In the surgical center at the Orthopedic & Sports Institute of the Fox Valley, surgeon David Eggert passes CEO Curt Kubiak and a visitor outside the rooms where hip, knee and shoulder replacements are performed.
“If you come 15 yards down there, I’ll show you where Curt fainted,” Eggert says to the visitor. “He didn’t even get in the room.”
Kubiak, who took over the top leadership spot at OSI in 2007, shrugs it off and continues the tour.
“I’m not a blood man,” he says. “I know my limitations.”
He also knows his strengths. Brought on as CEO from a non-medical background, Kubiak has used his experience managing costs for a manufacturing facility to lead the organization through a succession of physical and operational changes that have drawn attention from both local and national providers seeking to emulate OSI’s model.
Offerings such as bundled pricing, direct contracting and physical therapy onsite at businesses have attracted clients such as Mercury Marine, Oshkosh Corp. and Neenah Foundry. OSI leaders say focusing on improving patient experience — from the time they arrive at the parking lot to the time they receive their bills — has made all the difference.
“That really has always been on the forefront of just about every decision we make,” Eggert says. “If it’s good for the patient, it’s good for us and we’ll be successful.”
A new beginning
In 2006, eight doctors left Appleton Medical Center to start OSI on a plot of land in north Appleton, where a cluster of specialty medical clinics are now established.
“We all wanted to provide a more personalized service and patient care than we were able to provide in a hospital setting,” says Dr. Chris Weinlander, OSI’s anesthesiologist and medical director. “It took a certain amount of faith in the idea of being able to achieve that goal. That was what united us, and that was worth the risk.”
The physicians put their own money toward building the main campus at 2105 E. Enterprise Ave. OSI, which expects to see 15 percent growth in 2016, now has 15 surgeons and a staff of about 125 at its facility in Appleton and satellite clinics in Waupaca, Shawano, Ripon, New London and Kaukauna.
“Although we all had a vision, it wasn’t a straight line to get here, of course,” says Dr. Brian Lohrbach, a general orthopedic surgeon and an OSI founder. “There was a lot of pushback from the local health care system. To do it and be successful, we really had to work very hard. Every patient we get is essentially somebody we worked to get.”
The doctors knew they needed OSI to stand out. They began a search for a leader that could best help them do that.
A different kind of leader
Neither Kubiak nor the founding doctors knew how it would work, bringing in someone with a non-medical background to lead the organization. But all of them knew they wanted to try something different.
Kubiak spent the first 15 years of his career in finance at Plexus — costing out parts and later serving as the company’s director of integration for new acquisitions, moving his family briefly to Scotland. He traveled to Malaysia, China and Mexico to bring new Plexus properties on board.
Eventually, Kubiak sought a position that would allow more time with his wife, Karyl, and their three boys, who are now 18, 15 and 12.
Dr. Eggert says he and the other founders interviewed dozens of candidates with medical backgrounds who had led hospitals and clinics, and none really were right.
“When Curt applied it was a totally different interview,” Eggert says. “He said, ‘I hope you don’t mind, but I’m going to run the interview.’ He had his Powerpoint, and he was very, very convincing that he was the right candidate.”
Dr. Errol Springer, a general orthopedist and an OSI founder, says Kubiak is a think-outside-the-box idea man, yet his finance-based background has lent itself well to OSI’s direction.
“He has enough separation from the medical community to see ways that it could be different, yet he’s empathetic enough to the medical community to realize that medicine is different than just the standard industrial model,” Springer says.
Shawn Kienert, CFO of Fox Valley Hematology & Oncology (also a Plexus alum) says he and Kubiak often have conversations during which they reference past experience in the manufacturing space.
“The number of parallels is amazing,” Kienert says. “Running a business is pretty universal, and the nuances of the (medical) industry are certainly something you have to know and understand. But when you’re providing a service, the basic concepts of reaching out to people and providing value — they never change.”
Kienert also says when medical providers move into administration, they tend to lose touch with patients. Bringing someone in with an outside perspective was an enriching approach.
“All of our experience was geared toward running the business, so we become administrators who actually reach out and learn more about the clinical side,” he says.
Kubiak says he was influenced by Harvard Business School professor Clayton Christensen and his theory of disruptive innovation — making things that are expensive and complicated become simple and affordable. Coupled with Kubiak’s background costing components and products at Plexus, he was constantly thinking about how to make things less expensive.
