Episode 39: Private Practice Pitfalls And Starting An Anesthesia Company w. Dr. Brian Schmutzler

Mar 9, 2020

This Episode

Interview w/ Dr. Brian Schmutzler

You Will Learn

 You will learn:
– What made Brian switch from pandemics to private practice and eventually self-employment
– The logistics behind getting paid for consulting by device companies
– Brian’s #1 thing to lookout for when it comes to contract work

Resources & Links

Other show links:

In this episode, I sit down with Dr. Brian Schmutzler. Brian has a fascinating story about moving from pandemics as an MD-PhD, to private practice and eventually running his own anesthesia company and doing device consulting. In this episode, you will hear Brian talk about what made him make that decision, and some of the daily challenges of being self-employed.

Justin (00:04):
Hello and welcome to episode 39 at the anesthesia success podcast. I’m very excited to be joined this evening by dr Brian Schmutzler. Brian is an attending anesthesiologist who has had employment spanning all of the different types of practice models and I’m really pleased to be speaking with him this evening starting in academics, going to private practice and now as a self employed anesthesiologist. I think he’s going to have a lot of great insights to share with us today. Brian, thanks for joining us. So to start us off, why don’t you just give us a little bit of a 30,000 foot view of who is dr Brian Schmutzler and talk about the different type of practice models in which you functioned and, and how you feel about it.
Dr. Brian Schmutzler (01:38):
I started out initially thinking I wanted to do pure academia. I did an MD PhD combined program at Indiana university and kind of mixed a little bit of neuropharmacology with with anesthesia, really liked the lab, really liked doing research, thought maybe even I, I’d take the path of doing research full time and just sort of do clinical maybe a day a week. And then I got into the clinical aspect of anesthesia and really enjoyed the clinical aspect of anesthesia. And through the four years of, of anesthesia residency, kind of figured out that I wasn’t really an academic type guy. I really wanted to be able to do my own cases. I really want to fast turnovers and kind of just do things on my own, do things quickly. And so, and I wasn’t particularly thrilled about some of the goofy stuff that happens in academics in terms of, you know, all the hierarchy and there’s a number of things in academics that kinda turned me off.
Dr. Brian Schmutzler (02:34):
So I went ahead and went the private practice route to start with. I spent about five years in private practice an all MD model, kind of a medium sized group, about 20 docs. And, and through the course of, of that time realize that maybe that wasn’t the best, best fit for me either, particularly the, the system we had. And I think we’ll probably talk a little bit later on about, you know, can they all MD groups survive and all those kinds of things. But kind of saw the writing on the wall and head had done a little bit of research on business and how to run an anesthesia group. And so about Oh probably about five years in starting my own anesthesia. Did your group hire my own CRNs employed a NSD Asia management company and started taking over some contracts.
Justin (03:26):
Awesome. Okay. So Brian, you said that you know, in the academic world, you know, pursuing the MD PhD there were, it sounds like maybe an experience or two that maybe illuminated to you that academics was not the place for you. Was there any specific moment where you said, you know what, I think I’ll maybe want to migrate on from this at some point.
Dr. Brian Schmutzler (03:48):
Yeah. I had a couple of staff who were, I’m not around a whole lot, kind of let you just do everything on your own. And I was a little bit concerned about going out immediately into that and just becoming stale. I think it was probably the biggest issue and then the inner workings of, of academia in general kinda turned me off again, just the whole hierarchy. And then having to figure out, particularly where I was having to figure out how to do research on my own time, basically, they wouldn’t give me any clinical time outside of, of or any research time outside of the clinical time. So it made it a little bit difficult on me to, to kind of figure out how I would balance things. And then add to that that again, I’m, I’m kind of a speed guy. I really like quick, quick turnovers, 20, 25 GI cases, you know, 20, 25 ENT P and T cases in a day and that, that never happened in academia. So
Justin (04:42):
Understood. So at this point you’re thinking, okay, I have to spend like nights and weekends doing research. Maybe private practice is the place for me. So talk about that process for you and how it matured over time.
Dr. Brian Schmutzler (04:55):
A private practice when I started interviewing the places seemed a little bit better to me in terms of, of freedom and really ability to call the own show on my own shots. I’d interviewed at a couple of places that were owned by the hospital system. And then a couple of places that were kind of in transition to be owned by gigantic national corporations. And, and both of those I was a little concerned that clinically I wouldn’t have the freedom that I wanted to. And it, at least when I had interviewed at the private practice places, they said, yeah, pretty much, you know, you do your own thing and everybody does their own thing and, and we don’t bother each other clinically. So I, that’s what I liked about private practice as opposed to once academia was off the table. That’s what I like private practice as opposed to an employed by a hospital.
Justin (05:43):
Okay. And did you find that as you migrated into private practice that, that degree of autonomy that was promised, did that come to fruition?
Dr. Brian Schmutzler (05:52):
No, not 100%. I think on a day to day level, sure I could make my own clinical decisions. It wasn’t, there wasn’t somebody telling me that, you know, you have to do X, Y, and Z. But there were often repercussions if I brought in, for instance, a new regional anesthesia block or kind of a new way to do a case and the surgeon liked it if there some of the older folks in the group didn’t like the way it was done. They weren’t particularly thrilled about about hearing about the surgeons wanting something that they weren’t able to provide.
Justin (06:25):
So you were reading the latest white papers, but perhaps everyone wasn’t and that was causing some friction, it sounds like that. Yes. To put it lightly. Yes. Okay. And can you maybe talk a little bit more about the practice dynamics and what it was like, how big it was, what types of procedures you are doing? Sure.
