In this episode, Alan Coppock, CEO of Adminologybay, explores ways to improve the operational efficiency of healthcare organizations.
Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast.
Today, I’m joined by Alan Coppock who is a seasoned healthcare hospital leader, author, husband, father of seven, and grandfather to two baby girls. He’s helped to start hospitals in Kentucky and connected other hospitals to solutions that put them on a more solid footing for sustainability.
In mid-2017, Alan stepped out of his CEO role at the hospital he founded in order to start a new company, Adminologybay. From this platform, he offers a range of consulting services focused on operational efficiency, culture, and people. And his team has launched two online membership communities, Providerbay.com for licensed healthcare providers, and Execubay.com for senior healthcare leaders.
And now, he’s also a podcaster having just released the first episode of the Caring for Healthcare Podcast.
Alan has joined us to talk about his experiences as a healthcare leader and he shares thoughts on improving the operational efficiency of healthcare organizations.
Alan, welcome to the podcast.
Alan Coppock: Michael, thank you and I am thrilled to be part of your podcast.
Mike: Well, it’s great to have someone of your caliber on the podcast.
And let me just start out by asking you… how did you get started as a healthcare executive?
Alan: I’ll be as brief as I can. In 1994, I had my first healthcare job. I stepped out of the higher education career track that I had been on for about seven years after I graduated from college.
I worked for the college where I attended, University of the Cumberlands in Williamsburg, Kentucky. I worked for them for seven years. I had the great honor and privilege of working for one of the premiere small college hospital presidents, Dr. Jim Taylor for those seven years and learned just a tremendous amount about organizations and management and fund-raising. Dr. Taylor has the legacy of raising well over a hundred million dollars for this small, beautiful, little university in the hills of southeastern Kentucky. So, for seven years I had just learned a lot.
I stepped away from that in 1994 to my first healthcare job in the home health space. I did finance and accounting and payroll and all of the financial functions—and some IT stuff because my background from a degree standpoint in college was in the information space, information technology space.
So, I helped this company put their first network in and connect offices. We had about 250 employees in five locations. And so we connected all of those. I learned a lot through that as well.
In 1998, I had my first hospital job as a VP for the ancillary departments in a 270- bed regional medical center in rural Kentucky. And that was a great experience. I spent six years supporting the executive team.
And in 2004, I had the opportunity to start my own hospital within the walls of the bigger hospital. It’s a special designation called LTACH or Long-term Acute Care Hospital. That’s the Medicare designation for hospitals that take very sick and multiple co-morbidity patients.
And so, in 2004, I started. I led that hospital for 13 years. In the process, I helped to found a couple of additional LTACH’s in Kentucky. I helped to found a federally qualified health center or FQHC. It’s a primary care focus for southeastern Kentucky and medically underserved rural areas of our state.
So, I’ve had a full career already in healthcare. I’ve just been blessed to do some really incredible things—build teams, and hire folks, and develop policies, and meet all the regulatory requirements which, as you know, are myriad.
And so, that’s kind of where I got to in 2017 when I stepped out of that even and started Adminologybay.com, my consulting site, to support healthcare leaders and providers in navigating all of the changes that are coming our way.
Mike: Indeed! And I’ve heard that you like to teach in metaphors. Can you give me your favorite metaphor when it comes to the operation of a successful hospital or healthcare organization?
Alan: Absolutely, Michael. Let me set up the scenario.
Our frontline staff are working harder, they’re covering more territory. Their patients are more numerous, and they’re sicker. That’s the nature of the hospital in-patient business today. Patients don’t get admitted to the hospital until they are very sick.
And so, the nursing staff has felt the pressure of that. They also have less support from the nursing aides, from the pharmacy support departments, environmental service, and food service. There’s just fewer resources to support the nurses at the bedside.
And they’re also expected to be more flexible and willing to work in more than one area or unit for years. Nurses could pretty much find the unit or a particular type, whether it be a med surg, telemetry, ICU, emergency room. They could find that area that fit them, even mothers and babies, labor and delivery.
So, nurses were generally able to pick the area that fit them the best. And that’s not so much the case anymore because teams have to be more lean. There’s a built-in expectation that there will be more flexibility. And that’s tough!
So, as a leader, as a senior leader, I had to help my team through that transition. And so, I wrote a blog post called Revenue – Margin = Expense. It’s a backwards way of thinking from what we’ve traditionally thought as hospital leaders and even finance people.
We thought, “Well, my operating equation should be revenue – expense gives me my margin.” And what I’ve proposed in my post, in my blog post, is that if we’re really going to be successful, we’ve got to accept the fact that the equation has shifted. And so revenue – my margin, what’s my target, gives me the expense load that I have.
And that’s what I get to deploy to meet the needs of our patients, to get the best outcome.
