“Health systems are under financial pressure due to policy changes, an evolving payer mix, and rising operating expenses. Hospital operating margins are nearing all-time lows. An analysis by the Congressional Budget Office found that a majority of US hospitals will have negative margins by 2025 if they remain at their current level of productivity.”
As a part of my interview series with leaders in healthcare, I had the pleasure to interview Alyssa J. Rapp, CEO of Surgical Solutions, Managing Partner of AJR Ventures, Lecturer-in-Management, Stanford University’s Graduate School of Business
Thank you so much for doing this with us! Can you tell us a story about what brought you to this specific career path?
I love starting and running companies; it’s fun, challenging and creative. The Chicago startup scene is not as flashy of a brand of entrepreneurship as it is on the West Coast, and in some ways, it’s more substance-based. It’s just a slightly smaller pond with the same values but without the pretension.
From my early conversations with Steven Taslitz, Chairman of Sterling Partners, I knew I would be given a unique opportunity to work with an entrepreneurially-minded private equity firm if afforded the opportunity to work with him and Sterling Partners. In the year before I arrived at Surgical, there had been a fundamental change in strategy at Sterling Partners. Sterling’s decision to evolve into a hybrid family office/private equity firm was a highly attractive partnership structure/organizational design for someone as entrepreneurial as I. The shift in traditional structure not only didn’t scare me, I actually found it appealing. Then when the opportunity came to join the helm of Surgical Solutions, an existing Sterling portfolio company, my desire to learn a new industry (healthcare), the size of the Company (200 employees, ~$25MM annualized revenue), and its location (Chicago, my hometown), and its stage (poised for parabolic growth), made it the right place for me at this moment in my career.
Can you share one of the most memorable stories that happened to you since you began leading your company?
During one visit, I met Annette, one of our account supervisors in New York. She took time out of her day to give me the tour, and she was awesome. I couldn’t help but notice the running shoes she was wearing because I happen to have the same shoes back home. I complimented her sneakers, and when she talked about needing a new pair, I said, “You’re on your feet all day — this job must be wearing you out!”
Once I got home, I sent her a new pair of sneakers on me. I added a note thanking her for the extremely informative tour. I have found at Surgical Solutions and always that “personal touches” and immediately acting on observations can have a big impact: your team knows you are watching, closely. They know that you care. Annette has been promoted since then and continues to be a rising star in our company.
Finally, on a recent visit to one of our customer accounts in New England, I had the opportunity to sit down with one of our advisory board members, and a new technology solution that she is investigating involving RFID tagging. The solution could be a terrific “marriage” with our service offering, and the implications of the potential partnership for our company- and in terms of the use of technology to advance patient care in a “21st century hospital” setting are very inspiring to me. Imagine a world where the hospital knows when you walk in, all clinicians and instruments and service providers with whom you interact are all tracked through RFID tags and geo-location, and patient care is optimized in light of this use of technology….
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
I don’t know how funny it is or simply embarrassing that I did not know that all scopes are cleaned in the Sterling Processing Department of a hospital by our same technicians who also provide minimally invasive support services in the operating room before I began. Fortunately, our Chief Clinical Advisor and our account managers were painstakingly generous with their time in getting me up to speed on our first several site visits.
In terms of funny, showing up in heels and a dress suit for my first site visit was a tremendous learning opportunity: the blue booties and white jumpsuit that one wears to protect oneself and patients from visitors in “street clothes” don’t exact fit well over said items. Live and learn…..
What do you think makes your company stand out? Can you share a story?
Surgical Solutions provides hospitals and ambulatory surgery centers with a bundled service offering CRCST-trained technicians, state-of-the-art reusable instrumentation, access to best in class capital equipment/repairs management. Our clinical partners pay us a fixed fee per procedure to do the work that we do; the result is economic savings and increased surgeon/nurse satisfaction, let alone increased throughput and efficiency at the sites and systems in which we work.
Surgical Solutions covers Pre-op to Post-op support services and addresses several bottlenecks and gaps that exist between the Operating Room, Sterile Processing Department, Bio Medical Engineering and Materials Management within the hospital. Our organized approach, technical expertise, and commitment to superior customer service provides clients with the finest laparoscopic instruments and increased efficiency, all at a savings to the client. We cover over 100K procedures across 34 hospitals in 9 states.
By partnering with Surgical, physicians and nurses are able to perform at the top of their license, increasing OR efficiency and provider satisfaction. In other words, while Surgical Solutions provides a cash flow “hack” for hospitals, we also offer a job satisfaction “hack” for hospitals. Insofar as time that surgeons and nurses used to spend on workflow and logistics and now spend on patient care. Time providers spend on workflow and logistics is a drag on OR productivity and a driver of increased costs. A contract service provider like Surgical boosts OR efficiency by shifting responsibilities to specialists. This improves morale and decreases rates of burnout — and of course paves the way for caregivers to provide superior patient care.
What advice would you give to other healthcare leaders to help their team to thrive?
1. There’s no substitute for showing up and looking people in the whites of their eyes. I had my existing team members take me on field visits to assess our people on the ground, as well as our customer relationships. I wanted to look, listen, taste, and feel everything I could. Sometimes you just have to be there to see it, feel it, and truly understand it.
2. No matter what industry you’re in, none of us are ever going to be the best at everything. Ideally, in addition to cost-savings, that’s why you outsource. If you’re a hospital, you should be the best clinicians and patient-supporters that you can be. So if you’re already outsourcing your food service operations or laundry operations, why not also outsource this critical piece of the puzzle, the foundation of which can make you more efficient, productive, and cost-effective?
