Scott Christiansen (00:06):
All right. Welcome Jeff McLaren. Jeff, you are CEO and founder of Medaxion. Medaxion is at the center for one of the biggest challenges in healthcare today, which is anesthesia, more specifically the anesthesia service line, managing the anesthesia service line. For those who don’t know, give me the 1,000 foot view. What’s happening right now in anesthesia?

Jeff McLaren (00:29):
Well, I think there’s a lot happening in anesthesia right now, but if you had to widdle it all down is that what used to work in terms of how hospitals with staff anesthesia now cost a whole lot more than it used to cost. And that then drives changes to the contribution of the OR to the hospital’s bottom line. So that change in cost and that change in contribution is fraught. And there’s many, many causes as to why those costs have escalated. But there’s a … Initially, so to speak, there was kind of a throwing up of hands and hospitals were trying to figure out what do we do with this ramp in cost? I think healthcare organizations across the country after this initial period of shock are starting to bed into solutions.

Scott Christiansen (01:30):
Yeah. I mean, this is not a new problem, but it’s just grown to the point where it’s unmanageable, right?

Jeff McLaren (01:36):
Exactly. It’s unaffordable. I mean, the challenges and the complexity in the OR environment have been around for decades. Hospitals have just managed it and dealt with it. Not really solved them, but dealt with it. But now that the cost of those issues is so high, they have to address it.

Scott Christiansen (01:56):
Yeah. I don’t know why I feel the need to, but just to put the asterisk next to it, none of this is talking about the clinical quality of the anesthesia groups. Exactly. It’s all just about the rising costs.

Jeff McLaren (02:07):
The business of anesthesia. It’s the business of it.

Scott Christiansen (02:09):
The business of anesthesia is hard to manage right now. It’s in short supply and that doesn’t seem to be getting any better. Anesthesia, there’s not enough. I mean, we hear that across many specialties, but in anesthesia, it’s at the center of everything you do.

Jeff McLaren (02:24):
That’s right. And there’s more demand now for anesthesia because more and more cases are being done outside the OR. And where those cases might’ve been done years ago with nurse sedation, they now require anesthesia teams to help with that. And so that’s pulling on the anesthesia staff in ways that weren’t 10 years ago.

Scott Christiansen (02:46):
Give me a couple example of those cases that the anesthesia team’s getting pulled for.

Jeff McLaren (02:51):
Well, it might be interventional radiology. It might be electrophysiology. An example of that would be putting in a pacemaker, or it could be different procedures that are done by interventionalists that because of aging patient populations and patients are sicker, you need more expertise in the room.

Scott Christiansen (03:16):
Yeah. And I think that just goes back to the first thing you said is that we’re asking for the same things, but that’s not the way … Those used to be OR cases, now the procedure room cases. It used to be inpatient, now it’s outpatient, so everything has really changed.

Jeff McLaren (03:32):
That’s right. That’s right. And it could even be that the procedure cases that were done now require more expertise.

Scott Christiansen (03:41):
Mhm.

Jeff McLaren (03:41):
That’s just pulling on the anesthesia team more than in past years.

Scott Christiansen (03:49):
You’ve been innovating since you started with your product, their first anesthesia EMR, helping people go from paper to digitizing their data so that it can be more useful to them. Your latest innovation is you’ve developed a first of its kind tool platform to manage the anesthesia service line. So one, I want to hear more about it, but two, why doesn’t this exist?

Jeff McLaren (04:14):
It has not existed. That’s right. Prior to this new product there, there was no anesthesia management software suite. It was all managed through revenue cycle reporting and through Excel work. So it was a lot of hand tooling on how anesthesia was managed. So in a nutshell, we developed this because of the pressures we spoke of a few minutes ago on the anesthesia service line and the fact that now more than ever, more sophisticated tools using data now that data is more and more accessible using data in smart ways to manage the anesthesia service line. Two, because there’s been a wave of hospital insourcing of anesthesia, those persons that were managing their practice as an independent entity, in some cases, those leaders are now employees of the hospital. And so the hospital now has to manage that service line rather than others. And so there is a shortage of expertise in anesthesia.

(05:25):
So the ability that information tools can help with the people that are newer to managing anesthesia is only going to benefit the industry.

Scott Christiansen (05:35):
So the cost of anesthesia is going up, the supply of anesthesiologist is going down. The demand for anesthesia is going up. The number of people who know how to manage anesthesia is going down.