“So take those concepts in thinking about what can happen in health care, where we’ve got a system that is very expensive and inaccessible and make it cost effective and accessible,” Kubiak says. “That’s the challenge.”
One of the first things the doctors wanted Kubiak to do was look at OSI’s worker’s compensation system. Communication with multiple parties was slow and cumbersome, taking place by fax (even today, in some places). After searching for a better system, and finding none, Kubiak asked Paul Thomas, a programmer and another former Plexus employee, to help. Thomas, who is now OSI’s director of information technology, created ConnectED, a data software tool that allows all parties to communicate and track patients via the Internet. The system is unique in the country.
Kubiak also wanted input on improving the physical experience of the OSI building. He called in Steve Tyink of Miron Construction Co., Inc., which built the facility. Tyink, who serves as Vice President of Business Innovation at Miron Construction, told Kubiak to go stand out in the parking lot and pretend to be a patient.
“At that time, we had no signage on the front of our building that says ‘Main Entrance,’” Kubiak says. “We had no marking on the pavement that showed where a patient should walk. It was totally confusing.”
Patients are now greeted by concierges, most of whom are former patients. Their main task is to simply point patients in the right direction.
In a corner of OSI’s spacious, natural-toned lobby, an InstyMeds pill dispenser allows patients to go home with their prescriptions. But it wasn’t enough to have one, it had to look right. Originally the dispensers — about the size of a photo booth — only came in blue and gray.
“When they delivered the unit, I said, ‘You’ve got to come and get it,’” Kubiak says. “They said, ‘What’s wrong?’ I said, ‘It looks terrible, it looks like a piece of manufacturing equipment in my lobby.’ We were the first unit they sold that was not blue and gray. Now they sell them in a bunch of colors.”
OSI also has its own MRI and a radiologist who sends patients home the same day with a plan of care. OSI shares the MRI with Fox Valley Hematology & Oncology, which is connected to OSI’s building by a corridor they call “the link.” FVHO, in turn, has imaging equipment that OSI can use.
Also within the OSI complex is Great Lakes Orthotics, where orthotist Perry Alger can scan a patient’s body, cut a model out of foam with a CNC machine and make a back brace onsite.
“I was spending $15,000 a year on Federal Express charges to have the braces flown in overnight all the time,” Alger says. “So I needed to come up with a better way of doing it.”
That’s been a recurring theme at OSI: How can they come up with a better way of doing things?
When OSI surgeons heard about other groups performing total joint replacements on an outpatient basis, Kubiak and the surgeons visited nine sites nationwide to learn about it.
“There were a lot of unique solutions out there,” Kubiak says. “We knew we wanted to keep people onsite, but we didn’t have a way to do that just yet. One of our nurses came back and said, ‘What about a skilled nursing facility?’ I thought, ‘Holy cats, let’s think about that,’ and ultimately, that was the idea that stuck.”
The Recovery Inn is the nation’s first orthopedics-only recovery facility. It’s designed like a hotel — patients check in first, knowing which room they’ll have after surgery. Missing are the constant electronic alarms and antiseptic odors of a hospital wing. A wide carpeted track around the lobby allows patients to exercise their new joints. The furthest distance from the nurse’s station to any room is 55 feet, which helps prevent falls. OSI surgeons have performed 1,500 joint procedures since the Inn’s construction.
Because skilled nursing is the second-highest regulated industry in the country — behind nuclear energy — OSI brought in a partner to manage it, Kubiak says. St. Paul Elder Services helped establish the Inn, and in July OSI brought in the health care organization Eduro to manage the facility.
“We want to expand this model to other parts of the country, and Eduro is a partner that can do that with us,” Kubiak says.
Recovery Inn includes a physical therapy component. OSI has 12 physical and occupational therapists onsite with in-house partner Advanced Physical Therapy & Sports Medicine.
“I think the uniqueness is that you have two separate business entities with very complementary services that almost function as one,” says Rob Worth, CEO and president of Advanced Physical Therapy & Sports Medicine. “It’s a collaboration that allows us to leverage our relationships, leverage our resources, yet maintain our independence as a business.”
Its partnership with OSI has allowed the organization to work with employers not only on injury care but prevention as well, Worth says.
Neenah Foundry, which has about 1,000 employees including 650 in its manufacturing facility, contracts with OSI for onsite physical therapy three times a week for both workplace-related and non-work-related issues, says Brian Zoeller, vice president of safety and security.
