Paging iNDIGO Partners – How one of the largest private hospitalist groups in the nation is saving rural health care

The symptoms of a small, failing hospital are instantly recognizable: chronic empty beds, a beleaguered staff and a bottom line that bleeds red. But rather than closing the doors, is there a way to treat – and perhaps cure – these ailing facilities?

One prescription that is finding substantial success in rural communities around northern Michigan – and now beyond – is a team of hospitalists that comes armed with professional staffing in one hand, and business acumen in the other.

iNDIGO Health Partners in Traverse City just happens to also be one of the largest and most innovative private hospitalist groups in the nation. It was named to the Inc. 5000 (#3435), an exclusive ranking of the nation’s fastest-growing private companies, for the fourth time in 2015.

Revenue was $37.3 million in 2014 and represented 95 percent growth over three years. It created 85 new jobs over that time period and today employs 165.

“To me, the story of iNDIGO is one of trying to preserve health care in rural northern Michigan,” said Dr. Richard Woodbury, iNDIGO’s vice president of medical affairs. “Our vision is to preserve health care for a lot of reasons. It is in jeopardy throughout the country, but rural health care is in special jeopardy.”

The Hospitalist as Specialist

So what exactly is a hospitalist? Hospitalists are specialists, just like an internist or a podiatrist or an oncologist, but they specialize in the care of patients in the hospital.

The group first formed in 1993 as Hospitalists of Northwest Michigan, a private entity with physicians employed by Munson Medical Center, with one goal in mind: to provide high quality care to the patients. But they soon realized there was an even higher calling – that is, the health of the hospital. It was just as important as the health of the patient.

The physician group knew it could help bolster a hospital’s bottom line and it was mutually beneficial to do so.

In 2001, the group became independent of Munson, developing a “contractor” relationship.

“The willingness to collaborate with the hospital to meet their needs was a fairly novel idea as most providers approach their relationship with hospitals as one of ‘what can you do for me’?” said iNDIGO principal Dr. Ken Friar. “We understood that we would only do well if the hospital did well so worked hard to help make Munson a better place even if what we were working on didn’t always directly benefit us.”

Treating Patients Locally

Word began to spread about the group’s medical and business chops and in 2008 Cadillac came calling. At that time, Mercy Hospital (now Munson Healthcare Cadillac Hospital) had requested help in lowering its average length of patient stay, equating that with saving money.

But the doctors disagreed – bringing their philosophy of spending more money on staffing so hospitalists are comfortable with keeping patients.

“That was our first real experience of not doing what we were asked to do, but working with them on what they really wanted to accomplish,” said Friar.

The group is credited with being a key piece in the turnaround of the Cadillac hospital as it improved the hospitalist program, started growth of a healthy bottom line and gave leadership one key piece of advice: Whenever possible, stop transferring patients to other hospitals. In other words, treat them locally.

“Before long, we’d significantly improved the hospital’s reputation and patients wanted to stay at their local hospital instead of taking a long ambulance ride to a hospital an hour or more away,” Friar recalled.

After Cadillac came Alpena in 2009 and then on to the Upper Peninsula.

But keeping patients at these small, rural hospitals is often easier said than done. Typically they have a barebones staff to treat 10 or so patients a shift. While it’s a solution that lowers costs, it also damages revenues, said Woodbury, because a solo physician or hospitalist has no incentive to keep patients. More patients simply add stress to the system, so it’s easier to send them to a larger facility.

Case in point: Dickinson County Healthcare System in Iron Mountain.

“When we started at Dickinson County Healthcare, they were so used to shipping patients they didn’t even call the primary doc first,” said Dr. Troy Ahlstrom, an iNDIGO hospitalist and principal. “They had seven patients in a 96-bed hospital because they were shipping everything out. Since we’ve come in, their total average census is five times what it was and sometimes reaches into the upper 40s.”

And the numbers don’t lie. What had been a year-end loss of $1.5 million in 2013 turned into a $4.8 million profit a year later – in large part due to iNDIGO’s leadership and guidance.

On-site Doctors, Streamlined Care

Dr. David Friar is iNDIGO’s president. He joins Ahlstrom and Jim Levy, a physician assistant, as principals along with his cousin Woodbury and his brother Ken.

“We help hospitals understand what they need to change,” said David Friar. “It’s about keeping the care local.”

In addition to Dickinson County Healthcare, Munson Healthcare Cadillac Hospital and Munson Medical Center, iNDIGO now also serves McLaren Northern Michigan, Spectrum Health Ludington Hospital and West Shore Medical Center in Manistee. Its staff now numbers more than 150 hospitalists.

Helen Johnson, vice president of patient services and chief nursing officer at Spectrum Health Ludington Hospital, said the best part of bringing iNDIGO on board is gaining an on-staff physician available to the patient and clinical staff around the clock.

“Before we had the older traditional model of primary care physicians, running their offices and also coming to see patients in the hospital either before or after office hours or at lunchtime,” Johnson said. “Now we have an on-site doctor absolutely available to our patients and to clinical staff.”

Friar said its work at West Shore is a great example of what the relationship can do. Beyond staffing and managing the hospitalist program, it also analyzes hospital data so leadership understands what it needs to do to stay healthy.

“We help them change policies, adopt evidence-based best practices, streamline care, educate their nurses and support the rest of the medical staff so they can be more successful, too,” said Friar.

They also serve as consultants, helping the health care institutions meet the increasing regulatory requirements, find solutions for physician shortages and turn the red ink back to black.

Future Outlook

iNDIGO’s next big push is in the telehealth arena, which allows video connections to hospitals in the most remote corners of the country and provides a way to give around the clock care even for the sickest of patients. It also recently expanded into staffing skilled nursing facilities (i.e. nursing homes).

When asked about what’s down the road, Levy said the only constant in health care is change.

“We don’t know what tomorrow holds for health care, but we know tomorrow is not going to be the same as today,” he said.

But iNDIGO’s work will continue, he added, to ensure that communities are stronger and healthier than they are today.

Before Woodbury retires in some 10 years, his dream is to have a true health care system where all facilities read from the same playbook to accomplish high quality care.

“In medical school, I learned how to keep patients healthy, now I’m also helping keep the hospitals and communities healthy,” he said. “That’s what makes this such a great job.”

Anne Stanton contributed to this story.