Dr. Brian Schmutzler (06:43):
When when I first started out we had about I think there were about 18 docs servicing maybe 15 total anesthetizing locations, three surgery centers, one hospital, 10 to 12 rooms in the hospital maybe four rooms and one of the surgery centers, two at one and one at another one. Then OB cardiac did a little bit of everything over time. That kind of book of business shrank. One of the surgery centers went with the employed model, which I think is probably something we could chat about later on. But the hospital sort of kept asking for more and more coverage and so everything kind of shrank back into the hospital. In terms of cases. We did a little bit everything, mostly bread and butter, no trauma, no transplant. We did we did cardiac, we did a neuro, lots of ortho which is kind of where my niche fell in. I did some extra extra kind of on my own training and then training and residency as well. Not a true fellowship, but had, had quite a bit of training in regional anesthesia. So spent a lot of time in the ortho world.
Justin (07:46):
Okay. And are you guys doing all your own cases? Are there some supervision happening? No
Dr. Brian Schmutzler (07:50):
Revision at all. It was in all MD group kind of when I came in and it was a, I think 17 docs. And so doing all your own cases for the most part, all your own blocks from start to finish with the patient.
Justin (08:01):
Okay. And it sounds like at some point, I mean, and this is a major trend that we talk about all the time on this podcast, is that things are getting squeezed. So the anesthesia group is getting pushed by the hospitals specifically to say provide more coverage for the same or perhaps less dollars. Can you describe sort of how that unfolded for you? That was a very interesting process and, and part of what sort of showed me the beginning of the end,
Dr. Brian Schmutzler (08:26):
The hospital started asking for additional coverage, additional rooms later coverage, but paying us at a, at a, a rate. So they went to the MGMA data, looked at what the CRM a rate rate, daily rate was and started paying it that. And I wasn’t a partner when that first started, but as that, as that continued, the group decided that it was a better idea to continue to be all docs and just take a pay cut then to hire CRNs. And so obviously I, I didn’t completely agree with that decision, especially when I heard about kind of how the process was happening. But it was, it was pretty clear that that’s, that was what kind of started driving things that direction.
Justin (09:08):
Got it. And as the hospital is asking for more coverage, are there, like, is there a specific, I mean, was it like certain departments or certain types of shifts or like what was the beginning of that and how did it kind of unfold? The hospital
Dr. Brian Schmutzler (09:21):
Slidell started getting more docs coming on board, more surgeons coming on board because the hospital across town had started hiring their own general surgeons, orthopedic surgeons, a whole whole number of types of surgeons. And so all of the private practice docs, which is probably 85% of the docs in the area started taking their cases to the hospital that I was working at. So they just wanted more rooms. They never wanted to tell a surgeon. No. So they always wanted more rooms. The coverage became more and more each day. So I think it, we went from 10 room guaranteed per day. And to, by the time I left, we were 13 rooms per day, guaranteed. And then they were wanting coverage, you know, not just your typical seven to five coverage, but they were wanting coverage basically seven to seven every day at least if not longer. And we had a contract that said, you know, we went down to a certain number of rooms that three o’clock, five o’clock, seven o’clock and then call and those overtime, those kind of rules just went away. And so they just were running as many cases as they wanted, as late as they want it.
Justin (10:29):
Were there any conversations along the way about modifying, you know, the, the care model to be able to perhaps bring in other, you know, CRNs for example to say we’re going to staff up, we’re going to try to preserve the margins, we’re going to keep the anesthesiologist lifestyles. Okay. And we’re going to move to a little bit of supervision.
Dr. Brian Schmutzler (10:49):
So, so this is a great, this is a great segue, I think in Indiana, which is where I practice. Many of the docs who trained it, I U which was the main main university in the state and the only anesthesia program in the state end up staying in the state. And we at Indiana had had three of kind of the fathers of modern anesthesia, the both the stole things and Butterworth John Butterworth who all kind of pushed into the, the curriculum that you need to do your own cases. You need to be all MD. Crns aren’t the way to go. So that that’s bred into the culture in general. And so I think given that, given that culture, the group overall was not really willing to discuss going to do a, an anesthesia care team model. And you know, that a bigger issue I think is that a lot of anesthesia groups don’t have the business acumen to know, you know, words like margins and, you know you know, profit and loss and all that kind of stuff. So you’ve got docs who are docs, smart people, but don’t have any real business knowledge trying to make multimillion dollar decisions every day and oftentimes doing it not as well as somebody who has some, some business background would do.
Justin (12:06):
Sure. So you’re in this MD only practice, you’re getting squeezed and squeezed and squeezed by the hospital and was, was there like a shift or an assignment or like a week when you can say that was the time when I thought, you know what, it’s time for dr Schmutzler to take his take his ball and go play at his own game somewhere else.
