Randy Moore, CRNA, DNP, MBA: Inside Anesthesia

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Jeff McLaren (00:06):
Well, welcome today to another episode of Anesthesia Economics. And today we have a special guest. We have Randy Moore who's the Chief CRNA at NorthStar Anesthesia. And Randy, what's your title? What's your actual official title?

Randy Moore, CRNA, DNP, MBA (00:24):
It's pretty obnoxious. Yeah, Chief Anesthetist Officer, and I'm also the Executive Vice President of Clinical Strategy.

eff McLaren (00:32):
Okay, good. Great, great, great. I mean, clearly there's a lot to shake a stick at at NorthStar and also just from the industry at large. A lot of change, as you've written about in your blog, Inside Anesthesia, by the way, which I think is phenomenal. I think it is just fantastic. It's such an insight from multiple vectors into problems and potential solutions, however far out and difficult they might be for some groups and some facilities. Real insight as to the really valuable pathways to solving the problems in the industry. It's awesome.

Randy Moore, CRNA, DNP, MBA (01:15):
Well, thank you. Appreciate that. Thanks for reading.

eff McLaren (01:18):
Yeah, no, I love it. I don't read it every single time when it comes out, but I try to make it back and make sure I hit all of them. It's great. You started that, was it April of last year? Is that right?

Randy Moore, CRNA, DNP, MBA (01:28):
I think that's right. Yeah. Yeah. It's been a labor of love. Started with no audience, but slowly but surely it's starting to build out. So when you start something like that, you wonder if there's an audience or if you're any good at it. So it's nice to see people really starting to gravitate towards it and read it and give me feedback. And it's been a real fun project.

Jeff McLaren (01:50):
So you've been doing it coming up on a year here, over 10 months. Do you have any lack of topics that you might want to cover? I mean, there's so many and there's so many angles to hit this at.

Randy Moore, CRNA, DNP, MBA (02:05):
Yeah. Yeah. So I've not had writer's block yet. And I did move from doing weekly-

Jeff McLaren (02:11):
I didn't use that term, but that's what I'm ... Yeah, exactly.

Randy Moore, CRNA, DNP, MBA (02:13):
Yeah. I mean, some of these come a little bit easier than other topics, but I was doing it weekly for a while, but I decided in January to pivot to biweekly, which gives me a little bit more room to breathe. And things have been getting busier and busier, both with NorthStar and at home. So that seems to be a little bit more of a manageable cadence. But no, I mean, there's so much going on in the anesthesia world and in strategy and in leadership that I find myself not struggling with topics.

Jeff McLaren (02:44):
I can believe it. Do you mind if I throw out some topics and- Let's do it. ... get your thoughts on it because I'm sure ... I know you have a perspective, which I think is great. So the ASA and the AANA fight to the death situation that's evolving or it seems to be in the industry. And I know that you favor peace there between the parties. And I don't think that the discord is serving either party right now. And it has to have had an impact on Medicare rates just because there's discord in the lobbying groups. You may have a perspective on that one.

Randy Moore, CRNA, DNP, MBA (03:32):
Yeah. Well, I would say not just from the federal insurers. I think it's certainly on the commercial insurer side too. So for those of you, for the folks on your audience who may not know, I was the CEO of the AANA for four years. So I was arguably the chief architect of AANA advocacy. So I am acutely aware of the internal and external dynamics that occur within the organization. So I worked ... Prior to being the CEO, I was on the board for four years as well, or three years. So I was on the board for three years and CEO for four years. So I think I have a pretty good sense of how things are done and why things are done the way that they are. And I came into my role as CEO, fairly naive, thinking that I was going to be the individual to help bring both organizations together.

(04:24):
And my strategy was to focus on economic issues. I think there's one thing that we can ... If you have the Venn diagram of the things that we agree with and don't agree on,

(04:34):
There's a nice slice right in the middle around economics that I thought could be a way for us to portfolio

Jeff McLaren (04:40):
It really should be a pretty big football. It really should be pretty big.

Randy Moore, CRNA, DNP, MBA (04:43):
I would think so. I would think so. Yeah. Yeah. And it's hard because both organizations or governance structure, their internal politics really don't necessarily position things well for collaboration, in some cases, even communication. I don't know that there's any real meaningful collaboration going on, and there's probably very little communication today going on between the organizations. And that goes back before I was alive, before you were alive in terms of how the two organizations have advocated for their respective constituents, which is definitely your job. If you're a membership organization, you have an obligation to advocate and support your members. But I think it gets to the extreme where there are things that are, to me, obvious low-hanging fruit, things that just hurt the specialty period, whether you're a physician or a CRNA.

Jeff McLaren (05:40):
That's right.

Randy Moore, CRNA, DNP, MBA (05:41):
And I would argue that both organizations have unfortunately done a disservice to the vast majority of the members because they've not been able to find that common ground of collaboration. Both of these organizations are extremely impressive in terms of the talent that they have, both on the management side and on the elected side, the financial resources. Both organizations have significant financial resources, including very large political action committee funds and a very significant presence in DC and at state capitals, but they are not working in collaboration. And the commercials are very sophisticated. So they say, oh, there's a divided specialty and there's a way for us to make some policy decisions relative to reimbursement and know because the profession is divided or the specialty is divided and the organizations are not going to work together, we're going to keep doing that. And you're seeing it play out in real time.

Jeff McLaren (06:40):
And it just affects rates. In the end, it just affects rates and economics for both parties.

Randy Moore, CRNA, DNP, MBA (06:46):
100%. Yeah. And it's unfortunate because there really are some pretty clear areas of opportunity. And I think impact too, considering that these are both very large, well-respected advocacy teams and with a lot of financial resources and a lot of influence both in Washington, DC and in state capitals, and a lot of that is wasted because of the conflict that exists between the two organizations to this day.