Jeff McLaren (05:48):
I would say it’s not so much the supply of professionals that can provide anesthesias going down. It’s just not going up fast enough to meet the accelerating demand. And there’s been some challenges with the supply of anesthesia providers in that, for example, the program for CRNAs went from a two to a three-year program. So in that period of transition, the United States lost an entire year of graduating class of CRNAs because they had to go to school for an extra year. Now that all evens out over time, but in that transition window, you lost a graduating class. That’s just going to constrain supply of anesthesia providers.

Scott Christiansen (06:34):
So what’s some of the good news, because there’s a lot stacked against the vision operations of anesthesia right now, but what’s some of the good news that you’ve found in bringing anesthesia manager to market and helping people with their utilization of the providers? What are you seeing that you’re able to impact with just better management, with the data to do better management? Everybody’s been trying to manage well, but now you have the data to direct them.

Jeff McLaren (07:03):
Yeah. And I think the first hurdle is bridging the disconnect between hospital C-suite, particularly the CFO office in a hospital who’s being asked to write or to underwrite a much larger portion of the anesthesia service line, oftentimes called a subsidy. The connection between that party and the anesthesia service line. So there’s a hunger and a greater demand to understand why are those costs increasing? What can I do to help mitigate those costs? And it’s not doing things as they did before and expecting a different result. You have to do things differently now.

Scott Christiansen (07:51):
Right. So when you’re demonstrating anesthesia manager to that CFO and you’re showing them ways to see anesthesia, visualize anesthesia and how it’s operating, what’s the reaction they’re getting? This is data that they haven’t been able to leverage before.

Jeff McLaren (08:12):
Yeah, I would say it starts … The way we approach it is, first of all, making sure they understand the volume, the surgical volume in their system and the requests that they’re making from the anesthesia team, and then for coverage for that surgical volume. And then what is that cost of that anesthesia coverage? What is the shortfall in terms of the revenue that the anesthesia team can generate versus the cost of the anesthesia team? And that delta’s going to be a subsidy that the hospital’s going to have to make up. And then importantly, in walking that individual through, what can I do about it? Now I understand the economics of anesthesia. What can I do to help bend that cost curve? And that’s the part that is the most rewarding for me when we make these pitches is those individuals then jumping and saying, okay, I’d like to understand better operationally, how does that manifest to my teams?

(09:22):
So, okay, now I understand what could be done. How do we do it? And we provide that tooling to help not only the CFO in the hospital understand progress, but to help operational teams that are responsible for staffing anesthesia.

Scott Christiansen (09:39):
Yeah. You’ve often said to me that anesthesia is where the data is. Unpack that a little bit. Why is there more data?

Jeff McLaren (09:52):
So anesthesia is a mystery to most people. If you have surgery or if loved one has surgery, you might meet the anesthesia provider right before surgery, but you wouldn’t have met that person before. You might have a relationship and a visit at the surgeon’s office prior to the surgery, but you’re meeting the anesthesia professional typically right before surgery. And then they whisk you into the OR and then you’re asleep. And you don’t really understand what’s happening during anesthesia. And it actually, in some cases, some of the folks in the OR that are nurses and surgeons may not fully understand what’s happening in anesthesia either. The anesthesia team’s responsible for managing your complete physiology. A typical anesthetic and they’re giving probably 10 different drugs to you during the course of the anesthesia to make you unconscious, to control your physiology to benefit the surgical procedure. So they’re having to drop those drugs, track those drugs as they’re administered.

(10:54):
They’re having to document your physiologic response to the drugs and to surgery. They’re the document procedures they do. And so the traditional paper record of what they would’ve done fills an entire page, part of it is a graph, looks almost like is gridded out like graph paper. There’s tick boxes and forms to fill out. Now, in many cases, that’s done electronically, but there’s just a ton of data. So when we say that’s where the data is, it’s because there’s so many disciplines and aspects that are documented by the anesthesia team, including time-based events. So when did surgery start? When was there timeouts? Now, some of those events are also tracked by nursing, but the anesthesia team is tracking a number of additional events that are relevant interesting in terms of trying to manage anesthesia staffing, but also in terms of thinking through the care of the patient.

Scott Christiansen (11:49):
When you’re talking about anesthesia manager and this technology that’s not only data, but it’s also really making recommendations on optimization, but you’re pulling in 15 years of data, 900 locations, 7,000 ORs. Why is that database so important?