Dr. Brian Schmutzler (12:26):
Can I point to an exact time? No, but I think over time my wife got more and more unhappy. And I was thinking a lot of coffee, a lot of call, which was self-imposed. You know, I did a little bit everything. I did cardiac, I did the bigger cases, abdominal cases, neuro brain, all that kind of stuff. So, and I took a decent amount of call. The problem that we had is that even on days, I wasn’t on call, I was there until seven or eight o’clock at night. And so I think that was kind of the, the, the transition that occurred, not just the taking the call but the not having any ability to plan anything at any time. And, and no one really even offering to help in any way, shape or form and no end in sight really. Yeah. So I think, and you know, some of my former partners kind of followed as, as things continue to get worse and worse as well. So I think that kind of the writing was on the wall in terms of just, it wasn’t a sustainable model, particularly because we had six or seven locums working every day as well. So obviously that’s that that tears away at the bottom line and it means more call. So,
Justin (13:35):
Right. So I think one of the challenges that anesthesiologists faces the silo effect, which is if you come up in academia, you could be practicing in academia for 10 years and have no idea what’s on the other side of the curtain. With like the private practice world and similarly in either of those silos as far as like self-employment and the business side of things, even if you’re in private practice, it’s difficult to say like, what does the other life look like if I was to be in a different type of a model. So talk about how this evolved for you, Brian, and you know, as you’re thinking, okay, maybe I want to move in another direction. Talk about how that seed was planted in your brain. What kinds of things did you start looking at? What were the options for you at that point? Yeah, and I don’t think
Dr. Brian Schmutzler (14:17):
Ever really know what the other side looks like until you actually get there. And so I do, I’ve done a little bit of everything. In terms of, you know, I do some hospitalists work, which is totally employed at you just work a shift and they pay me. I do some, you know, I did the private practice obviously now totally on my own. I’ve done some locums work here and there from time to time. Which is, you know, being a totally an independent contractor. And so I dabbled in a little bit of everything. You know, so, so you never really know the other side looks like. I think for me what basically happened is I started exploring other options and the first options I looked at where other private practice groups, I mean, that was the most comfortable to me. It looked a little bit of academia, but we kind of like where we live and I wasn’t close to any, any academic centers, so it wasn’t really an option there.
Dr. Brian Schmutzler (15:10):
Looked at a couple of places that were running the employed model, you know, just being employed by the surgeons or the center or the hospital itself. Some things about that are, are we’re a little bit off putting a lot of control, you know, no control over what I’m doing. And then I started doing a little bit of consulting for a few different AFCs and endoscopy centers, trying to help them figure out what to do with their anesthesia and really thought to myself, Hey, this might be the way to go. You know, running my own anesthesia, you know, hiring my own CRNs, figuring out, you know, how to run the business on my own. And then reaching out and using some of the contacts I had made particularly with, with anesthesia management companies and other guys doing similar things.
Dr. Brian Schmutzler (15:55):
You know, it’s just kind of a small world in anesthesia period, but especially those who kind of own their own groups. And so I had a lot of conversations with a lot of different people and really decided, Hey, I’ve got enough business background to kind of know what I’m doing. I know who to hire, I know what to hire out and how to hire it out. And so I made the leap and here we are. Okay. So you just said consulting, so that’s a new element. At what point does consulting come into play? So I initially started consulting mostly with medical device. I, I spent a good deal of time probably six to eight days a month. Working with Aventis on Q who makes a a the catheters and pain balls for regional anesthesia. Got started with that sort of leading the regional anesthesia push.
Dr. Brian Schmutzler (16:40):
And the group that I was in the private practice group that I was in got connected with the rep and, and really said, Hey, I use your product, I love your product, you know, and, and I’m willing to start using it for pretty much everything. We kind of, you know, talked a little bit more, she thought that I’d be a good representation for the company. And so I started giving talks for them on a few different topics. And then probably over the last 18, 18 to 24 months I really got involved in a new block called an erector spinae plain block, which has kind of become my passion. It’s a very versatile block and the company at the same time, they kind of made that their, their goal to, to use that block just cause it’s quite an effective block. And so, you know, now I spend quite a bit of time doing that. I kind of spun some of that into some other medical device and pharmaceutical consulting. And then most of my consulting in terms of, of anesthesia business issues came from just kind of word of mouth, started consulting with a couple of centers near Indianapolis, a couple of centers near kind of North of me and, and word of mouth spread and just started doing that. You know, a little bit more often and which again, like I said, led to my own, you know, kind of taking my own anesthesia company and
Justin (17:56):
Okay, there’s a, there’s a few things I want to unpack here cause this is awesome. You, you, you started in private practice and then all of a sudden there’s entrepreneurship happening because you’re seeing, you’re tracking the business of anesthesia and so you’re invited by this device company to start giving talks. Can you talk a little bit about how that started? How the economics are arranged? Are you just like a 10 99, they’re writing you a check to say, you know, independent consultant, dr Schmutzler is like all of a sudden, you know, having self employment income. How did you think about that? How much were you getting paid? Did you negotiate that? How does that work? Somebody is, I’m sure there’s people out there thinking, wow, consulting getting paid by device companies. That sounds awesome. How do I start?
Dr. Brian Schmutzler (18:34):
Right. Yeah. So again, I think probably the best way to start is just find a product that you believe in. I would never just for my own integrity and I just don’t think you’re good at sales if you try to pitch a product you don’t believe in. So I found a product that I really believed in that I used on a consistent basis and got involved with the company through the rep. And again, they, they see that I had some, some business background and realized that I’d be pretty good at talking not only talking about it clinically, but talking about the product from a business point of view. So I gave a couple of talks, kind of not paid, kind of get my feet wet for them, see what they thought. They got good feedback from it. And so they offer me a contract.
Dr. Brian Schmutzler (19:13):
It is a 10 99 contract. I haven’t a CPA who kind of deals with all this. I run all my, my consulting and all my 10 99 business through my LLC and then pay myself as a, as a W2, which is another thing that we could chat about if you want to chat about kind of how all that works. But and so yeah, so I’m a 10 99. There was a little bit of negotiation. I was pretty early in the game, so I think they got a pretty good deal with me and I don’t think that I, I don’t think that can probably take exactly what I make, but I think I probably her our do pretty well as compared to clinical work. I can say that. And, and it’s fun and it’s enjoyable and I think it works well for the company. You know, a lot of these medical device companies and pharmaceutical companies, you know, a salesperson could go on and say whatever they want. But peer-to-peer I think is pretty effective. And particularly if you believe in the product, you use the product and you’re able to speak about it intelligently and talk about the economics of it with, with guys, I think it works pretty well.