Jeff McLaren (07:14):
Yeah. Yeah. Well, that makes sense. And I guess there's now in place and then movement afoot potentially for a 15% for the personally performed GZ component as well, which has its own level of controversy, and that causes a certain amount of discord in and of itself, right?

Randy Moore, CRNA, DNP, MBA (07:37):
Yeah. And if you looked at the UnitedHealthcare, the Aetna, the Cigna, it's almost across the board at this point in time.

Jeff McLaren (07:46):
Oh okay.

Randy Moore, CRNA, DNP, MBA (07:46):
Yeah. The playbook is like, well, how much can I get away with without being sued or having to deal with a significant public backlash? And you saw last year, they really stepped in it. There was a decision by one of the commercials to, we're going to cap anesthesia time at a certain amount. So if the surgery goes longer, and they flew too close to the sun on that one, because it was just ridiculous. It defies any kind of rational understanding of how anesthesia is delivered, but they don't-

Jeff McLaren (08:20):
And like you said, what can they get away with? Do they try to get away with that?

Randy Moore, CRNA, DNP, MBA (08:24):
And this and other things, including decreasing or eliminating reimbursement for modifiers, you're seeing that play out and they're getting away with it largely. And so they're going to keep pushing the boundary of what they can do because they're smart, they're strategic, and they know that the specialty is divided and the specialty's ability to respond, imagine if they would've done this to cardiology or orthopedic surgery, I think it would've been a very different response. And so as you see this stuff play out, we call it the normalization of deviance. The more you get away with something, the more you're likely to push it and you're seeing that play out in real time.

Jeff McLaren (09:10):
Interesting, interesting. So does NorthStar have a strategy that you feel is unique in addressing that challenge or do you see that many of the national providers are moving in generally the same direction? I know there's a large component of physicians and CRNAs in most all of the large organizations.

Randy Moore, CRNA, DNP, MBA (09:36):
Yeah. My hypothesis on this is that no one in Washington DC really cares what NorthStar thinks about these issues. And it's easy to say-

Jeff McLaren (09:50):
Or anyone in particular, right?

Randy Moore, CRNA, DNP, MBA (09:52):
Poor corporate healthcare. And so our position has been that we're not out front on advocacy and that it really is the responsibility of the membership organizations because they do. These decision makers, these policymakers, whether they're elected or appointed, actually really do care what their constituents think and what these large organizations, how they feel about certain issues. So we have provided guidance and support to both organizations about, you need to be out upfront on this, these are talking points, this is what we think the impact is across the profession, these are the unintended consequences and this is what's likely going to come down the road and positioned ourselves that way. Now, the other thing is this is also, we have contracts with commercials and if they unilaterally make a policy decision that is really problematic for us and it opens up a potential avenue of contract negotiation, which is fine for us, but if you're a mom-and-pop anesthesia group, you don't have the resources or the leverage, then it's a very different animal.

(11:04):
And those folks really need to rely on advocacy from the respective membership organizations. And if that doesn't happen, then they're in pretty bad shape.

(11:17):
The real element of this that often is not talked about is like, who gets really harmed on this is hospitals and health systems because they become the financial backstop.

Jeff McLaren (11:30):
They're the payer of last resort, aren't they?

Randy Moore, CRNA, DNP, MBA (11:31):
The payer of last resort. So

(11:33):
If there's a big move from a reimbursement policy decision that impacts a smaller regional group, what they're going to do is they're going to immediately turn to the hospital that they have a contract with and say, "Yes, your stipend has to go up in 5% or 7% or 10% because now our reimbursement has gone down in a material way." And usually this impacts the hospitals that can at least afford it the most. So think about small rural critical access hospitals that have no margin or a negative margin, and then now they have to pay even more for anesthesia because of these reimbursement-related activities from the commercial payers.

Jeff McLaren (12:11):
I mean, it's really a crisis in that segment of the market.

Randy Moore, CRNA, DNP, MBA (12:14):
100%. I mean, if you look at the amount of hospital closures and even short of closure, you look at some of these critical access hospitals are shutting down their OB service or psychiatric, inpatient psychiatric, the things that just don't make money and are really hard to support and-

Jeff McLaren (12:32):
They used to be supported by the OR.

Randy Moore, CRNA, DNP, MBA (12:34):
Exactly. Exactly. And so you're starting to see, or not starting, you're continuing to see this growth in healthcare deserts and women having to drive two and a half, three hours in order to have a baby somewhere. And that's, I think, only going to get more challenging moving forward as the reimbursement headwinds will be getting worse rather than getting better.

Jeff McLaren (12:56):
And I would imagine that when the hospital has to bear more, that when they can't provide a certain or fund a certain amount of coverage, then that causes a certain amount of surgical service to leave, which then reduces the funding for the remaining surgical service, which causes more to leave. And it's kind of this downward spiral that's continuing.

Randy Moore, CRNA, DNP, MBA (13:18):
Yeah, 100%. And we've seen this in real time where we've had facilities that we've worked with that have slowly just kept cutting and cutting until they get to the point in time we have to cut to the bone. And then some of those facilities are, if they're lucky, they're acquired from a health system. And if they're not lucky, then some of them actually have to shut their doors.

Jeff McLaren (13:42):
And that's happening all over the country.

Randy Moore, CRNA, DNP, MBA (13:44):
Yeah, it does. Yeah. And in the parts of the country that are at least resilient where there aren't other facilities for these patients to go to, those are the ones that are being harmed the most.

Jeff McLaren (13:58):
So yeah, and all that's tragic. And in many ways, I think avoidable with the right level of cooperation where we hit on at the beginning of our comments. Just in terms of raw numbers, where do you think the body of CRNAs and the population of CRNAs is going in the US? I haven't tracked this specifically, but are there more schools opening or are the class sizes getting a little bigger in the schools that are open or is it a little bit a combination of both?