And most often, that means we’re going to see an expense reduction. So we have to understand that. We have to have our eyes open. If our organizations are going to be sustainable, we’ve got to generate a margin.
So, in order to describe all of that, I came up with what I call the MLB metaphor, the major league baseball metaphor. My wife and I are huge Cincinnati Reds fans. And I know that’s not real popular now because the Reds haven’t performed great this year at all.
But my MLB metaphor simply says this. When the coaches, prior to a major league baseball game, come to the home plate to meet the umpires and the team’s head coaches are there at home plate standing with the umpires, we’ve seen it, we’ve been to games, we’ve seen it on television even—the camera always gets a shot of this—they’re having a discussion.
And my wife and I used to joke, “I wonder what they’re talking about because everybody knows the rules, right?”
But one thing that I know that they’re not talking about is—I can almost assuredly bet that the umpires are not asking the coaches, “How many players would you like to have on the field today, coach?” I’m pretty sure that’s not one of the questions being asked because, in fact, they know that each team can field no more than nine players at a time, and it’s how they position those players and it’s the strategy that they deploy whether or not they shift their in-field to the right or to the left, or their outfielders in or out based on the hitting statistics of the next batter. The strategy is what most often will determine the outcome of the game.
So, it’s not a question of how many. And I think that’s where healthcare leaders have figured out that they’ve got to accept a new reality, and that is that we only have a certain or a finite amount of resources to deploy, and we have to figure out, based on our strategy and how we deploy those resources, how we’re going to cover all of the needs that are required by our patients and by our physicians.
It’s a reality I think that healthcare organizations are grappling with. And those that accept that reality and deploy appropriately those resources, I believe, are going to be the ones that find themselves on a more stable footing, a more sustainable path.
And I think that’s pretty critical from a foundational standpoint.
Mike: And certainly, you’ve seen your share of changes throughout your career. How have you seen the hospital finance function change throughout your career? And what are some of the biggest challenges facing hospital finance departments in your opinion?
Alan: It’s an excellent question, Michael. Back in 1998, one of my first sit-downs with the CFO of our organization when I was the VP of the support department just wanting to do the best I could to lead those departments, I sat down with the CFO, he was particularly frustrated, and he said, “I want you to know that my job is to be your score keeper. I will bring you the results, and you have to manage them.”
I caught on to the fact that he was quite frustrated. And so I said, “Well, why are you frustrated?” And he said, “Well, I just feel like I’m being expected to do much more than really is in the scope of what I’m supposed to do. I’m supposed to give you your results, and then you act on them. And instead, I have to figure out how to solve some of the deficiencies or some of the ways that we’re not achieving the results that we are supposed to achieve.”
Well, here’s where I think a big change has happened. I think that hospitals and healthcare organizations are figuring out that they really need a strong operations focus. And whether that is the CEO who is the ultimate lead, the operator, that brings that focus, that level of focus on operations—
When I talk about operations, I do a lot of mentoring of future leaders, and I always ask them, “In your MHA program, what are they teaching you about hospital operations?” And most often, they say, “Well, we know the term, but they really don’t talk a lot about operations in the program.” And so I give them a just a quick lesson in operations.
I say, “The hospital operator, that person, if you could picture a wall full of dials and meters, the meters are the indicators, the measurements, that the organization feel are key to their success, those metrics that they are measuring daily, weekly, monthly, quarterly, et cetera. And then, the dials are those initiatives that we can put into place that impact or affect those measures.
And the operator is that person who is in front of the dials and meters, making adjustments, understanding that an adjustment to a productivity dial, for instance, may impact other measures or meters.
And so, from a finance standpoint and the change over time, I believe healthcare organizations are maturing to the point that they understand how important it is to have an operations focus.
And it takes a lot of pressure off of finance, so that finance can then truly become what my friend, the CFO back in 1998 was frustrated about, wanting to simply be the scorekeeper. And yes, offer input into the strategy, but not be expected to solve every problem because it just wasn’t possible for the finance department to have that as their focus, to solving the operations problems.
So, I think that’s the biggest change, a new focus on operations.
Mike: Alan, what ideas do you have for bending the cost curve down for hospitals and other healthcare organizations?
Alan: Well, I’m doing a lot of writing about this. I think I know that hospitals and healthcare organizations providers, in general, are being paid more this year than they will ever be paid in the future. I think that we all have accepted that our reimbursements, what we’re paid for what we do, is on a downward trend.
And so, it’s incumbent on any strong leader to begin asking the question of “What costs do we currently have that we can either reduce or eliminate?”
And there are a couple huge ones that I’ve been writing a lot about.