Justin (20:13):
Yeah. So you’re talking about a certain device or product and you’re, you’re doing those talks and then all of a sudden you’re doing consulting on like the anesthesia business and reimbursement for different types of, you know, care providers and different models and efficiency and all that. So talk about that transition where you’re going from very specific, narrow consulting to all of a sudden doing anesthesia consulting more broadly.
Dr. Brian Schmutzler (20:40):
So, so that sprung out of being asked by a particular an endoscopy center and an ASC closer down Southern Indiana to kind of help them with their, with their anesthesia model. Just started talking with a couple of CEOs. And again, it’s a small world. Anesthesia is a very small world and even medicine, particularly in Indiana, which is a pretty small state is a small world. So started having those conversations and just started doing research making phone calls. I called some insurance companies, tried to figure out kind of what was going on there. I looked at as many insurance contracts as I can get, get my hands on. I joined the MGMA, which you guys may know of. The MTMA kind of runs data on average payment and there’s a lot of data in there that it’s pretty, pretty powerful data.
Dr. Brian Schmutzler (21:31):
Becker’s spent a lot of time with Becker’s, I kind of focus a lot of what I do on AFCs and endoscopy centers. And Becker’s is very, very involved in that. So for those, those of you who don’t know what Becker’s is, he was actually an attorney who started basically healthcare attorney who started kind of his own website and white papers and they have conferences and all kinds of stuff. So kind of come combining all those things. We you know, I just started getting more, a little bit more involved and learned a lot, you know, and I think I get better and better at it as time goes on. Cause I learned a little bit more about particularly how the insurance companies like to negotiate. And what you can do with that. And then certainly how to set up an anesthesia model for hospitals, surgery center, endoscopy center. You know, how many docs do you need, how many CRNs you need. And so a lot of that stuff you learn on the fly, but you keep running numbers over and over again and you kind of figure out what works and what doesn’t.
Justin (22:28):
Okay. So you’re doing this consulting, is this while you’re at the, you know, the MD group? Yes. Okay. Yeah. So you’re getting the business savvy, you’re, you’re doing your work, you’re laying the foundation for making the connections and like getting to know the consultants who joined the MGMA. You, you’re starting to see how the economics of anesthesia works and you’re also seeing, okay, I think this group is not well positioned for you for growth into the future. So now you’re thinking, I want to take all these new found, you know, revelations and I want to parlay that into a self employment opportunity that’s going to optimize all the things that I wish were optimized and I’m gonna write my own ticket. So talk about that process.
Dr. Brian Schmutzler (23:08):
So I think it was pretty serendipitous. Again, we go back to kind of the erector spinae plain block, which I feel like maybe I can, you know thank my entire future for that particular block. But I got to kind of be the expert when it came to breast cases and we were using a pair of her tables at the time. We’ve since switched to erector spinae plain blocks. But I kinda got to be the expert there. Got really close with the general surgeon who did a lot of breast surgery. He had ownership in a surgery center, not far away interestingly, just outside of my non-compete range. So he, he kind of said, you know, we don’t like the anesthesia we have you. And he knew I had some business background too. He said, you know, what do you think?
Dr. Brian Schmutzler (23:51):
You think he would come over and, and maybe at least take a look and, and I’ll tell you, and I’ve seen this time and time again through consulting and through my own practice, it takes a solid two years to set up an anesthesia contract. Whether you’re already established, whether you’re starting from scratch, where they’re going to employment model, it’s easily two years from start to finish. When you say from day to day you say, I want to change the anesthesia model at X, that, that it’s a good two years. So over the course of about two years, we had a lot of conversations, a lot of talks. I interview a lot of anesthesia management companies and a lot of CRNs and, and then kind of pulled it all together. But I, I’d say it was mostly because he was so happy with how his breast patients were doing with my anesthetic.
Dr. Brian Schmutzler (24:34):
It was probably the biggest reason to take me to that moment. When you’re having that conversation and he’s putting the ball in your court and saying, I think you’re the guy, what’s it going to take? Are you going to be able to make this happen and what’s going through your head at that point? So we were actually, I worked out with him as well. We lifted, we lifted weights together. So we were, we were actually in the basement of the hospital lifting weights when he brought it up. And I thought to myself that, Hey, you know, it could be fun, maybe I’ll do this, you know, like on the side, kind of figure out something to do for you there and I’ll do a little bit of it. Not realizing that it really, that this would be my kind of the start of my own own company.
Dr. Brian Schmutzler (25:10):
And so, you know, it was scary points for sure. You know, you, you give up some security of the medium to large sized private practice anesthesia group. Yeah. It has some security and go and totally out on my own. You know, at any moment they could have pulled the rug out and said, you know, you’re done. Forget it. So there was a little bit of fear in that and certainly that the moment when we act, when I actually resigned from my private practice group and, and I mean I’ve had everything in place for the, for the new business, but actually doing the resigning and saying, now I’m taking the full leap. Again, was probably 18 months after we started the conversation, but it was it was scary for sure. And, and even probably the first two to three months I was, you know, on my own was completely a scary thing.
