Beaumont nurse anesthetists object to NorthStar Anesthesia employment contracts

NorthStar Anesthesia, the Texas-based anesthesiology group that Beaumont Health contracted with to service seven of eight hospitals, has given more than 220 certified registered nurse anesthetists until Monday at 6 p.m. to sign two-year contracts or the company will remove a $30,000 signing bonus.

Nurses tell Crain's that 90 percent of the CRNAs have refused to sign NorthStar's contract, which they say amounts to a "take-it-or-leave-it" offer and $12,000 less than what they make in salary and benefits at Beaumont.

NorthStar CEO Adam Spiegel confirmed the company has so far signed a fraction of the Beaumont CRNAs, but he said an unspecified number of additional nurse anesthetists have been recruited and hired because Beaumont has been "short staffed."

The biggest reason the Beaumont CRNAs cite in refusing to sign NorthStar's contract is lack of trust with a contractor they do not know, said David Shea, a Southfield-based attorney with Shea Aiello PLLC the CRNAs hired in mid-October.

"These CRNAs have been put into an extremely difficult situation. None of them are happy, but they want certain guarantees because they don't know NorthStar," said Shea.

"(It's true) NorthStar (has) been around a long time, but they haven't had a relationship with them. They weren't consulted (on the outsourcing plan) before (Beaumont) issued the contract. There are problems with the contract."

Adam Spiegel, NorthStar's CEO, told Crain's the company offered the nurse anesthetists a fair compensation package, amounting to $217,000 annually for a 40-hour week, a $25,000 average increase over Beaumont. However, he said the annual compensation for the first two years includes an additional $15,000 each, or half of the $30,000 bonus.

"We have done everything we possibly can on the money side. They started at $92.15 an hour and we moved them up to $97," Spiegel said. "They came back and asked for $99 and for an extra week of PTO. ... That's another million dollars across the system."

Spiegel said NorthStar's compensation offer puts the Beaumont nurse anesthetists on par with other CRNAs in Southeast Michigan and in the "lower part" of the 75th quartile in Michigan.

Average CRNA salary in Michigan is $194,640 with the national average at $181,250 in 2019, according to the Bureau of Labor Statistics.

"Beaumont and NorthStar want to make it about money, and it's not about money," Shea said. "They don't understand we have 200-plus CRNAs, some of whom have worked for more than 30 years. They were told (by Beaumont) during a pandemic that they've been sold off to the lowest bidder.They don't know who NorthStar is. All they know is they are an out of state anesthesia provider for-profit organization."

Founded in 2004, NorthStar operates in 20 states at 150 hospitals, including Spectrum Gerber Hospital in Fremont and the Detroit Medical Center. In 2015, NorthStar acquired longtime DMC partner Anesthesia Staffing Consultants PC. DMC is owned by for-profit Dallas-based Tenet Healthcare Corp.

In 2018, NorthStar was acquired by Cranemere, a London-based holding company that invests in health care and other businesses firms, from TPG Growth.

Spiegel said he considers NorthStar to be a pro-CRNA company with a good national reputation that worked closely with providers during the pandemic to keep them financially whole. He said the company provided additional personal protective equipment to ensure employee safety.

"We spent multiple weeks virtually on site, on Zoom and over the phone, myself included, talking to some of these CRNAs directly just to get a sense of what were they looking for," Spiegel said.

Two CRNAs, who asked to speak with Crain's anonymously for fear of job retaliation, said none of the nurses wanted to be outsourced and were not consulted by Beaumont about the reasons or the alternatives.

"This is just not the way we as nurses should be treated," the first CRNA said. "To not be consulted about transitioning our entire staff to an outside employer disrespects all of our dedication to Beaumont and our careers as nurse anesthetists."

"We want Northstar to be able to retain and recruit high quality nurse anesthetists because we value our team and we value the community that we serve," the first CRNA said. "This simply isn't possible with the package they offered."