The first one is agency staffing. And what this pertains to is the idea that you engage or contract with a service firm that would supply nurses when you need them to cover shifts if your volume peaks and you need additional nurses. You can call the staffing agency, and have them supply the nurses.
And what we know in the hospital world is there’s an up-charge for using agency staffing rather than hiring your staffing—and the up-charges, conservatively, 35% to 40% to engage that agency.
And we also know that it’s a multibillion dollar industry, the agency staffing business, if you will.
So, it’s a cost that I think can be greatly reduced and, in many cases, can be completely eliminated. And the way that that happens is when an organization gets very serious about its culture, about being the place that the high performers in the market prefer to work, when that happens, when there’s a vacancy on your staff or on your team, it’s much easier to fill.
I’m writing an online course right now that’s titled How to Become the Magnet in Your Market. And it’s basically a re-cast of the initiatives that we deployed in my place where, when we had a nursing vacancy, for instance, in the summer of 2016, we attracted 63 qualified applicants for one vacancy in a small LTACH, a 32- bed long-term acute care hospital. And in the spring of 2017, we had another vacancy that attracted 35 applicants.
So, there were some things that we were doing that I feel like can be valuable to other organizations who decide, in a competitive market, maybe there’s two, three, or even four hospitals in a particular geographic market that one of them decides, “Well, we’re going to become the magnet in our market.” And what that will do is greatly reduce my reliance or my need for the very expensive agency staffing solutions.
So, that’s one.
The second is another multibillion dollar healthcare expense that I think can be greatly reduced, if not eliminated in many cases. And that is in the recruitment space.
When a hospital or healthcare organization needs a new physician, most often, they turn to a recruitment firm. The firm promises to bring, to fill, or place a physician into that open vacancy. And the fee for this is exorbitant.
It strikes me as odd that healthcare organizations haven’t yet embraced the fact that this is a cost they can avoid.
So, let me give you a for instance. A hospital needs a hospitalist. The fee for placing that from a recruitment firm, for placing a physician into that position could be (when all the expenses are paid, and all-in) is about $50,000 for one physician to be placed.
And that’s a hospitalist, an internal medicine, or a family medicine background, if it’s a highly sought-after specialty—cardiology or other—the that fee could be much higher.
It extends also to the leadership appointments or leadership recruitment firms that are executive search firms. And in their case, they could charge anywhere from 30% to 50% of the first year’s total compensation. So if it’s a 6-figure job with incentive in place in year one, whatever that total compensation is year one, take 30% to 50% percent of that, and that is what would be assessed as a fee for placing that executive by an executive search or an executive recruiter.
Those are two costs that I think can be avoided And you might say, “Well, how can they be avoided?” or “How could hospitals avoid using a physician recruiter?” And that’s part of what I address in our developing the online membership community.
The Providerbay.com is a place where we hope to introduce paying members to the community to the opportunities that are available from organizations.
And completely, what I’ve always thought is that hospital leaders are plenty smart enough and physicians are plenty smart enough for sure that they can decide when the right organization, the right opportunity, the right fit for them, and then the organization I believe is capable of putting the opportunity out there, and then essentially attracting physicians. We really don’t need the help of a recruiter.
As a matter of fact, I had trouble finding the value that recruiters or staffing agencies actually bring to healthcare. And this next two to five years particularly, Michael, is going to be all about delivering value, lowering cost, improving outcomes. And so we’re going to need to be very intentional about who we partner with, and whether or not they are delivering value to us as providers in the community.
Mike: And as those organizations operate more efficiently, what are some of the impacts on culture? Can you address some of those?
Alan: Yes. As I’ve mentioned earlier, I’m developing an online course for organizations titled How to Become the Magnet in Your Market. This is a very intense cultural focus.
It starts first with developing strong managers and strong leaders. Managers or the manager aspect of a supervisor role is that technical aspect, the skill to manage policy, to manage expectations. But leadership is the second aspect of that. And that’s the idea of for a supervisor to become a leader is when a supervisor becomes the person that others want to follow, that is inspirational, and that is engaging. We talk about servant leadership in a big way.
So, developing strong managers, strong leaders, that takes a senior leader team focusing on how to make their supervisors rock stars.
And for years, I’ve seen this happen over and over again. Hospitals will promote a star nurse or a star therapist to a leadership role, but then do very little to empower or enable that nurse to be effective by supporting them from a training standpoint on how do you develop those managerial skills, how do you develop that leadership potential that I think all of us have if we’re given good guidance.
And then, from a cultural standpoint, it’s recognizing and rewarding high performers. I believe when you recognize and reward appropriately high performance, that’s one of the key elements of being able to attract high performers to your team.