Dr. Brian Schmutzler (25:58):
But, you know, I got more comfortable with it and, and overall it’s been, it’s been great. You know, my, my life is my own. Again, I can direct my own practice. The CRNs I hired are great, all awesome. We work really well as a team together and, and you know, I, I look back and think, I can’t believe that it was drummed into me that the anesthesia care team model is, is not the way to go. You know, it just, it just seems to work pretty well and it’s nice to have somebody, you know, CRN, a doc, whatever. It’s nice to have somebody always around to bounce an idea off of like, Hey, what do you, what do you think about this case? You know, we have this, you know, a guy who was coming in for an endoscopy who has a laryngectomy, you know, they want us to do a an EGD, what do you think? How would you do it? You know? And we kind of bounce ideas off of each other. So it’s a really collegial relationship. It works well.
Justin (26:46):
Yeah. So there probably came a point for you when you said, okay, I’m going to really make a go of this. This is going to be my only thing. And I’m thinking back to, I had this experience like two and a half years ago in my financial planning practice where I was like, okay, I’m going to make a really, really, really big Google sheet and it’s going to be a bunch of tabs in it and it’s going to be all the things that I need to think about. All the numbers, all the literally lists of stuff that I need to just either do or consider. What kinds of things were you going through? What kinds of things are you considering as you’re thinking about sort of pulling the rip cord and going solo?
Dr. Brian Schmutzler (27:20):
Yeah. So I mean one of the biggest things you gotta think of is, is there enough caseload and revenue to support it? Or is this something where I’m going to have to say to the facility, you have to pay me a huge guarantee. And then there, that’s not something, obviously a, an ASC is gonna like, so yeah, that was probably step number one. So I took all their data, they sent me multiple, multiple data sheets, took all their data and analyzed all their data based on what I knew about insurance contracts. And that w once I had those numbers, I was pretty sure we were going to be able to make it work. I think step two was figuring out how do I do all of the credentialing, hiring, insurance, negotiations, contracts, attorneys, all that kind of stuff. And that’s when I went into the, you know, I need to find any anesthesia management company.
Dr. Brian Schmutzler (28:07):
You know, I don’t want to be owned by a group, but an anesthesia management company is a good partnership. And so they handle all of that kind of stuff. And clinically, you know, clinically I’m totally on my own, but business wise, we’re, we’re partners. We do everything together. Right? And then I think the next step was we got to hire people. And as you know, and yet, as you’ve said on your podcast, multiple times, there’s a, there’s a shortage of anesthesia providers at all levels, MBAs, CRNs, AAS. So finding the right people, finding the right price point. You know, not pricing myself out of the market so low but also not, not going so high that I, I can’t, you know, make make payroll basically. So, you know, that was the next step. And then just, you know, physically getting to the building, figuring out the flow and how we’re going to put people in there.
Dr. Brian Schmutzler (28:57):
How many docs, how many CRNs, how do I get my own vacation coverage? How do the CRNs give vacation coverage. And so I’m, I’m kinda like you, I, I don’t do tabs. I actually do, I might have one right here. Yep. Here we go. So and for those of you watching, you can probably see this, but I, I, I use these little lined pads and one of those in front of me here and I just go through and I write, you know, this is my tab about you know, how many CRNs do I need and all the calculations there and here’s my tab about how much is it going to cost. And so you know, I’ve got those papers laying all over the place, cleaned up the office a little bit for this, but, but overall I can, I have those just laying all over the place and that’s, that was the process we went through. It was just each step of the way.
Justin (29:44):
Yeah. So when you’re kicking the tires on the surgery center, I, I’m fascinated by surgery centers for a lot of reasons. For anesthesiologist, it’s a, it’s a huge growing market for pain docs. Obviously there’s a partnership opportunity there in many cases, but I think understanding the surgery center as a business entity is really critical no matter where you’re coming from. So for you, it was important not only understanding the topline caseload, but understanding what are the sources from which these cases are coming and are those sources stable? So can you talk a little bit about that process? Yeah, so I had to go in and obviously meet all the surgeons there.
Dr. Brian Schmutzler (30:18):
And, and there were two points in the process where I had heard one was leaving and knowing the other one was leaving. And, and we kind of pumped the brakes. And I had a lot of talks with the CEO about, Hey, if this guy leaves your case load goes down 20%. That’s a huge deal. Yeah. And so we, we had a lot of conversations about that. Overall it’s a multispecialty surgery center and there’s a lot of different referral sources, referral sources from across two counties across probably seven or eight different groups. And so it’s not like if one of these groups lost some referrals that we’d be totally down. They’re also in the process of, of joint venturing with a hospital system, which hasn’t totally happened yet, but I kind of knew about that process as well, which is going to bring a whole lot, a lot more cases as well.
Dr. Brian Schmutzler (31:06):
So yeah, you’ve got to think about the business. The other thing from an anesthesia point of view is that you have to worry about not, not really charging them for your services as much. Hospitals are used to paying large hospital guarantees, right? So hospitals want coverage and they don’t care how much it costs for the most part. So they want you to cover X number of rooms. They want X number of call docs and they don’t really look at, you know, how to schedule something to use less anesthesia or less staff. You know, hospitals are just bigger and more used to just spending money to keep rooms open. Surgery centers, it’s much less like a very, you know, very lean run, run as low cost as possible. And so it’s, it’s, it’s much more difficult to walk into a, to an ASC and say, Hey, yeah, I need $1 million a year and guarantee, you know, they’re going to look at you like you’re crazy because that’s coming out of the doctor’s pockets.
