Grady CEO takes hands-on approach to follow money

New Grady hospital CEO Michael Young knows that turning around the state’s largest and most troubled public hospital requires some new, if not radical, ideas.

So here’s one, a little gambit in which he followed the money down the rabbit hole that is Grady’s $740 million budget.

Days before he took office, the newly hired chief executive decided to examine every check over $1,000 that Grady had issued to vendors for one week in July. The massive hospital is a spending monster with hundreds of vendors, so there were more than 100 checks totaling upward of $1.7 million. For three hours, in a pair of shorts, he hunched over check after check in his room at the Embassy Suites in Buckhead.

“The best way to figure out what’s going on is to look at the checks,” he said, noting that he now has made this mini-audit a weekly practice. “Then you start asking questions. You decide if there are contracts you don’t want to pay for anymore, or services you want to bid out again.”

Young has looked at checks for medicine, nursing temp agencies, legal fees, a $6,000 pacemaker and a $4,900 artificial knee.

This is not the usual work of a hospital CEO, especially one overseeing a medical megalopolis like Grady Memorial Hospital. Grady operates a 600-bed hospital, 60 specialty clinics and its own nursing home. It has 4,800 employees and serves as metro Atlanta’s top level trauma center and last refuge of care for the poor.

The Grady health system also runs deficits of up to $40 million a year, so saving money is a priority of the CEO, who officially started work Sept. 2.

Young hit upon checks that shocked him, such as the $100,000 one-week payment for temporary employees, including nurses and X-ray technicians. Not only did Grady have to pay the temp agency —- some of the temp nurses made more than a staff nurse, he said.

“It was breathtaking,” he said. He has since reviewed the operations in those departments. “We had three temps last week in radiology. We’ll have one next week.”

This kind of micro-audit of checks, he said, is not taught at Harvard Business School. (Young should know; his MBA is from there.) The idea first came to him in 1986 when he was promoted to CEO of a Pennsylvania hospital.

While it is not uncommon for a financial auditor to review spending this way, it is rare for a CEO to take on such a mundane, time-consuming task, said Ken Harmon, director of the school of accountancy at Kennesaw State University.

“I think it’s pretty creative of him,” Harmon said. “He’s looking at good evidence of where the money is going.”

Experience helps, as well. Young, 52, has been a hospital CEO for 22 years and recognized the names of numerous vendors. He also followed up with questions to his vice presidents, and visits to departments.

He spotted that Grady sometimes has to pay other hospitals to do a test for clogged heart arteries. So Tuesday he ordered a new cath lab, figuring the savings would pay for the unit in about a year and a half. He found excessive legal fees. Some reviews of malpractice cases could be done in-house, he said, or by himself.

“Give me a chart and give me two hours, I can tell you,” he said. “That saves the hospital five or 10 grand.”

In truth, Young said he did not find a lot of “low hanging fruit,” such as contracts where Grady was being vastly overcharged. The real savings will come, he said, by using the checks as clues to problems in hospital operations. Reducing spending through greater efficiencies, he said, could result in millions.

Beyond the financial benefits of these snapshot reviews, they send a message about Young’s leadership style: hands-on and detail-driven.

Rep. Vincent Fort (D-Atlanta) said he has heard stories of sweetheart deals in which politics or favoritism drove a Grady contract.

“People might not want to do those deals” if they know the person in charge is reviewing the checks, said Fort, a longtime advocate for Grady.

John Evans, a member of the patient and worker advocacy group called the Grady Coalition, noted that Grady has gone through several CEOs over a decade of multimillion dollar deficits.

“If you’re going to get a handle on this place that has run in the red for years,” Evans said, “you might have to be a different kind of CEO.”

Young was awarded the Grady job this summer at an annual salary of $615,000. At the time, he spoke of the challenge of turning around the hospital.

“I’m not sure it can be done, he said. “But if anybody can do it, it’s probably me.”