing a better job, but, but until then, I mean, it’s humans doing it and and we we make mistakes, and we make more mistakes when our processes are bad.

Michael 58:19
I can get a sense for why it would be that case, because I come from the world of strategy consulting, management consulting, and these tend to be individuals, usually men, but more and more women these days who went to elite MBA programs, they’ve got PhDs from some of the best schools in the world, and they live in a world where they are the best of the best at what they do. And I remember there were many times when we would talk about doing optimization work to figure out what is the best way to staff assignments, what’s the best way to deliver assignments, what’s the best way to train people. But you’ve got a bunch of people in that room who think they’re the smartest people in the world, and if they are doing it this way, there’s no better way to do it. And I suspect there’s an element of that in the medical profession where doctors assume that they are the stars of the team, and it doesn’t matter what game plan the coach is calling, because they will make it work, and as long as they think it’s working, there’s no reason to change it. That’s what I think is happening there.

Mark 59:17
But I think you’re right. Surgeons are amazing people. I will say that first of all, but they’ve been stars their whole lives. I mean, they were their high school valedictorians. Um, I mean, if they played sports, they were on sports teams, yes, and and they were, many of them are good musicians as well. Their career path was laid out for them years ago. They are driven, usually male, alpha males, there are more women, but I think in the world of surgery, it’s still 10 to 20% women more coming. But. Their women are still a minority in the world of surgery. So so they went to to 12 years of schooling, like most Americans, you know, high school and and eight years of grade school and junior high. They they got bachelor’s degrees, then they they got medical degrees. That’s four years. If you’re a surgeon, that’s an there’s another two years on there for a minute specialization. And then there’s typically another year or two for fellowships to be to be fellows, and in sub specialty areas where you’re really going to make a lot of money, and these guys have been catered to, you know, their their whole professional lives. They’re recruited to come to to hospitals. Sometimes, some hospitals have given them loans that they forgive to buy a home, even businesses. I’ve heard there there are people they they make a really good living. Most, most surgeons are millionaires, multi millionaires, many of them, they typically live in gated communities or or exclusive communities. You know, they drive the best cars. They’ve got trophy wives. They come to work. They do surgery on Monday for four hours. They’ll see patients on Wednesday or Thursday. They’ll visit their patients in the hospitals. Well, one of the other reasons they want to do their surgeries on Monday or Tuesdays is most of the time their patients are going to be released, discharged before Friday, so that they don’t have to come in on weekends, so they never have to work weekends in their lives. They maybe work three, three and a half days a week. They work hard. I will not take that away from them. And and many of them these days start their own ambulatory surgery companies or or they, they are a part of a physician practice that owns an ambulatory surgery center. So you know, they’ll operate in the hospital, and they’ll also operate at their ASC. And at their ASC, they don’t take any Medicaid patients, and some of them might not even take Medicare patients. They can be very exclusive about they let in. And so they’re it’s only going to be lucrative, whereas, you know, they might end up doing a procedure in a hospital on someone that they’re not going to get paid very much, if at all, for

Michael 1:03:02
If anyone was listening to this in high school and they were not sure if they should be doctors, I think you just convinced them

Mark 1:03:09
well. But you know, they they also, they pay a price for it a few days a week. They’ve got crazy hours. They pay high medical malpractice costs, although increasingly, doctors are joining physician staffs to be employed by hospitals. Uh, when I started out as a health reporter, employed physicians only constituted maybe 10 or 15% of of all physicians. Now it’s over 50, I think it might be 60% and a lot of areas in primary care, it’s 70 or 80% employed physicians employed by hospitals. When you’re employed by the hospital, you typically don’t make as much money, but you have fewer headaches. You don’t pay your own medical malpractice cost. The hospital does. You don’t pay the nurses and staff that are part of your surgical team. The hospital does. On the other hand, though, you know if you’re doing that, then you don’t you’re working at the hospital’s ambulatory surgery center, not your own, because hospitals also have their own outpatient surgery centers too.

Michael 1:04:29
So basically, you got these guys who had the best treated like rock stars, and now they’re being told they’re not the best at running their business.