Dr. Brian Schmutzler (32:01):
You walk into a hospital and say that, and you know, they run some numbers and say, I, we can’t give you a million, but we’ll give you 800,000, you know, so it’s, it’s just a totally different, totally different way to look at things at an ASC. The other thing is that your, your boss have it. Have you at an ASC is another doc, so it’s a whole different conversation to talk to a doc as opposed to, you know, CEO of a hospital or a, you know, a board of a hospital. And so yeah, there’s definitely differences economically and logistically with an ASC as opposed to us.
Justin (32:34):
Yeah. And you talked about sourcing talent. So is like a classic problem in business growth. How do we find good people at a reasonable price to provide a certain service and have them not like quit or, or do a bad job or do something that’s going to, in your case, caused them to get sued. Right. How did you go about turning from like an anesthesiologist into an HR company and saying, I need four CRNs we’re going to do a conscientious patient care. How did you go about that?
Dr. Brian Schmutzler (33:03):
So word of mouth was the, that was the first way I did it. Again, anesthesia is a small community. Even though I didn’t work with CRNs, I knew quite a few CRNs. And so just asking around, Hey, you know, who would you recommend? Would you have this person? Do your own anesthesia and then trying to gently pull them away from where they are and finding out you know, spending a little bit of time finding out what are people paying you know, and then putting myself kind of in that range. And, and getting the best people. And I, and I, you know, we probably in the part of this was that the anesthesia management company I partnered with helps quite a bit with this as well as we’ve got a little bit further down the line. But, you know, we do a lot of research and we probably overpaid just a little bit, but we overpay so that we get the talent we need.
Dr. Brian Schmutzler (33:50):
And so I think that’s worth it for us. You know, overpaying, you know, 10% or so is not, is not going to cause us to, to not make a profit, but it’s going to cause us to keep the CRNs. And then I feel like, and you know, you could ask them and I think they’d agree. I treat them pretty well. You know, the way I run it on the first one there and the last one out. So I’m doing cases, if there’s a, you know, there’s, sometimes there’s a 6:00 AM case and no more cases till eight o’clock, I’ll do that 6:00 AM case. They get to come in a little bit later. Once we get down to one room, I run it myself. So I send them home. So I think, you know, it’s quality of life. They probably enjoy. Again, we have a cordial relationship, we have a good time together, we make it fun. And I tried to do little things just to, to make sure that they know that they’re, you know, they’re valued. Tell them that they’re valued. I’ll get meals from time to time. It’s, it’s actually a, it’s, it’s nursing nest this week. So yeah, hard. It is. We’ve made a big deal about that. I’ve got a banner, my wife made a banner, we’ve got a banner up and you know, we’re doing meals each day. And so just, just overall, just being a good boss on top of kind of being a clinical director.
Justin (34:56):
Okay. So talk a little bit right now about what the current sort of profile of your practices in that context.
Dr. Brian Schmutzler (35:02):
Yeah, so, so pretty much running in the surgery center, the anesthesia at the surgery center we have four to five rooms some days three, but some, you know, somewhere between three to five rooms each day. We do pretty much medical direction. Sometimes we’ll flex a little bit into medical supervision if I have to pop into a room to do a few cases. But essentially that means that I’m doing the, the preoperative evaluation you know, in there for induction in there for emergence, checking on the CRNs, making sure everybody’s getting breaks, kind of highly administrative. I mean I do clinical work as well, but highly administrative. And then you know, on the back seeing the patients in the PACU, discharging them and then just kind of managing all the anesthesia, working with the working with the or coordinator to to do scheduling. So we try to vertically schedule so we’re not wasting her staff or, or my staff. And just kind of coordinating everything from an Orr perspective that you’d expect an anesthesiologist to do. So that’s kind of like the current practice and it’s an ASC. So we’re Monday through Friday, 6:00 AM some days till five, 6:00 PM. I’ve been there till 8:00 PM, but you know, we’re not doing call, we’re not doing weekends, we’re not doing holidays. And so it’s a, it’s a good lifestyle I think for me and definitely for the CRNs as well. Okay.
Justin (36:18):
And talk a little bit about medical directorship. So am I correct in understanding that? Are you the medical director at the ASC?
Dr. Brian Schmutzler (36:24):
I’m the chief anesthesiologist. The medical director is a, is one of the surgeons that owns the the facility. When I say medical direction that there’s a difference in medical direction versus medical supervision in terms of how you manage tRNA. So that’s what I say in terms of medical direction. Yeah.
Justin (36:41):
So let’s, let’s talk about that for a minute, cause I know the, the oversight question is a hot topic. So talk about direction versus supervision, different thresholds and how that relates to billing. Just at a high level. Sure. So medical director direction,
Dr. Brian Schmutzler (36:55):
You have to meet their seven criteria and I can’t spout them all back to you. They’re all in our EMR, which is great cause it reminds me every time, you know, okay, have you done the preoperative evaluation? Have you done, you know, the there for induction? So, so basically the gist is that you are involved intimately involved in the care of every patient. And so the definitely you have to do the preoperative evaluation and prescribe the anesthesia plan. You have to be there for the challenging portions of the case, which include induction and emergence and then, you know, any lines or anything like that. Being physically available and monitoring the case at some interval. And they don’t, they don’t make that entirely clear. But we, we kind of say I’m there every half hour, I’ll pop back in every half hour. Now. Sometimes that’s, you know, longer than the case.