Randy Moore, CRNA, DNP, MBA (14:35):
So the programs are responding. Sometimes I jokely refer to this as AC and BC. So BC is before COVID, AC is after COVID. So think as COVID is not necessarily a disruptor, but an accelerant. And what we were seeing, so this stuff was happening before COVID.

Jeff McLaren (14:54):
Everything felt very different for us too, from our side, right around COVID.

Randy Moore, CRNA, DNP, MBA (14:59):
Right.

Jeff McLaren (15:00):
Yeah.

Randy Moore, CRNA, DNP, MBA (15:01):
And that was the match or that was the gasoline to, you saw all these issues really accelerate. And so to be clear, there's been a supply demand imbalance of CRNAs and anesthesiologists that predated COVID, but COVID really kind of ripped the bandaid off. And then what we're seeing now more on the CRNA side than the anesthesiologist side, we're seeing the law of supply and demand remains undefeated. So anytime you have a material shortage of a product or a service, the price of that product or service goes up. And that means CRNA compensation has gone up, call it 30% in the last four and a half, five years, and the anesthesiologists are in a very similar trajectory.

Jeff McLaren (15:48):
Well, I'm interrupting you, but is some of that increased due to the fact that the program went from a two to a three-year program for CRNAs? I mean, it had to have some effect, but it wasn't ... Yeah.

Randy Moore, CRNA, DNP, MBA (16:01):
And the effect was greater than what was predicted. So I was on the inside of that a little bit when I was at the AANA and- Yeah, I was going to ask you about that. ... made the transition from the master's degree to the doctorate. They didn't ask our opinion, but they said we asked questions like we're really worried about the potential disruption in the pipeline. And it was like, this is going to have no material impact on pipeline. And at 100% did.

Jeff McLaren (16:24):
Well, I understand that. I mean, that doesn't make sense on its face. You basically took an entire graduating class out of a decade. I mean, you had to have, because people that would've graduated in two are now graduating in three. Now it feathered in over a period of years, but still.

Randy Moore, CRNA, DNP, MBA (16:41):
Yeah. And I think some of the optimism that they had was that they thought the programs were going to transition earlier and faster than what they did. But human behavior being what it is, a good number, I don't know what the exact number is off the top of my head, but I would say a majority of programs waited until the last method. So what you saw was the disruption in pipeline. And so programs, they skipped a year or they decreased their cohorts in order to effectuate that transition from master's to doctor's degree. That all happened at the worst possible time, which right in the lead up to COVID. And so you saw this kind of material disruption in the CRNA pipeline at the exact same time it needed to not be disrupted, and then COVID hit, and then there was all kinds of workforce-related disruption related to that that we're still still experiencing today.

(17:31):
So- Those

Jeff McLaren (17:32):
The surprises, all the stuff that just piled on on top of all this.

Randy Moore, CRNA, DNP, MBA (17:36):
Yeah, it was like a perfect storm situation from a workforce perspective. And so today what you're seeing is what happens, this is what markets do. Now there's something like 150 nurse anesthesia programs, which is a significant amount of growth in the last five to seven years, and there's probably something close to 20 in capability review, and we're really starting to see that now inflection of increase in nurse anesthesia graduates per year. So now in 2025, we saw about 3,200 graduates from nursing anesthesia program, just to give you some reference, probably-

Jeff McLaren (18:12):
Interesting.

Randy Moore, CRNA, DNP, MBA (18:14):
Eight years before that, it was about 2,200, and then it stalled out for a period of time, and now we are experiencing pretty significant year over year. So my hunch is by 2030, we're probably knocking on the door at 5,000 graduates per year, which is obviously going to, I think, have a pretty big impact on the workforce for CRNAs.

Jeff McLaren (18:35):
No question. I've got a nephew in law that is getting ready to step into his third year of the program.

Randy Moore, CRNA, DNP, MBA (18:44):
Oh yeah.

Jeff McLaren (18:46):
Sorry, to be a CRNA. And look, he's super smart guy and he's really excited about his career after his program. So when the transition was going to happen, and you said that many of the programs waited to the last minute, did they wait because the new or the applicants didn't want to be in school for three years, they would've rather gotten out and two and started earning? Was that why they waited and when they had to do it, they had to do it?

Randy Moore, CRNA, DNP, MBA (19:18):
I think it was more, honestly, around procrastination. I mean, there's a bell curve distribution of how people approach change. There's always the early adopters and there's the middle of the hump, and then there's the late adopters. I would say that with this scenario, I think a lot more folks waited until the 11th hour than was predicted when they were doing the analysis. And we were asking tough questions about the impact to the workforce supply. And so at this point in time, even with the amount of program growth, you're still seeing considerable interest in nursing anesthesia programs.

Jeff McLaren (19:51):
Oh yeah. I hear people, age cohort of my nieces and nephews, he's one that's in the program, but I've got a couple of others that are in nursing that are considering it. So it's a thing. And I know from my peers, their kids that are getting out of college, going nursing, but may then follow on and become a CRNA. So it's definitely out there. I mean, it's incredibly lucrative for a young person.

Randy Moore, CRNA, DNP, MBA (20:25):
Yeah, absolutely. I mean, yes, you are compensated well, and the work is really challenging and rewarding. So it used to be that they would call CRNAs the best kept secret in healthcare. I don't think that's the case anymore.

Jeff McLaren (20:41):
I don't think it's the secret anymore. No, but I tell you, the folks that I know and the kids that I know that are considering it or in the programs, what encourages me is they really are smart folks and they have a real interest in being intellectually challenged all through the course of the day. I mean, I just enjoy seeing that in their personalities and how I think their personalities would be really good fits in that role.