Mark 1:04:38
Yeah, yeah, and they don’t like that. But one thing about surgeons is they’re very intelligent people, and most of them are convinced by the data and when they see that they can be home for dinner with their wives if they want to be home for dinner with their wives, and that they’re going to have. A normal work week, that they’ll be home five or six o’clock, if at that, maybe earlier, and that their patients are having better outcomes, that they’re not losing their nurses to burn out, that they’re not losing their anesthesiologists and other parts of their surgical team to burn out that that their patients are having a better time with a few few fewer medical errors and higher patient satisfaction. They’re frequently, almost always convinced. Well, let’s give it a try, and if it doesn’t work, in six months, we can go back to the old way. And usually they’ll they’ll stick with it, but it makes them convincing. And typically, when lit vac has done that, he has as part of his team surgeons and hot retired hospital CEOs who kind of go along and say, Hey, listen, I don’t blame you. The first time I heard this guy talking, I thought he was full of shit too. Well, I’m sorry I said that on a podcast.

Michael 1:06:16
That’s okay. This is not the 2000s I think the audience understands. Mark. Thank you so much. That was one of the most interesting discussions I’ve had in quite a while. I learned a lot. It was very fascinating to see similarities between industries, but I do agree with you, because the negative consequences in healthcare means death or some other kind of thing we don’t want to mention. It has to be taken more seriously.

Mark 1:06:39
Yes, I agree. And, and I think that’s something that surgeons and hospital CEOs will be dragged into kicking and screaming. But I think eventually this is going to be business as usual. It’s just going to take a while, and, and, and that that’s unfortunate, because we have somewhere between a quarter of 1,400,000 people who die every year unnecessarily in hospital. So I’m not talking about you have a heart attack. They take you to the hospital and you don’t make it. I’m talking about wrong drugs. You go home with an infection that you didn’t have when you went in and and it’s, it’s, it’s terrible. We have among industrialized nations, you know, we have the, the highest hospital mortality rate in in in the world, and it’s awful and it’s unnecessary, and it could be a lot lower, and it would be if Dr lit Vax programs were adopted all across the country. I’m I’m sure he told you about about the study by two professors from Stanford and and Berkeley, who who concluded that if every US hospital adopted lit facts methods, it would say between 120 and 150 billion with a B annually, and that was in $2,012 today, it’s more like 150 billion to 180 billion, which starts to come close to 20, 25% of Medicare costs, which is astonishing. We could, we could save an awful lot of money while improving the quality of care. And maybe the United States could go up a few notches from number 10,

Michael 1:08:42
Yes, having a follow up discussion with him because the topic was so interesting. But I’ll say the topic has many moving parts, so you don’t want to rush through any piece you need to,

Mark 1:08:51
Oh, I agree, yeah. It’s, it’s, what’s so interesting to me is, is there are applications outside of hospitals in absolutely and community health centers and physician practices. It’s been tried and proven to work in in a community health center in New Orleans, in a poor neighborhood that was ready to close, and now it reports millions of dollars in revenues, and has been able to expand access to services and and even to physicians and experts in the in the area of of healthcare inequities. And there are many, and many of them are racial that it, it, it’s a way of reducing racism, because it’s expanding access to care to minority populations who really need it. And then there, there are many other components. You’re You’re right. I hope you’re able to delve into those with. Dr Litvak, who I think is a fascinating fellow. He

Michael 1:10:04
is, well, I would like to have a follow up discussion with you as well, pending your availability, because out gay is a pretty big topic here, and there are some other topics we could cover, but we’ll touch base.

Mark 1:10:15
I’d like to do that. That’d be fun.

Michael 1:10:17
I like that. Mark. Thank you so much absolute pleasure,

Mark 1:10:20
and look thanks for giving your time. Take care. Ciao, Cheers. Bye, bye.

Michael 1:10:25
As we wrap up, today’s podcast is sponsored by strategy training.com if you want to strengthen your strategy skills, you can get the overall approach using well managed strategy studies as a free download. Go to firms consulting.com forward slash overall approach. And if you’re looking to advance your career and need to update your resume, you can get a McKinsey and BCG winning resume template example as a free download at www dot firms consulting.com forward slash resume PDF.

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