Dr. Brian Schmutzler (37:39):
Right. So the case only lasts 15 minutes. But and then being there for emergence and then being there in the PACU, prescribing the PACU plan and discharging the patients that, that strict medical direction, you can only do four to one according to the CMS guidelines. And most of the insurance companies fall under that as well. What does that mean in terms of billing? You know, it depends on the, on the insurance company. You know, for the most part that the reimbursement to docs and CRNs is pretty close to the same. There’s a few insurance companies out there that will separate it out where they pay the doc more than the CRNs. And essentially what they do is they pay 50% to the CRM and 50% of the doc. That’s kinda how it works. If you’re doing strict medical direction medical supervision is a little bit looser.
Dr. Brian Schmutzler (38:21):
You can go higher than four, five, six, seven, 10, you know, somewhat argue. There’s no limit to that. When we do it, it’s essentially you know, there’s four CRNs and I’m in a room. And so what that means is I’m still seeing all pre-ops. I see every patient preoperatively, I see every patient postoperatively and I discharged them from PACU. And so I’m still involved in the care of the patient, but I’m not intimately involved in the care of the patient, meaning that I’m not there for all of the important portions of the case. And in that case, the CRA bills the whole case or, you know, we’re, we’re, we’re all salaried. We, you know, we go kinda, it all goes into one pot and we pay everybody out of it. But the CRNs the one who receives the reimbursement for the case there’s a a small amount that most of the payers will kick into the doc just for being the supervisor, but it’s really nothing huge to speak of. And that’s kind of how we run medical supervision when we have to pop into that model.
Justin (39:14):
When you say to the doc, is that the anesthesiologist?
Dr. Brian Schmutzler (39:17):
Correct. Yeah, yeah. The anesthesiologist. Yeah. I’m, I’m the physician of record on, on all of the records in the surgery center. So, so the, the surgeons are, are technically not supervising the scar days. I’m recorded on every case.
Justin (39:33):
Got it. Cool. So there’s a lot more we could go into that’s super wonky. So we’re going to avoid that for at least now we might have another episode about like talking about billing and AA versus QSI and all that stuff, but not today. Okay. So you mentioned at some point you, you brought a management company in to help you answer some of these questions that are very specific and that are kind of requiring technical expertise. You had some of that, you didn’t have all of that. Talk about how you, how did you vet these management companies and, and how did you pick one? How much do you pay them? What do they do for you? How does that all that all work?
Dr. Brian Schmutzler (40:09):
Yeah, so I talked to quite a few management companies just kind of in generalities because there were a few different few different contracts I was kind of looking at and then, you know, really decided on this one, this one surgery center, talk to quite a, quite a few of them. And, and I wanted somebody that had a good reputation. And so honestly, I had my attorneys had to go and look up every, you know, every possible at least in the States where I knew they practice every possible lawsuit they had against that. So, so I wanted to vet them. I wanted to make sure I was getting in bed with somebody who was reputable and I wanted to stay away from a true anesthesia company. Right. I didn’t want to be owned by somebody who was going to tell me what to do clinically necessarily.
Dr. Brian Schmutzler (40:51):
I really just needed somebody, a, you know, an anesthesia management company that could come on board and, and basically do the business end of things, which is, which is what the company that I work with pretty much does. And so, you know, we, we had several conversations, a lot of nondisclosure agreements and, and really just kind of came together and decided, Hey, this is will, this will work for the both of us. And then I had to introduce them to the, to the surgeons and to the CEO of the surgery center. And make sure that that clicked. And it did, the CEO of the management company came and really click with the CEO of the surgery center. And then we went from there. And you know, they, they have a set rate and I, I won’t go into too much detail there just cause of, you know,
Justin (41:31):
Ndas and all the NDAs. But yeah, they have a
Dr. Brian Schmutzler (41:34):
Set rate. So they, they, they take their portion and I, you know, I take my salary and my portion and I think everybody ends up pretty happy.
Justin (41:41):
Is it usually like a percentage of salary or how are they compensated? It’s typically a percentage of revenue. Yeah, that’s what I’m, yeah, top percentage of top line. Yeah.
Dr. Brian Schmutzler (41:49):
Yeah, yeah, yeah. Percentage of revenue. And depending on which one you use to see the percentage of revenue after expenses or percentage of revenue before expenses. So that’s, if you’re thinking about doing that,
Justin (42:00):
Depending on whether or not they’re ready to put their money where their mouth is as far as optimization. Exactly. Exactly. Okay, cool. So, you know, this is a very, you had to learn a whole new set of skills as a business person and a consultant and a process optimizer. Talk about, you know, if somebody thinks this is amazing what Brian has done, I’m interested in emulating his success. Are there any like landmines that you stepped on or things to look out for it like, Oh my gosh, that Tuesday, that one day was the worst day that I’m never gonna forget and here’s what happened. Anything like that go, go down.
Dr. Brian Schmutzler (42:35):
Yes. So I think one of the first things you want to look at is, is a non-competes, and I think you probably had had this on on your podcast before. You want to be careful with non-competes, your own non-compete and anybody you hired noncompete, and I can’t talk about all the details as I mentioned, but I, there were lots of letters back and forth from lots of different,
Justin (42:56):
Dr. Brian Schmutzler (42:57):
People in companies and attorneys and all kinds of sets of lawyers involved. You’re really not even trying, right, exactly. Exactly. Exactly. So I would say that the letter I got from the anesthesia group that we were taking the contract from, this is, jeez, this is a year before anything was even signed. They had just kind of heard and they had actually heard through it misplaced email on the end of some, somebody’s not even really involved. That letter was probably the day where I was like, Oh my gosh, I’m not sure if I can do this. You know, just a, just a threatening letter and we’re gonna, we’re gonna do this and that and, and so it took about two weeks of my attorneys calming me down before I decided I get back on the horse and do it again. So I’d say that’s the biggest thing is just to be prepared for that, but also have all your ducks in a row and make sure you’re not doing anything torturous or, or untoward and just keep, keep everything above board I think is probably probably the biggest, biggest landmine to watch out for.