Randy Moore, CRNA, DNP, MBA (21:07):
And I spend quite a bit of time interacting with nursing anesthesia students, and I am honestly blown away by the caliber of folks that are competing to get into these programs. And I joke, and probably not a joke, I don't know if I would've been able to get into nursing anesthesia school with accountability. I don't know about that, right? Yeah. So I agree. It's an incredibly impressive group of individuals. And so I feel pretty good about the future of the profession just based on the caliber of individuals that are competing to get into these programs.

Jeff McLaren (21:41):
So I didn't do the math, but if it's going from in the next five years, from 3,200 to 5,000, this is an area where I don't track, is the physician graduating rate for anesthesiologists once they finish all of their training growing at that rate? I can't imagine it is, but-

Randy Moore, CRNA, DNP, MBA (22:01):
It's not. It's not. And there's much more regulation and bureaucracy and complexity to increasing the physician pipeline because of the way it's tied to federal reimbursement. They're trying and they are increasing their cohort size or they're increasing the number of residencies, but not anything close to the trajectory of what we're seeing in nursing anesthesia.

Jeff McLaren (22:24):
Yeah. That's interesting. Now, when they went from a two to a three-year program, was there a large challenge for those programs to ... How did the curriculum change when that timeframe changed? Was there just more clinical component? Was there more classroom component, for lack of a better descriptor of the split?

Randy Moore, CRNA, DNP, MBA (22:49):
I mean, some of the criticism about the movement was that they really weren't adding more clinical. They were adding more leadership theory, policy to build out a doctoral degree. Now, having said that, the programs writ large, they have increased significantly in the quality of their clinical experiences for CRNAs, even since I've been out of the program to meet whatever it's ultrasound-guided work that they're doing, ultrasound-guided nerve blocks and other kind of advanced procedures, that is at a very impressive level, but that occurred completely independent of the transition to the doctorate. It was just that's where the profession was going and that's where employer's expectations were going. And so the programs have had to adopt to that.

Jeff McLaren (23:35):
And so the rigor just had to become more stringent. Yeah. Yeah. Interesting, interesting. So in scanning through your last blogs, I mean, there's so much good stuff here. I mentioned that at the beginning, but it really is just fantastic. I encourage everyone that is seeing this today to read your Inside Anesthesia blog. It's just fantastic. Interesting concept of cultural debt. I think the concept came up in one of your latest blogs. What do you make of that?

Randy Moore, CRNA, DNP, MBA (24:11):
So I have a pretty simple theory of how do you differentiate yourself as an employer of CRNAs and anesthesiologists? I think what we're seeing today is there's levers that you can pull in order to recruit and retaining folks. And the most obvious one is compensation, which is right answer. You got to be market competitive. But if I were to be critical of the anesthesia business ecosystem, I would say that if I looked at most of the folks who are in that space, they're only pulling that one lever. And my theory is that competitive advantage is not found in compensation, it's found in culture, and that is-

Jeff McLaren (24:52):
I agree 100%. Look, almost all studies in different industries will show this, particularly in white collar work, particularly in white collar work, right?

Randy Moore, CRNA, DNP, MBA (25:01):
Yeah.

Jeff McLaren (25:02):
Yeah.

Randy Moore, CRNA, DNP, MBA (25:03):
And so it sounds simple, but it's not. I mean, it's a simple concept that's really difficult to do, which is if you're able to create a really strong culture and you are competitive on compensation. So you can't get out of this thing alive without being competitive in compensation. So you can't say we have great culture, they're far going to pay you less. I mean, these people are smart, they're not going to be manipulated and taken advantage of. But if you can stay in the zone of competitive compensation, you differentiate with culture. And the best way you differentiate with culture is to make sure you have great site leaders. And what I see, unfortunately, is far too often we allow people to be in roles who are ineffective. And so if I look at, so at NorthStar, let's say we acquire a new site, we've won a contract, we come in, the first thing that we will analyze is who are the leaders on the ground?

(25:56):
And if we have a site, honestly, let's say we have a site that may be destabilizing, meaning you see the vacancy, the vacancy's going up, the turnover's going up, the premium labor spend is going up. For me, I assume it's a leadership problem, it's all proven otherwise. And I'm correct about 90% of the time.

Jeff McLaren (26:14):
Oh, I can believe it.

Randy Moore, CRNA, DNP, MBA (26:16):
If I don't have anything that was going on the ground, if I look at those data points and I see that kind of trending, it's almost always a leadership problem and that creates what I call cultural debt. So you will allow this culture to fester because you're not focused on or you don't have the courage to deal with an effective leadership, but either manage them up or manage them out as quickly as possible. And then you end up actually having to overpay for clinicians, whether it's locum tenens or you're having to pay above top of market because it's a really shitty problem. It's a really bad work environment. And-

Jeff McLaren (26:53):
It's like battle pay in the military. If you're in combat pay.

Randy Moore, CRNA, DNP, MBA (26:58):
And I think my hypothesis is that that's a pretty stupid way to run a business. And if you want to be really good, you have to have really good leaders and it is directly impacting margin. So if you were just not talking about we have a moral responsibility to create a good culture, we also have a financial and operational responsibility to create good culture. And you can't get out of this without having great site level leadership.

Jeff McLaren (27:26):
And I imagine that some of the pressure on leadership actually comes above the direct service line managers. It comes from the C-suite of the facility that might be depending impossible parameters on the service line that this just can't be met that increases stress that then causes without the appropriate emotional control and without the appropriate EQ leadership capability of the individual, it's just going to manifest into poor behavior, which is going to then lead to the cultural debt.

