By John Schaffner

Grady Hospital CEO Michael A. Young

“Grady Hospital is alive. … It is back,” hospital CEO Michael A. Young recently told Buckhead business leaders. “But we still need your help.”

Speaking to the breakfast meeting of the Buckhead Business Association, Young stated, “There is a tremendous transformation under way at Grady.

“When I came in 2008, there was a new board of directors who set a transformational vision for Grady,” he explained. “They believed the hospital was on the verge of closing. I thought it would take three years to turn things around. Fortunately, I was wrong. We made a remarkable turnaround, and in 2009 Grady had its first black bottom line in 25 years.”

The CEO, who came to Atlanta from Buffalo, where he had turned around a hospital system in three years, told the business group, “In 2009, we improved our operating bottom line by $79 million over 2008. We made that turnaround while absorbing a $9.6 million reduction in our state trauma funding. So it was really over an $80 million improvement.”

He told the audience the people in Fulton County should want “to shine my shoes. In 2007, Fulton County gave Grady $76 million. This year, Fulton County is going to give $50 million. So I have reduced your tax exposure by $26 million.”

He proclaimed, “Grady is a bargain.” He runs a 900-bed hospital with five administrators. “Without Grady, you are going to pay more.”

How was the turnaround accomplished? He cited several examples:

“We lowered our total operating expenses by 1 percent. We reduced our labor costs by 3 percent, and reduced our head count by 4 percent by changing processes and improving efficiencies.”

Grady eliminated the use of rental-agency nurses, saving $8 million, and recruited 350 new nurses. “We don’t have any rental nurses – because at 3 p.m. those nurses punch out and they are gone. They are not committed at the same level as an employee nurse.”

“We reduced overtime by putting in a fingertip time card system. It was interesting to see how many people actually came to work.”

“We saved $4 million last year by going to a self-insured health plan” for the 5,000 employees.

“We literally redid every contract we had in place. For instance, we had an IT contract that was let in 1978, and we paid the same full maintenance on a 25-year-old software system that we paid in 1978.”

“We feel everybody has a responsibility to pay what they can pay. When health care is free, people don’t follow up on that.”

The hospital is keeping closer tabs on prescriptions. “Grady was giving away too many free pharmaceuticals. We are the second-largest pharmacy in the U.S. – the equivalent of 20 CVSs. We give away 5,000 prescriptions every business day.” The hospital gives away $80 million worth of drugs a year.

“We redirected a number of our emergency room patients. We have one of the top five emergency operations in the U.S. – about 120,000 outpatients a year. We now have that below 100,000 for the first time in many years.”

“We reduced hospital stays by a day and a half in critical care, from eight days to 5.8 days.

The hospital’s equipment was antiquated. “We have replaced every piece of X-ray technology in the hospital. We have the finest radiology department in the country.”

Young pointed out that Grady Hospital has “about 14 percent of the market share of patients (in the metro area) and about 1 percent of the paying market share. Sixty percent of Grady patients do not have a medical home, he added. “We saw 52,000 more patients last year than we had ever seen before and who did not have insurance.

“Did you ever think about where the 100,000 people in the Atlanta area who lost their jobs last year went for health care?” he asked. “Have you thought about what that would do to your health care delivery at your hospital, at your doctor’s office? I think about that every day,” he added.

Young said Grady’s biggest challenge over the years has been not being able to plan and equip for the future. When he got to Grady, it had 40 ambulances but only 17 of them worked. “Now we have 40 ambulances on the road,” he said. He spent $110 million in gifts to the hospital on capital replacements.

He said his team is racing to put in an electronic medical records system by Nov. 1. “Grady is doing it in 12 months, which has never been done before in the U.S. We currently produce 40,000 pieces of paper a day.”

Young warned the audience, “This recent health care reform for Grady is either going to be the biggest grand slam ever or it is going to be a big strikeout. We survive off a program called Disproportionate Share. In 2006, it was $130 million. This year it is going to be $80 million, and that is how Grady got in trouble before,” he explained.

“Let me tell why you should care,” he stated. Pointing out that Grady graduates 250 doctors a year, “If Grady goes down, the entire medical education program in Georgia goes down. The wait you will have to get in to see your doctor will triple. There would be no Level 1 trauma center here.

“I need your help on the state level to let the government know how important Grady is,” he said.

“Second, there is a proposition on the Nov. 4 ballot. It is a $10 fee when you renew your license each year” to support a statewide program of trauma centers.

“We only get about 10 percent of the funds,” he explained. “We need about five or six more trauma centers spread around the state. Ten dollars every year to save your life is well worth it,” he concluded.

John Schaffner

John Schaffner was founding editor of Reporter Newspapers.