And then, another aspect is just realizing, recognizing that results are what we’re graded on. It is not good enough—and I would tell my team this. I would say to our incredible nurses, I’d say, “Listen, it’s not good enough anymore for us just to be awesome. The fact that you’re awesome is really the first reason that you’re here. We brought you into the team because we believed you’re awesome. But that’s not where we’re graded as being great people. Where we’re graded is whether we can achieve the results that are needed for our patients, for our organization.”
And there are a lot of ways. As you know, we’re graded now on patient satisfaction, how we either delight or miss delighting our patients. And our patients now score us that way. And payers are paying a lot of attention to how we score regarding patient satisfaction.
Outcomes, how we achieve the correct outcomes, how we avoid the events that lead to poor outcomes is the second way.
A third way we’re graded is on margin. We have margin targets. It’s built into our budget. We want our margin, obviously, our operations margin, to be positive. In many cases, this last cycle, hospitals were not able to achieve positive margins. And therefore are in a state of turning things around because you have to. It’s not an option anymore for an organization to generate a negative margin year over year without some attention to turning that around. So, margin is another way we’re graded.
And the fourth one that I focus on is that aspect of value, whether we truly are, over time, bringing down our cost burden and improving our outcomes. That’s the value equation.
Mike: So, Alan, you’ve alluded to a new membership community that you’ve created for healthcare professionals as well as a podcast. Can you tell us a little bit about those?
Alan: Absolutely, Michael! We’ve launched Providerbay.com for physicians, and physician extenders, nurse practitioners, physician assistants, these licensed healthcare leaders that are leading our clinical teams, that are leading the focus that we have on patients.
Here’s what I found out just from talking to just so many physicians who are frustrated—the pace of change. We’ve moved from many doctors being independent entrepreneurs in their own right to now looking at employment contracts and agreements.
And I’ve told hospital leaders, even my own hospital board, I’ve said for a couple of years now, we begin to employ physicians, and then that leads us to treating doctors like employees. And then we wonder and we get frustrated and gloomy when we start recognizing that they begin to act like employees.
And I don’t think that people that take the training and the years out of their productive careers to go through four years of medical school, another four years of residency, and then maybe a 2- to 4-year fellowship—I mean that commitment and the cost that goes along with it, essentially putting their futures on hold to receive that training and background, I believe it’s not the kind of person that responds best in a traditional or typical employee role.
And so, it’s been tough on them. And some of the loneliest people you’ll find are physicians because they don’t have a connection to a community.
And so, we want to provide that for physicians who would find benefit or find the ability to help them work their way through challenges to be able to bounce things off of colleagues in a safe place.
So, our Providerbay.com, it’s a paid membership community. We make sure that these are actual physicians that become members. We check the NPI number. We kind of vet that out. But then, they come into this online space in a safe and protected environment and can discuss real life every day challenges.
And through the discussion forums inside the community, they can get help and offer help to other colleagues who are struggling.
Execubay is very similar, but it’s for senior leaders. Perhaps, if there’s any more lonely profession in a community in a geographic area like southeastern Kentucky, perhaps the more lonely person than even the doctor or the nurse practitioner is the hospital leader who can’t even go home and talk about their workday in specifics because of requirements for confidentiality and privacy.
It’s just a very difficult time. And so we want to support the senior leaders and those preparing to be senior leaders, whether they’re in MHA programs now or maybe in middle management roles, but hoping someday to hit that C-suite position or even a chief executive or the top senior leader role to actually lead an organization. We support them in Executivebay.com.
We’re going to do all that in a lot of different ways. But one of the chief ways we plan to get the word out is through our weekly podcast. The title is Caring for Healthcare. We believe that’s an appropriate title for what it is that is in our heart.
I have a great team around me at the Adminology Bay team.
It consists of a PhD, Kevin Flora, who understands social media and how to move the social conscience in a big way and in big numbers through all of the social media platforms;
My son, Josh. From a technical standpoint, Josh Coppock is on our team;
Mindy Bess, a nurse practitioner, she is a family practice or family medicine practice nurse practitioner working in our community. She happens to be our oldest daughter. And so I’m just thrilled to have her on our team;
And then, we have just wonderful HR professionals helping us develop the cultural aspect as we move forward.
So, the whole idea is that we help leaders and providers sort out the challenges that they face from a practical sense every day. We’re not the academic place. We’re not the place that sounds “Well, there’s this theory. And here’s this set of course and core tenets. And here’s this structure that we can offer.” We’re more of a practical, on-the-ground “here’s a problem I’m facing today. Have you ever encountered that before?” and to bring that to a forum, that question or that issue to a forum to allow others to help each other.
Mike: Alan Coppock, much luck with your new healthcare provider community as you begin to tackle some of healthcare’s most pressing challenges.
Thanks very much for sharing your perspectives today on the Hospital Finance Podcast.
Alan: It’s been my honor and thrill.