Randy Moore, CRNA, DNP, MBA (28:03):
Yeah. And I think that a big chunk of leadership is that this is a relationship business. If you're in leadership, you're in the relationship business. And if you want to have the influence, you have to develop relationships with key decision makers and you have to bring them along. You have to educate them without being patronizing. You have to empathize with them in terms of, yes, CEOs of hospitals absolutely want to blow out OR capacity because they see it as the economic engine in the hospital. And if you're positioning yourself as the person who's limiting them from doing that, you're going to lose your job and you're going to lose your contract. And so you have to educate them on like, "Hey, how do we do this as efficiently as possible? I also want to build out OR capacity. I also want to bring in surgical volume, but let's be smart about it and let's talk about how we can do this cost effectively and efficiently.

(28:55):
We're not bringing out our teams and we are delivering real sustainable margin to your facility," and you pivot that from a zero sum to a win-win conversation, then you get in a more productive zone, but that requires a lot of patients in EQ and diplomacy and empathy. And that's really hard for ... You're time constrained, you're annoyed, people are coming at you from all directions, complaining, but you really have to invest in those relationships if you want to be successful.

Jeff McLaren (29:32):
Yeah. Anesthesia is not free. I think you wrote about that, maybe even said those words. It's true. It used to be a cost that ... What's that?

Randy Moore, CRNA, DNP, MBA (29:43):
Yeah, I mean, the ASC is a perfect example. So the ASC used to be pretty much a no subsidy business, meaning that because of the hospital.

Jeff McLaren (29:50):
Yeah.

Randy Moore, CRNA, DNP, MBA (29:51):
So you win an ASC contract, you are going to be able to be ... Your margin as an anesthesia business is going to be fine because they have a really figurable payer mix. Those days are over. The ASC is

Jeff McLaren (30:03):
When I say hospital, I meant ASC because ASCs definitely used to be free.

Randy Moore, CRNA, DNP, MBA (30:09):
Not today. No, no. Maybe 10%, maybe 15%, but it used to go ... And I'm making this data, I'm making this number up off the top of my head, but it's directionally correct. So it used to be 85% of all ASCs, no subsidy. I would say in about a three-year period, we flipped that from no subsidy to about 85% of these facilities now have to subsidize. And that number's ticking north, it's getting closer.

Jeff McLaren (30:35):
So I would imagine that just given ASC economics, that that's causing some to close.

Randy Moore, CRNA, DNP, MBA (30:41):
Yes.

Jeff McLaren (30:42):
Or changes the economics to the surgical practice and the management company that are partners in that ASE.

Randy Moore, CRNA, DNP, MBA (30:48):
Yeah, you're seeing a lot of ... I mean, it's still a high growth area because surgical volume is aggressively out migrating from the hospital to the ASC, but you're seeing ASC go up, then you see them close in 18 months,

(31:02):
And you're seeing a lot of M&A activity in the ASC market. That I think is only going to accelerate. And on the anesthesia side, what we're seeing is a lot of contract churn. So used to be if you had a C minus anesthesia partner at your ASC, but you didn't have to pay a subsidy, okay, that's fine. They're not awesome, but they're not annoying me. But the day they show up and say, "We now need a subsidy," your expectations relative to their performance and their partnership changes very quickly. And we're seeing a lot of ASCs fire their anesthesia vendors and go look for alternative anesthesia vendors because now they have skin in the game financially on the anesthesia in a way that didn't exist two, three years ago.

Jeff McLaren (31:50):
And so that inflection of asking for a subsidy causes really a rethink on who's providing coverage at that facility.

Randy Moore, CRNA, DNP, MBA (31:59):
Because

Jeff McLaren (32:00):
You're then saying, at what price?

Randy Moore, CRNA, DNP, MBA (32:02):
At what price. Yeah. And now you're on the hook, then you're going to be very interested in and much more interested invested in who your anesthesia partner is. If I have to pay for this thing, then I want the best. And we saw this in the anesthesia in the hospital business during and immediately after COVID, there was an enormous amount of contract churn. And that was because there was a lot of groups who were struggling, and still to this day, struggling to put CRNAs in the anesthesiologist and see. And now the ASC was probably about 18 months behind that. And the big inflection point is when it went from a no subsidy to a subsidy business, then boom, significant amount of contract term.

Jeff McLaren (32:49):
Yeah, no, we saw it in our customer base too, just how there was much more disruption than we had heard in the prior years. I mean, it seemed to me that the whole subsidy shock started to be felt about, from our perspective as a software vendor to the industry and an information systems and solutions vendor to the industry that it happened around 2019, right around that period. We were saying COVID, but it felt pretty palpable at the end of 2018 and 2019. I'm sure it was happening before that, but it came to my attention that this was really a thing and a real problem.

Randy Moore, CRNA, DNP, MBA (33:31):
Yeah, I just wrote subsidy shock down. I'm going to steal that. So I think, yeah, because if you look at anesthesia, the two big macro chins are workforce issues and reimbursement. And both of those issues preexisted COVID, but during immediately after COVID, they really came to a head. Whether it's no surprise billing, whether it's the decrease in reimbursement from the federal government, what's going on with the big, beautiful bill, there's nothing but headwinds on the reimbursement side That coupled with significant year-over-year increases in CRNA and anesthesiologist salary at the exact same time, created this perfect storm scenario, and you're still seeing the implications. Both of those things still are very much in play as drivers of disruption.

Jeff McLaren (34:22):
And I think the corporatization of anesthesia at certain levels created ... In certain markets, not in all markets, in certain markets, it created distrust that, hey, this subsidy escalation is somehow PE caused, which when it wasn't, but there was that natural assumption. And it felt to me that the CFO at some of the health systems were even disconnected in some ways from the CFO and the C-suite within the hospitals, because back in the day when they were managing at that particular level, they were able to deal with the subsidy requests, and all of a sudden all of their CFOs and CEOs of the hospitals were having a shock and they were probably assuming that there was a lack of negotiating capability or something else. I don't know if you saw that too.