Jeff McLaren (12:15):
Yeah, it allows us to benchmark in terms of true peers. It’s one thing to think about two hospitals that might be in the same area within a city, but they might be quite different. They might do different kinds of cases. They might have different areas of specialization, they might have different volume levels. And so all of those things are just going to drive different operating parameters. And so having that large database of cases and then the profile of facility that that case was done help us drive benchmarking that are to a facility that is comparing themselves to a true peer.

Scott Christiansen (13:02):
And it sounds like you guys are a real bright spot in what’s a really challenging issue for everyone involved in anesthesiology. How’d you get into it? You’ve started multiple health tech businesses, mostly focused on anesthesia.What drove you to that?

Jeff McLaren (13:19):
Yeah.

Scott Christiansen (13:19):
I don’t think I’ve ever asked you that before.

Jeff McLaren (13:21):
No, that’s interesting. It’s over 20 years ago. An individual that I was on a corporate board with had retired to New Zealand of all places, and he ran across an anesthesia information platform that was developed out there and was looking for larger markets. New Zealand, a relatively small country, under five million people. United States, a pretty big country, pretty dynamic market. And so that was my first entree into anesthesia. As you said, I’ve been in healthcare IT my entire career, having started a business right out of college as much as anything because I didn’t know any better. No, but I’m really proud of that. And I’m still affiliated with that company too.

Scott Christiansen (14:05):
I wish I was still as smart as I was when I graduated.

Jeff McLaren (14:08):
I fell into anesthesia and I love it. It’s incredibly unique and in many cases just misunderstood or a specialty with not a lot of understanding by the general population. So

Scott Christiansen (14:22):
Yeah.

Jeff McLaren (14:22):
A lot of opportunity there.

Scott Christiansen (14:23):
Excellent. Okay. Quick quiz for you. The Route three pointers quiz at the end. Don’t get off easy. Good. You’re based in Nashville, and so it’s the Grand Ole Opry’s 100th anniversary, so I pulled up some quiz questions for you. I have no idea if you have any idea about anything at the Grand Ole Opry, but here we go. Did the Grand Ole Opry like Elvis’s first appearance?

Jeff McLaren (14:51):
I would say no.

Scott Christiansen (14:52):
The reaction, he performed Blue Moon of Kentucky and the Opry famously told him to go back to driving a truck. Another one that they missed on.

Jeff McLaren (15:04):
I’m not surprised. I’m not surprised.

Scott Christiansen (15:06):
They refused membership to Hank Williams as well. So they got it right a lot of times, but those two. Yeah,

Jeff McLaren (15:12):
But they got it wrong sometimes too, clearly.

Scott Christiansen (15:14):
Yeah. Okay. Was it originally called Grand Old Opry?

Jeff McLaren (15:19):
No.

Scott Christiansen (15:21):
No, it was originally the WSM Barn Dance. And the commentator started, he said, “For the past hour, we’ve been listening to music largely from Grand Opera, but from now on, we will present the Grand Ole Opry.” And that just caught on and everybody called Grand Ole

Jeff McLaren (15:41):
I didn’t know. I did not know that how that was.

Scott Christiansen (15:43):
It was kind of fun. It was two years after it launched in 1927. Was the Grand Ole Opry credited with the birth of Bluegrass?

Jeff McLaren (16:01):
The birth of Bluegrass?

Scott Christiansen (16:03):
Yep.

Jeff McLaren (16:04):
I might say yes.

Scott Christiansen (16:06):
It is. It’s credited for the birth of Bluegrass. So this is my setup to the last question here. You get to choose the oddest ever performance at the Grand Ole Opry. So performance artist who communicates only through sneezing, a silent monk who specializes in 90-minute silent sets or an AI hologram that only performs in binary code. They’re all real. You just have to decide which is the weirdest one.

Jeff McLaren (16:37):
First.

Scott Christiansen (16:38):
All right. The sneezing. On that, thank you for appearing on the Ruth three Pointer podcast, Jeff. It was nice talking to you, learning more about your products and your career. Hey, thank you, Scott. And I think you nailed the quiz. I think you got them all right, so congratulations.

Jeff McLaren (16:51):
I was about a thousand on that. Yeah.

Scott Christiansen (16:53):
Well done.

Jeff McLaren (16:54):
Well done. Thank you, Scott.