Justin (44:00):
Yeah. And have a budget for legal. Yeah, exactly. Cause in these contracts, you know, a group we’ll put, or a hospital, a site of service, we’ll put out an RFP request for proposal and whoever has the contract, the incumbent a sense senses that they’re in danger and all of a sudden they would be, you know, I don’t know the specifics, but their incentive to do everything they can to protect the contract that they currently have. And so they’re gonna have their lawyers send out stuff to everybody, threatening them to say, Hey, if you try to encroach on our territory, it’s going to be a problem for you. Right,
Dr. Brian Schmutzler (44:32):
Right. And they’re all, it’s all posturing. I mean, you know, it’s, it’s very, very difficult to, to really, you know, unless you’re untoward and your business practices, it’s really difficult to actually do something. It’s an art piece out there. You know, you’re, you’re pretty much game to, to apply for that and send that RFP in and then see what happens. Again, the, the noncompete issue is all another issue and you could probably spend 10 podcasts on it. Yeah. It’s state specific and very complicated. Very complicated.
Justin (45:04):
Cool. any other specific insights as part of this process? You know, you’ve made a lot of professional transitions, you know, you moved from like exclusively tr. It doesn’t get more like clinician specific than somebody on the MDPHD track who’s like, I want to live in a lab half the time to all of a sudden now you’re a CEO of a, an anesthesia company and you’re, you’re having to do HR functions and optimization of the practice of anesthesia functions as well as having hands on the patient. You’ve gone through a significant evolution as a professional. So are there any other, you know, important like keystones for you or, or steps along the way that you would say don’t overlook this component?
Dr. Brian Schmutzler (45:43):
Yeah, I mean, I can’t think of anything specific of don’t overlook this component, but just learn as much as you can. So every time I talk to somebody, you know, it doesn’t matter who at the grocery store or, you know, on Facebook or something, I try to learn something about what could take me to the next level. And, and I think that’s the biggest thing. And the other thing I would say is don’t, don’t jump until you, you kind of know what you’re getting into. There were multiple times kind of along the course that I said, okay, I’m going to do it. I’m gonna do it. And then, you know, either my attorney or my wife or somebody said, are you sure you know? And then I had to step back and say, no, really, I’m not sure I’m not ready. So, you know, you’ll never be 100% ready. But I think if you get 85% there, you can probably make the jump. But just, just learning everything you can from everybody you can, keeping all your options open and then making sure you’ve actually thought out, you know, what’s next? What could go wrong? And in my 85% sure this is going to work, or in my 50% sure. And if I’m 50% sure it’s not time.
Justin (46:46):
Yeah. Yeah. An entrepreneur friend of mine said the sweet spot is somewhere between 60 and 80% of certainty for entrepreneurship. If you’re 100% that you’ve probably left too much on the table and there’s no more money to be made and if you’re 30% you need to go back to the drawing board and come up with a business plan. Yeah, I like that. I like that. Yeah, I think that’s a, that’s good insight. Cool. So Brian, I want to close with this question. You’ve, you’ve gone through a lot, a lot of personal professional transitions and you’ve learned a lot and you’ve grown a lot. So take me to a time when perhaps you’re stepping into some new environment when all of the hard work that you’ve put in to either become a consultant or hire a consultant or build a business model. Like any of these moments when you’re stepping into that, that situation and things are working for you and you’ve put a lot on the line, you’ve invested a lot and things are going the way that you’ve hoped. And it’s in that moment. It’s kind of like the culmination of all your hard work. Take me to that moment and describe what’s going on there.
Dr. Brian Schmutzler (47:44):
So, so I could say without a doubt, it’s probably three weeks in to having taken over the surgery center. The one of the super busy GI docs, very fast, quick turnovers comes up to me and says, it was, we offered him a swing room because we had an extra provider that day comes up to me and says you know, two things. One you’ve done this without any essentially any change in our practice at all. You know, without, it’s gone off without a hitch. We expected some pickups, there haven’t been any. And number two, you guys run things so quickly that I couldn’t even keep up with you if I had a swimmer. And that, that right there was the moment when I was like, this is, we’re doing, we’re doing it right. You know? And so, you know, having some, having the surgeon recognize, you know, how, how well we’re running things to me was, was kind of the culmination of, all right, everything I’ve done, even though times were hard and you know, some of my former partners hate me and I, you know, all of these, all of these things, all this craziness you know, that particular moment I can definitely say, all right, we did the right thing and we’re providing a great service.
Dr. Brian Schmutzler (48:56):
Everybody’s happy, everybody’s making money and everybody’s doing the right thing for the patient. And so, you know, what could be better than that,
Justin (49:04):
That that warms my heart. Yeah. Well, dr Brian Schmutzler, it’s been a pleasure speaking with you. Thank you for joining us today on the anesthesia success podcast.
Dr. Brian Schmutzler (49:14):
You as well, thanks.
Justin (49:19):
If you liked what you heard this week, head on over to anesthesia, success.com where you can find more content and free resources to help you build a successful career in anesthesiology and pain management. If you want to leave a review in iTunes, I would also really appreciate it. Thanks for using some of your valuable time to join me today on the anesthesia success podcast.