By: Gary Keeling, Executive Director, Change Healthcare
With hospital stipends becoming more difficult to obtain, effective anesthesia revenue management must be focused on developing new lines of business to ensure financial success. Office-based care and ambulatory surgery centers provide excellent opportunities for additional revenue if practices can develop strategies to effectively address scheduling and coverage requirements.
Several years ago, another anesthesia billing consultant and I were meeting with a group of anesthesiologists at an area restaurant. The practice recently had been informed that its hospital wanted to open new operating rooms and would need additional coverage.
A brief discussion ensued and the physicians quickly agreed that the expanded coverage would undoubtedly require an increase in their already-substantial stipend.
My consultant friend listened quietly, then finally said: “You own a $7 million-a-year business. If you owned this restaurant instead and the bus boy didn’t show up, you wouldn’t hesitate to start bussing tables. So how is owning an anesthesia group any different?”
Initially taken aback, the physicians soon began talking about how they might be able to work the board differently to improve productivity and handle the increased throughput. The group eventually concluded that with a few adjustments, the hospital’s requirements could be met without a higher stipend.
The practice’s willingness to find new ways to meet the hospital’s needs without a higher stipend offers an important lesson in the COVID-19 era.
After the sharp drops in hospital revenue due to pandemic-related deferred utilization, many facilities and health systems are simply not in a position to pay higher stipends. That’s why it is vital that anesthesia groups find alternative strategies for increasing revenue.
Even before the pandemic, the ability to negotiate stipends was under pressure due to increasing competition and greater utilization of staffing firms. My experience as a national anesthesia practice management consultant suggests that the number of hospitals providing anesthesia stipends has fallen from about 95% ten years ago to around 70% today.
One way to compensate for the loss of stipend revenue is to look for opportunities to provide anesthesia services for ambulatory surgery centers (ASCs), pain clinics, and other office-based settings. The demand is certainly there: In response to the pandemic, the Centers for Medicare and Medicaid Services has significantly expanded the types of surgical procedures approved for non-hospital settings.1
Providing anesthesia services in ASCs and office settings can be attractive because the cases typically are low acuity and of short duration. Office settings also have a good payer mix and frequently serve a large number of pre-pay cash patients for elective procedures.
For example, I recently worked with a group that secured a four-day-per-month contract at a fertility clinic. The practice averages five cases a day at the clinic, with each case paying $900. That means the practice is on track to generate an additional $200,000 per year for minimal anesthesia coverage.
You may be reading this and thinking the deal won’t wash: The group would need to hire and pay a new anesthesia provider more than $200,000 to ensure they’re staffed appropriately for the additional coverage.
However, in this case, the practice studied its hospital utilization data for the previous 12 months and realized the case load was consistently low on Tuesdays. As a result, they were able to move a provider to the fertility clinic on Tuesdays without jeopardizing hospital coverage. And when they are faced with an occasional busy Tuesday, the post-call provider stays on and is paid a $1,500 per day bonus to work through the post-call shift.
I work with another group that has become prosperous by continuing to add ASCs and office-based locations. Over the past year, they’ve hired three physicians and eight CRNAs to meet staffing needs. What makes the growth so valuable is that revenue for their ambulatory cases is much higher than average revenue for hospital cases. Plus, bringing on additional providers reduces the call burden across the entire group.
In this latter case, success has bred success: I recently attended one of their RFP presentations to an ASC and a key selling point was that the practice was now large enough to flex providers in and out of the ASC based on daily volumes. The group has also started sending a CRNA out to a pain clinic one day per week after the clinician’s hospital shift to deliver MAC (monitored anesthesia care). On average, this work pays $200 per case, with an average case time of about 20 minutes. The CRNA, who is paid $1,200 per pain clinic shift, does 12-15 cases daily, generating $2,400 to $3,000. That means the work is bringing in an additional $75,000 in net income to the practice annually. Not surprisingly, several of the group’s CRNAs have asked to be scheduled on these extra shifts.
The takeaway from these examples is that if you’re resourceful and determined, your practice can find lucrative anesthesia opportunities that will benefit the entire group. Admittedly, most anesthesia providers work long hours, so finding time to develop new lines of business isn’t easy.
But the good news is, we can help. Change Healthcare provides a full range of anesthesia revenue cycle management and practice management services to more than 150 groups nationwide. We can assist in assessing staffing needs and making revenue projections to accurately evaluate each potential growth opportunity.
1. Trump Administration Finalizes Policies to Give Medicare Beneficiaries More Choices around Surgery, CMS.gov, Dec. 2, 2020