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Anesthesia Services
Healthcare executives across the country are discovering, to their surprise, that a nationwide shortage of anesthesia providers threatens to disrupt patients’ access to surgical, obstetric, and other services. This shortage stems from a decade-long decline in the number of providers entering anesthesia training programs that is only now beginning to reverse itself. Since the shortage has been 10 years in the making, it will take at least as long to work itself out.
In the meantime, compensation levels for anesthesiologists and nurse anesthetists are rising rapidly, and competition over their services is intense. Consequently, anesthesia groups are becoming much more aggressive in asking for financial support from their affiliated hospitals, citing an inability to recruit and retain qualified providers in the absence of this assistance.
ECG Management Consultants, Inc., has assisted numerous hospitals and their anesthesiologists in structuring arrangements that create long-term stability within the anesthesia group/department, thereby providing the coverage needed for other key hospital services. Our approach gives clients the answers to crucial questions, such as:
- Are anesthesiologists’ compensation, benefits, and workloads/lifestyles out of step with the market?
- If so, what factors within the hospital (e.g., OR utilization, call requirements, payor mix) or the anesthesia group (e.g., staffing levels/mix, cost structure, revenue cycle management) contribute to the problem?
- How much financial assistance, if any, is needed from the hospital to stabilize the anesthesia group?
- How should such financial assistance be structured?
Examples of our experience in this area include:
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Selected Projects
- Developing an exclusive agreement for anesthesia services.
In this project, we assisted a hospital and its
affiliated anesthesia group in developing an exclusive agreement for providing anesthesia services.
Specific activities associated with this project included: interviews with hospital and group representatives;
a review of operating room scheduling practices and development of recommendations for modification;
preparation of alternative solutions to the services and compensation issues that were central to the
relationship; and presentation and assistance with selecting an approach to the services agreement. The outcome of the engagement
was a mutually beneficial terms sheet that defined the relationship. For the hospital, the terms sheet provided dependable
coverage for projected anesthesia needs and minimized financial risk. For the group, it provided
reasonable compensation and predictable schedules, as well as the ability to maintain its independence.
- Developing a local survey of anesthesia services contracts.
In this project ECG assisted an anesthesia group in
developing market-based information for anesthesia services and preparing recommendations for the
clinic to use in negotiating professional service arrangements with its affiliated hospital.
Specifically, we analyzed anesthesia compensation trends, designed a survey tool to conduct local
and regional surveys assessing current hospital/physician arrangements related to anesthesia, worked
with the hospital and anesthesia providers to facilitate agreement on key issues, and assisted in
negotiating professional service arrangements. As a result of this engagement, both parties agreed
upon staffing and compensation levels, as well other financial arrangements related to house officers,
anesthesia after-hours coverage, preadmission services, physician recruitment, physician administrative
time, and management fees.
- Assisting with development of an anesthesia services agreement and anesthesia group formation.
We assisted a hospital and anesthesia group in two major areas:
(1) developing a detailed services contract between the hospital and anesthesia group, and (2) forming
an anesthesia medical group. Our assistance in this project included: developing the anesthesia group’s
legal structure, governance, infrastructure, and operating budget; preparing employment agreements and
alternative provider compensation models; and working with legal counsel to develop legal documents that
reflected the anesthesia services agreement and the group’s proposed structure. This engagement resulted
in the successful negotiation of the service agreement and establishment of the medical group.
- Reviewing an anesthesia department's operations and financial performance.
We reviewed a hospital’s anesthesia department to
provide management with a better understanding of the department’s operations and financial
performance. Specific areas of evaluation included charge capture, coding, physician compensation
and productivity, scheduling/workload issues, third-party reimbursement environment, and utilization
of nurse anesthetists. This review resulted in a major restructuring of the anesthesia department’s
operations and staffing, which in turn significantly improved the department’s financial performance
and support of surgical operations.
- Conducting a practice management review and contract negotiation for an anesthesia group.
This project consisted of two components. First, we conducted
an operational and financial review of the anesthesia group to identify opportunities for improvement
that could be achieved independently of any change to the relationship between the hospital and the group.
This review encompassed billing and collections, third-party payor reimbursement levels, physician
compensation and productivity, and overhead expenses. Second, we assisted in negotiating the anesthesia
services contract on behalf of the hospital, including analyzing the financial implications of changes
to specific terms. As a result of this engagement, the hospital negotiated contract terms that were
acceptable to the anesthesiologists, while reducing the hospital’s support to them by roughly $2.6 million
over the course of the 5-year contract.
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