Randy Moore, CRNA, DNP, MBA (35:18):
Yeah, we are seeing that. So we're seeing more and more regionalization of negotiation. So it used to be- Yeah. It used to be that the hospital CEO was calling the shots, was materially involved in negotiations. And if it was a system, they would elevate it with a strong recommendation to accept or reject the offer. What we're seeing now is hospitals and health systems are regionalizing and scaling is a lot of these decisions are actually made above the hospital level. And in fact-

Jeff McLaren (35:56):
The money's just too big, isn't it?

Randy Moore, CRNA, DNP, MBA (35:57):
Money's too big.

Jeff McLaren (35:58):
The dollars are huge.

Randy Moore, CRNA, DNP, MBA (35:59):
Yeah. And as they systematize, there's pluses and minuses. The drawback is that now you're having people make decisions about anesthesia contracts or emergency medicine contracts or whatever who actually aren't that close to the business and they're making decisions in a very transactional way and they're saying, well, I have another vendor that can come in and do this at much cheaper, not understanding that vendors, they are under quantifying labor costs, transition costs, et cetera. So you're seeing a lot of this, the systemization of decision making is really taking these key decisions out of the hands of the CEO of the hospital, and that has some untoward consequences for sure.

Jeff McLaren (36:45):
Well, and I would imagine too, that if you're trying to look at a system of hospitals, there are real differences between the coverage dynamics and the cost requirements of coverage at these hospitals just based on patient acuity, the extent of NORA and scheduling chaos, which may or may not exist in the facility, and that creates coverage challenges that aren't the same in all these hospitals. And if they're looking for a uniform number, it's challenging.

Randy Moore, CRNA, DNP, MBA (37:13):
It is challenging. And it's any situation where the decision maker is too far removed from what's going on on the ground and isn't curious enough to ask questions about the second and third order complications or consequences, then you are in a position. We've seen this play out at NorthStar. Not long ago, there was a contract that we lost and it was because someone at a higher level made the decision, really didn't get the support or enfranchisement of the hospital CEO. And it's been an absolute catastrophe because they lost close to 100% of their workforce because our team didn't want to work for this new incumbent group or this new group that came in. And it was all because someone who was too far away from the decision made the decision, and now they're having to deal with the consequences with our financial, operational, and honestly impacting patient care.

Jeff McLaren (38:08):
Yeah. And there's such a communication gap that we see in the industry, which is an area we're really leaning into heavily as a company between telling the story of why the subsidy request is what it is and what the cost of the coverage ask is, and how could that be mitigated and how the coverage ask can be different between different facilities. And there's just a disconnect, not only at the local level of the hospital sometimes, but oftentimes, but then you layer that up to a system it's only going to amplify.

Randy Moore, CRNA, DNP, MBA (38:40):
Yeah. And I think to some degree, the anesthesia industry has some blood on its hands here too, in terms of how do these groups negotiate. So we, whether-

Jeff McLaren (38:51):
Not at the last minute. That's what you don't.

Randy Moore, CRNA, DNP, MBA (38:53):
Yeah, not with a gun to your head and a 90-day term notice in hand. So I think the way that we win business and the way that we retain business is through transparency. So we're not trying to hide money, we're going to show you what the model is, what the cost is, and we're going to show you three flavors. We're going to say, this is option A, option B, option C. We happen to think option A is your best option and from coverage and cost perspective, but we can do option B, we can do option C and we can talk about it. And these are the financial implications of each of these options and these are the intended and unintended consequences we need to be aware of. And when you show up with radical transparency, like we're not trying to hide money, we're not trying to screw you, pardon my French.

(39:38):
And when we see the economics change in a way that we're going to be proactive and show like, hey, the market's moving on compensation or we're seeing these issues with reimbursement, that goes a long way. Don't get me wrong, nobody wants to pay more money. But if you are transparent and you show up with a partnership and collaborative perspective, and sometimes we have conversations with our clients and say, "The subsidy needs to go up because costs have gone up." We could actually keep the subsidy fixed, but let's talk about what we would do. Maybe we need to take a point of service down on Wednesday afternoon because it's super slow. And I think that-

Jeff McLaren (40:14):
So is your ABC layering typically coverage levels? I mean, that's really your delta between ABC.

Randy Moore, CRNA, DNP, MBA (40:22):
Yeah, there's something around the edges on models. So for example, you could do, depending on the facility, you can do a medical direction model, or maybe we could say we can do a loose collaboration model. Instead of one to four medical direction, we can do one to six QZ facilitated.

Jeff McLaren (40:38):
We're going to have a physician there, but it's mainly CRNA. Yeah.

Randy Moore, CRNA, DNP, MBA (40:42):
We think both models work fine, choose your adventure, but the biggest driver is going to be points of service coverage. So if you want to add a point of service onto a contract, but it's at 35% utilization, guess what? That's very, very expensive. Or if you have a point of service, say you have 10 points of service, but by 1:00 PM, you see the tumbleweeds going through the OR and only five ORs are working-

Jeff McLaren (41:11):
That's very expensive.

Randy Moore, CRNA, DNP, MBA (41:13):
That's incredibly expensive. And there's a way that we can do this more efficiently, which actually might drive down your stipend or at a minimum, mitigate an increase in stipend. And so we try to show up with not a zero sum, increase our stipend by X percent or out. We show, this is our path forward. These are our options and we can work with you to get us in a win-win outcome.

Jeff McLaren (41:35):
And so I would imagine that some of the B and C planning is, in here, maybe even the A, may even entail movement of certain surgical blocks that are allocated, you're going to move that to the afternoons. For example, of tumbleweeds in the afternoon, you're going to need to take some of your morning starts and move it to the afternoon. You just have to.

Randy Moore, CRNA, DNP, MBA (41:57):
Yeah. Yeah. And we're seeing more rationalization. So I would say that we would have the conversations and the CEOs would nod their heads and then they would go back and like, "I really don't want to talk to this. I don't want to ."