Ok, thank you for that. Let’s jump to the main focus of our interview. According to this study cited by Newsweek, the US healthcare system is ranked as the worst among high income nations. This seems shocking. Can you share with us 3–5 reasons why you think the US is ranked so poorly?
Changing demographics, technological development, and new policy measures have all affected the way we deliver and pay for care. Perhaps nowhere are those changes more evident than in the practice of surgery. Operating rooms have long been a major source of revenue for healthcare providers. Yet as the economics of healthcare shift, health systems have experienced shrinking margins are continually expected to “get paid less to do more,” to quote my friend Matthew Primack, CEO, of Advocate Christ Hospital, Chicago’s largest contiguous hospital location.
Health systems are under financial pressure due to policy changes, an evolving payer mix, and rising operating expenses. Hospital operating margins are nearing all-time lows. An analysis by the Congressional Budget Office found that a majority of US hospitals will have negative margins by 2025 if they remain at their current level of productivity. Hospitals face rising operating costs, with two costly expenses: technology and labor. Labor is the single largest expense for most hospitals, on account of administrative burdens and the increasingly complex business of medicine, which bloats an already over-taxed system, preventing hospitals from improving patient care or expanding clinical capacity.
In our company’s white paper recently published in OR Manager, we also identify physician and nurse staffing shortages as a troubling trend. The American Association of Medical Colleges projects a shortage of 120,000 physicians by 2030, and the American Association of Colleges of Nursing estimates over 1 million nursing job openings by 2024. Staffing shortages are complicated by an epidemic of burnout among caregivers, which leads more employees to quit, creating a vicious cycle. These staffing shortages decrease the capacity, efficiency, and effectiveness of a health system. Into this beleaguered environment comes Surgical Solutions. The solution we provide a hospital is a shortcut, a way to “variablize” these crushing fixed expenses.
You are a “healthcare insider”. If you had the power to make a change, can you share 5 changes that need to be made to improve the overall US healthcare system? Please share a story or example for each.
Today’s hospital leaders and managers are faced with the challenge of how to leverage new opportunities, mitigate risk, and ensure the delivery of cost-effective care. One solution is to use third-party service providers. A growing number of hospitals have established outside contracts for functions like clinical staffing and supply chain management. Although outsourcing is not a revolutionary business strategy, its application to perioperative services represents a strategic and adaptive framework for hospitals to improve both patient care and their bottom lines.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Until it’s the last inning, keep swinging, as you never know how the game will end. All you can control is your effort.” — my husband (Hal Morris + MLB World Champion, 1990 Cincinnati Reds)
Deals can fall apart in the 11th hour. But matches can also be won in them. Simply put, “all you can control is your effort”. If you give it your 120% and only if you do, will you have a chance of winning.
Are you working on any exciting new projects now? How do you think that will help people?
As CEO of Surgical Solutions, there are three strategies I’m employing that are disruptive. First, we are working to expand our outsourced services offering that supports hospitals on a fixed fee/procedure basis (with human capital, capital equipment and disposables inventory) from 34 sites to 100….asap.
In a world where minimally-invasive surgery volumes continue to rise due to an array of demographic trends and industry dynamics, all while the economic conditions for hospitals continue to worsen (eroding margins, increasingly tight cash flows), our outsourced solution that drives efficiency and throughput on a variable-cost basis. This solution provides economic relief to many of these providers while helping to improve patient outcomes.
Second, I’m working with other key executives to transform the company from “analog” to technologically-enabled, and potentially even as a leader in health tech innovation in the category through our Surgical Cost Management Platform™.
How can our readers follow you on social media?
Follow me on twitter @alyssarapp. You can also find more information about Surgical Solutions at https://surgical-solutions.com/about-us/
Thank you so much for these insights! This was so inspiring!
About the Author:
Originally from Israel, Limor Weinstein has been anorexic and bulimic, a “nanny spy” to the rich and famous and a Commander in the Israeli Army. Her personal recovery from an eating disorder led her to commit herself to a life of helping others, and along the way she picked up two Master’s Degrees in Psychology from Columbia University and City College as well as a Post-Graduate Certificate in Eating Disorder Treatment from the Institute for Contemporary Psychotherapy.
Upon settling in New York, Limor quickly became known as the “go to” person for families struggling with mental health issues, in part because her openness about her own mental health challenges paved the way for open exchanges. She understood the difficulties many have in finding the right treatment, as well as the stigma that remains so prevalent towards those who are struggling with mental health issues. She realized that most families are quietly struggling with a problem they’re not comfortable talking about, and that discomfort makes it much less likely that they will get the help they need for their loved ones. She discovered that being open and honest about her own mental health challenges took the fear out of the conversations. Her mission became to research and guide those families to the highest-quality treatment available. Helping others became part of her DNA, as has a commitment to supporting and assisting organizations that perform research and treatment in the mental health arena.
After years of helping families by helping connect them to the right treatment and wellness services, Limor realized that the only way to ensure that they are receiving appropriate, coordinated and evidence-based care would be to stay in control of the entire treatment process. That realization led her to create Bespoke Wellness Partners, which employs over 100 of the best clinicians and wellness providers in New York and provides confidential treatment and wellness services throughout the city. Bespoke has built its reputation on strong relationships, personalized, confidential service and a commitment to ensuring that all clients find the right treatment for their particular issues.
In addition to her role at Bespoke Wellness Partners, Limor is the Co-Chair of the Academy of Eating Disorders. She lives with her husband, three daughters and their dog Rex in Manhattan.
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