Having those therapists onsite saves employee time and productivity, not to mention health care costs. Zoeller says that in 2015, 83 employees received physical therapy treatments (83 would-be worker’s comp claims that would have averaged $5,000 each). The company paid about $38,000 for the physical therapy instead, saving about $395,000. Preventive treatment also greatly reduces the company’s OSHA recordable rate, Zoeller says.
Price bundling & direct contracting
Surgical costs were once managed by a confusing standard. “Insurance companies say they will pay multiples of Medicare,” Kubiak says. “So if Medicare is 1, they’ll pay you 1.3 or 1.5 times Medicare.”
With the help of Aaron Bleier, another former Plexus employee who is now OSI’s financial manager, OSI reset its pricing based on industry standards and an acceptable profit margin. The insurance company didn’t know what to do.
“They said, ‘What’s the multiple of Medicare?’” Kubiak says. “I said, ‘I don’t know, but you can figure it out. Just take my prices and divide them by your standard. There’s your multiple.’”
That new way of costing resulted in a better pricing system for patients, who were leaving OSI highly satisfied — until they received the bills, which came in a number of envelopes and were confusing.
“Anybody in retail would say your last touch has got to be a beautiful sendoff. So, here our last touch was the financial part, and that was a wreck,” Kubiak says.
So OSI decided to bundle prices for total hip and knee replacements so patients knew the cost — including surgery, a stay at the Recovery Inn, all follow-up physical therapy appointments — for everything.
“Today, we have 60 bundles,” Kubiak says. “We have 48 orthopedic procedures and 12 spine procedures. I don’t believe there’s anybody else that’s got more.”
The bundling idea evolved into a direct contracting plan with employers. OSI has about 20 company clients who have opted in to plans that guarantee prices for employees. By the end of the year, Kubiak hopes to have partnerships with at least 100 companies.
“Historically, the cost of health care has been borne by employers, and now to a greater extent their employees,” says Dr. Lohrbach. “We realize if we can go to these self-insured employers or midsize employers who self-fund their own programs, they can recognize a substantial cost savings.”
It’s a model that other specialty clinics are interested in trying. Kienert of Fox Valley Hematology & Oncology says while it’s harder to offer bundling with cancer treatment, his organization plans to offer bundled pricing for certain types of breast cancer treatment.
“Some of the major cutting edge cancer centers have tried it on a limited basis and we’re going to join their number,” Kienert says.
FVHO also is working on emulating OSI in the direct contracting model.
“We’ve also shamelessly copied (OSI’s) patient experience initiatives, everything from the feel and sense of the atrium and the welcome areas to patient wait times,” Kienert says. “We use them as a frequent reference for some of the major projects that we undertake.”
FVHO also is a partner with OSI, along with Neuroscience Group and NeuroSpine Center of Wisconsin, in the formation of NOVO Health, an independent administration network.
NOVO Health is a representative organization that helps participating organizations align resources as independent physician groups who want to offer a lower cost, high quality patient experience to self-insured companies.
“NOVO Health brings these specialties together without the need of a hospital administration or any other big overhead structure, and allows the employers of the valley to leverage that benefit from a contracting basis,” Kienert says.
Building a model
Working together with its partners has enhanced the patient experience that OSI wanted to create. The organization learned that it didn’t have to own everything to control the outcome, Kubiak says.
“I inherited this medical mall with tenants that had different profit-loss statements, different businesses,” Kubiak says. “So from the start I had to figure out how does everyone get along, how we could align with each other without controlling each other or owning each other. It means you’ve got to get really good at communication. You’ve got to get really good at collective problem-solving.”
At Plexus, other companies would try to imitate its successful model by piecing together engineering and prototyping companies, Kubiak says.
“We called it the Frankenstein design because all the parts were there, and it looked like it would work, but you tried to use it and they didn’t talk to one another,” Kubiak says. “We kind of had that Frankenstein design here. It needed to be joined up. So that’s what kind of sparked an interest in me. I saw an industry-changing concept here.”
Kubiak says there is room for more partners, but the goal is to replicate the model in multiple locations rather than expanding the campus much more.
“I don’t want to slip back into the model of a very difficult-to-navigate system, from a patient’s perspective,” Kubiak says. “Part of what they love is how small this feels.”