Jeff McLaren (42:11):
That's what I thought you were going to say! They don't want to have that hard conversation with ... And then you're kind of back to this EQ thing. Lately in some of the discussions internally have been fascinated with how the ability of leadership to manage difficult conversations, whether it's with staff, whether anesthesia staff, whether it's with nursing staff, whether it's with surgeons, whether it's with C-suite, the ability to manage those difficult conversations leads to success or failure in some many instances.

Randy Moore, CRNA, DNP, MBA (42:45):
And I say this is a leadership heuristic I feel very strongly about, which is avoidance compounds. So the longer-

Jeff McLaren (42:53):
There's no free lunch, is there?

Randy Moore, CRNA, DNP, MBA (42:54):
Yeah.

Jeff McLaren (42:55):
Yeah. No.

Randy Moore, CRNA, DNP, MBA (42:55):
Yeah. And again, I'm guilty of this stuff too. I don't want to say I don't make these mistakes, but the truth is that you look at folks who are really good leaders, one of the things that invariably you see is that they will not avoid conflict. They'll run into the fire and they'll have the hard conversations and make the hard decisions because they know that the cost of inaction is much more costly than the cost of action. So another thing I say often with my team is, let's not be short-term expedient, long-term stupid here. So let's make the right decision and suffer the short-term discomfort in order to put us in a better position longer term.

Jeff McLaren (43:41):
One of the things we're running it hard is using data to ease those conversations. So it's not just creating individual awareness with a person, but aiding that person's ability to then communicate difficult topics to then form a consensus between disparate team members. In the end, you have to get there. I mean, the surgical, the keys, owners of those surgical blocks that are going to have to move, have to buy into the program or they're going to leave. But in the end, the data shows that it doesn't work. If presented in the right way with the right kind of emotional intelligence, the right kind of lead-in, it helps the conversation.

Randy Moore, CRNA, DNP, MBA (44:29):
Yeah. And the other thing, and we touched on this a little bit too, is in any scenario, whether I'm talking to my kids or I'm at work or negotiating with a client, I give them options. I never give them take it or leave it. And so giving someone options saying you've got, as I see it, you've got three options here, and we think they're all tenable. We think option A is your best option, but I would totally understand if you picked option B and we would support you in that. I think deescalates the conversation and makes it feel less zero sum and honestly gives them control because that's what we want is we want control.

Jeff McLaren (45:08):
Yeah, it's control. And also they have to then mentally navigate why is B cheaper? Why is C cheaper yet, assuming it's kind of a laddered cost structure. Well, it's cheaper because, okay, maybe there's a couple points less of coverage here. Well, how will the surgeries fit into that? It makes them go through the math and the algorithm to get there.

Randy Moore, CRNA, DNP, MBA (45:30):
Yeah, I think that's right. And one of the things that we still see a little bit too often is that the CEO, CFO, COO are too disconnected from what's going on in the operating room. And if you look at, this is all about incentives. So the surgeon has incentives, and unless it's an ambulatory surgery center and they have a piece of it, they have no risk here in terms of they take no financial risk. A hospital or the operating room director and manager, they're incentivized by keeping the surgeon out of their office. And so they're going to-

Jeff McLaren (46:05):
Emotionally, keeping them out of the office, because no one wants to be yelled at, right? Yeah.

Randy Moore, CRNA, DNP, MBA (46:09):
And so they're actually not, and I've had that job before and it's really difficult. They're not in a best position to make these decisions. So who typically is, is the CEO or the COO or whoever at the executive level can look at this problem holistically and make a decision that's in the best interest of not everybody, but most folks. And in order to do that, you got to be in it, you got to understand. And sometimes it's frustrating. We'll have conversations and you can see there's a disconnect, which is crazy to me because the operating room's the economic engine of your hospital and so-

Jeff McLaren (46:46):
You got to have an interest in digging in.

Randy Moore, CRNA, DNP, MBA (46:48):
100%. Yeah, totally agree.

Jeff McLaren (46:52):
Yeah. Like we were talking about before, I mean, the problems have been around for decades and decades. They were just affordable. They were affordable problems and they just became unaffordable. And I think in so many facilities changing legacy traditional tradition or behavior or deference to surgical whim in terms of desire for certain blocks, if that was affordable, it would be acceptable. It's just not affordable anymore.

Randy Moore, CRNA, DNP, MBA (47:25):
Yeah. And the ground has shifted. And I think what we're seeing here is there's, again, bell curve distribution like there is with almost everything. You see these really sophisticated leaders in hospitals and health systems who understand that the rules of the game have shifted and they're moving and pretty quickly to adapt to that. And then on the other hand, you see the 20 or 25% who are still with the legacy mindset and are struggling. And those are the ones that are struggling financially and the ones that are losing surgical volume market share, are having problems keeping their surgical staff staff because they're being used and abused and they don't know when they get to go home. So I think knowing where you're at in terms of your leverage and where you want to take your program is really important.

Jeff McLaren (48:15):
So when you look out at your facilities and see inefficiency, is it due to NORA out of OR cases where they're scheduled by a service line manager, so it's not centrally scheduled, then it's a little bit more chaotic because anesthesia can't plan. Is that a big driver or is it certain days of the week have peaks and you have to staff a little bit more evenly over the course of the week, and so that creates inefficiency. Is it uniform scheduling of cases regardless of anticipated severity or surgical efficiency? Some surgeons are just faster at certain procedures. What do you see as the biggest driver and opportunity for improvement? And that may be a loaded question because there could be all of them, right?

Randy Moore, CRNA, DNP, MBA (49:04):
Yeah. I mean, the truth is it's all of the above, but I think the thing that we're seeing a lot is because there's just a proliferation of out of OR anesthesia going on, and that's only going to increase. And if from a process-

Jeff McLaren (49:19):
And the patients are sicker.