In a statement, Beaumont disputed that the NorthStar contract offer is less than what the CRNAs are making at Beaumont. It is "fully committed" to completing the outsourcing plan to NorthStar on Jan. 1 for its Royal Oak, Troy and Grosse Pointe hospitals.

"We recognize change — particularly in a year such as this one — can create anxiety," said Beaumont's email. "During negotiations with our CRNAs, NorthStar listened carefully to their feedback and responded by enhancing employment offers."

Beaumont also said it is actively engaged in ongoing employment related discussions with our CRNAs and NorthStar. "We truly hope our CRNAs will accept these generous employment offers and continue to work at Beaumont," the statement said.

While the hourly rate offered by NorthStar is slightly more than Beaumont, the second CRNA said NorthStar is offering a "huge loss of benefits" compared with Beaumont that include changes in education time, paid time off, short term disability, pension and life insurance.

On Oct. 28, Shea met with NorthStar on a Zoom meeting to discuss the contract. He said the nurses rejected the contract. He said the nurse anesthetists have five remaining problems with the contract.

They include not knowing the proposed local NorthStar CRNA leadership structure, the scope of their duties and the lower total compensation and benefit offer.

"We couldn't get any answers from them," he said. "They say your manager will tell you what your scheduling is, your call, vacation, all these quality of life issues (when you start work)."

Shea, who said he will meet with NorthStar Thursday evening on Zoom to further discuss the contract dispute, said one of the objectionable aspects of the contract is a provision that if a nurse leaves before the end of the two-year contract or drops hours, she or he must pay back a pro-rated share of the $30,000 signing bonus.

"I have never seen a CRNA contract like this. It is front-loaded. It is worse than a noncompete because there is a penalty," Shea said. "It creates suspicion (among nurses). If you have to bind me for two years, and I don't know you, I don't know my job responsibilities or scope of practice, it is cause for suspicion about this company."

Spiegel said the CRNAs were offered the bonus if they signed the contract early. He said NorthStar wants to incentivize CRNAs to sign early so the company knows how many more to hire to fulfill its contract.

"We're working with Beaumont on a contingency plan to make sure patient care isn't disrupted," he said. "From that perspective, you don't have to sign with us right away. But there are only so many slots. The longer they wait the more slots we are going to fill with non-Beaumont employees."

Another issue is NorthStar wants all the CRNAs to be credentialed at Beaumont's three northern hospitals.

"The nurses are worried they will be moved where they are needed," Shea said. "We objected to that and they did agree nurses could stay at their current hospital and could only move if both parties agreed."

Spiegel said NorthStar always planned to allow nurses to choose where they practice.

"It's in the contract. We can't move anyone without permission," Spiegel said. "We want them to be cross-credentialed for convenience. In a crisis, like let's say there's a surge (of COVID-19), or some CRNAs get sick, that way we can" ask them to transfer to another hospital.

Spiegel said the pandemic limited the amount of communication the two sides could share about the new employment arrangement — similar to the reason Beaumont CEO John Fox gave in October as to why merger talks with Advocate Aurora Health failed.

"I'm sure they were worried about their jobs. Now they have a new employer coming in who, to be honest, hasn't been able to interact with them," Spiegel said. "To me, it's actually not that surprising that they may have some concerns about the organization. And that is creating some friction."

Over the past two years, Beaumont has been considering various plans to improve its anesthesiology services, to both reduce costs and improve quality through integration.

Beaumont currently contracts with Mednax, a Sunrise, Fla.-based company, for its three legacy northern hospitals. In early June, Beaumont notified its Mednax-employed anesthesiologists that it decided to move to a model that some health systems use where anesthesiologists and CRNAs work for the same group.

Beaumont selected NorthStar for its Dearborn, Trenton, Taylor and Wayne acute care campuses, effective Aug. 20, replacing Anesthesiology Associates of Ann Arbor. Later, Beaumont selected NorthStar for its three northern legacy hospitals, effective Jan. 1. No decision has been made on Beaumont Hospital in Farmington Hills, the old Botsford hospital.