Randy Moore, CRNA, DNP, MBA (49:20):
They're sicker. They're sicker. They're sicker. And those are typically much less efficient than the main OR in terms of turnover and-

Jeff McLaren (49:29):
Rooms are less well-equipped, the whole thing.

Randy Moore, CRNA, DNP, MBA (49:31):
Yeah. And still way too many hospitals think of out of OR anesthesia as a separate than their main OR and their endoscopy versus thinking about it holistically. And so there's a lot of structural inefficiency because the right hand doesn't know what the left hand is doing from ... So they're thinking about ... The OR manager is thinking about the OR, the endoscopy manager's thinking about endoscopy, the cath lab manager, and they're thinking about this in silos. Someone needs to sit on top of this and say, okay, these are all interventional suites, and we need to think about resources, including anesthesia resources across the continuum throughout the day. And if you don't do that, then you're banking in a significant amount of inefficiency and cost. And so that remains a huge driver. The other thing is there's so much still vibe-based decisions about OR. I mean, there are oceans of data-

Jeff McLaren (50:29):
A vibe-based decision. I think that's true. That's what it is.

Randy Moore, CRNA, DNP, MBA (50:31):
The surgeon seems busy. Well, okay, what's their payer mix? And it's interesting, but that same surgeon is taking all of their commercial payers to the surgery center and then bringing all the Medicaid folks here. Are you actually making money off the surgeon? Yeah, they're doing a lot of cases-

Jeff McLaren (50:48):
They don't even look at it. In some cases, they don't look at it.

Randy Moore, CRNA, DNP, MBA (50:50):
And so you need to know how much, not to be gross about it, but you need to know whether or not the surgeon is actually profitable because they're going to tell you they're profitable because they're doing a bunch of cases here, but those cases are actually not generating margin. So I think really understanding the inputs to the system and understanding where the profitability exists, and then there's some stuff you're going to do because you provide an important service to community and you should do it, but be clear-eyed about the cost associated with that. So I still think there is not a shocking today because there's so much data, there's still not a lot of data-driven decision making that's going

Jeff McLaren (51:27):
There's not. There's not. The explosion of flip rooms and how the seeing from the rafters that different surgical groups deserve that because that's efficient for them when it's not efficient for the hospital-

Randy Moore, CRNA, DNP, MBA (51:43):
Or anesthesia. Yeah, and there's a lot of abuse there. And I think the psychology of it, I understand. So the hospital CEO is he or she is competing for surgeon market share. They're not competing for anesthesia market share because when I'm doing anesthesia, I'm not bringing money into that hospital. I provide a service that allows them to bring money to the hospital, and that is the surgeon. The surgeon is the rainmaker. I understand that and I respect that. I know exactly where I'm at in the food chain. So with that, there is this-

Jeff McLaren (52:15):
You're necessary in the food chain. That's a good thing.

Randy Moore, CRNA, DNP, MBA (52:17):
They would probably say I'm a necessary evil. But the reality is there's all of this strategy that's based in hope and prayer, which is if I give this surgeon two flip rooms for three cases, he or she's going to bring more and more of their surgery. And I'm a trust but verify kind of person and say, if that is really your play, you're competing for surgeon market share, that could be smart, but you need to really keep your eye on that because if that surgeon is not bringing profitable surgeries and/or they're not bringing the volume and you're still bidding over backwards because they're quote unquote an alpha surgeon, then I think you're getting screwed. And so again, it's a data-driven decision and it's a decision based on leverage and it's a decision based on your strategy for surgical volume in your market, and there's other things you can do to acquire more surgical volume for sure, but reject the knee-jerk impulse to build out capacity without verifying that additional, that incremental capacity is actually bringing sustainable margin.

Jeff McLaren (53:27):
So you think that, and I'm not a part of these discussions, so I don't know. Do you think when those flip room arrangements are agreed to that there's not even a discussion that we're going to monitor this every couple of weeks, and especially as we start this program, we're going to need to make sure that you're bringing and filling these slots because it's very expensive for us, but we would like to do it for you, but it's expensive for us. You have to fill it. I can't imagine those conversations are had in a fulsome way, or if they're had, they're not monitored, because all I hear is complaint about flip rooms and how it's just killing efficiency.

Randy Moore, CRNA, DNP, MBA (54:11):
Right. Yeah. And surgeons, they're smart, obviously, and they know their leverage. And we've seen this, there's a cycle or in a market, I won't say the market, but there's the surgeon group, so they'll move their surgical cases from hospital to hospital. So for three years, they'll be at hospital A until they get pissed off, then they move all their cases to hospital B. And then when they get pissed off at hospital B, they move their cases back to hospital A. And it's a strategy they use based on their leverage in the market. I think at some point in time, that feels like an abusive relationship and that you would want to break yourself out of that cycle. But again, it's who has leverage in the hospital, if I were in that situation, I would think about, how do I build my leverage out in that so that I'm not-

Jeff McLaren (54:57):
That's it.

Randy Moore, CRNA, DNP, MBA (54:58):
Yeah. And if there is a commitment to bring volume, then there are conversations about whether or not that volume actually materializes and consequences.

Jeff McLaren (55:08):
Yeah, that's critical. I think you're right. I think that's oftentimes not had. Randy, I'm afraid I kept you longer than we agreed. I mean, this has been a lot of fun. This has been a lot of fun. Look, thank you for joining today. This has been a great conversation, and I just want to thank you for your blog Inside Anesthesia. Again, I think it's fantastic, Randy. I think it's probably the third time I've said that, but it's true.

Randy Moore, CRNA, DNP, MBA (55:36):
I'll take all the compliments you can get.

Jeff McLaren (55:38):
I'm not just saying that because we're on them. It really is great. So thank you for spending time with me today. I really appreciate it.

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