Anesthesia Services: Addressing the Financial Challenges

As healthcare providers grapple with the shortage of anesthesia providers and increasing financial constraints, leaders are redefining their relationships with anesthesia providers. In this episode of Value-Based Care Insights, Daniel Marino is joined by Tim Hanners and Dr. Dave Lebec where they address these challenges and explore best practice approaches in working with employed and independent anesthesia groups. The discussion explores ways to improve financial performance by enhancing anesthesia outcomes, optimizing staffing models, and managing reimbursement from payers.

LISTEN TO THE EPISODE:

 

Daniel Marino:

Welcome to value based care insights. I am your host, Daniel Marino. In today's topic, we're going to spend some time talking about the changing anesthesia market and a lot of the pressures that we're seeing from our industry. Either. As a result of the anesthesia activities that are occurring. Maybe the shortage of the anesthesiologists and the sees of providers that are across the country, as well as the economic pressures. In many hospitals surgical services remains, if not the largest generator of revenue, It's certainly number 2. And yet anesthesia is such a critical component to providing that level of surgical services, not just in the hospital, but also in the surgery centers. So many hospitals are actually expanding their surgical services combining the services in the acute arena, but also in the ambulatory area.

Well, I'm really excited today to have 2 wonderful guests, 2 great colleagues, Tim Hanners, who is a former hospital executive, and has been working in the anesthesia space for a number of years, has helped, you know, quite a few organizations around the country help to improve and work through a lot of their anesthesia economic challenges as well as a lot of the operational challenges. I also have Dr. Dave Lebec and Dr. Lebec has been the chief medical officer for nationally, and the Seizure Service Company. Again, has worked with numerous organizations around the country from the provider perspective, just really helping to align the incentives and create a lot of clinical as well as operational efficiencies. Tim, Dave, welcome to the program.

 

Tim Hanners:

Thank you, Dan, thanks for having us on here. And, by the way, Dave is an anesthesiologist which is important to this, and I have to give further introduction to Dave cause he won't do it himself. He's too humble. But you know, Dave has a unique perspective of being, as you mentioned, that heading up national anesthesia Provider groups across the country and seeing things at that 30,000 foot view, but also he continues to work clinically as local tenants, etc. So he's seeing it from inside the ORs as well. So glad to have Dave on here.

 

Daniel Marino:

Appreciate that, Tim. And yes, Dave forgot to mention that that obviously practicing anesthesiologists is important. So maybe we could start with you, Tim. Real quick. What are you seeing? Are some of the real challenges that healthcare providers are struggling with as they're thinking about. Maybe either realigning some areas or just responding some of the surgical needs that they have within their community.

 

Tim Hanners:

Yeah. So you hear, you know, the hospital administrators, CEOs and in particular CFOs, are really struggling right now. They're very frustrated because you're right, the traditionally, the OR has been a real driver for financial performance, for everything. And there's some things that are a bit out of their control, because the payers, of course, of the financial margins of the OR shrink and are shrinking greatly. And then there's some other things, factors where a lot of their OR business has gone to ASCs. And that's, of course, been orthopedic. But a lot of other things are moving to the ASC procedures, and surgeries.

 

Daniel Marino:

Right? So we're seeing that that shipped inside of service. So Dave, I can't help but think that this puts probably the anesthesiologists in a real difficult position, right? I mean to one extent it's always great to be needed. And yet, you know, and I'm sure they can get pretty much roles anywhere, but they have to be, I would think, certainly professionally challenged on really meeting the needs of the provider organization and even their surgical counterparts.

 

Dave Lebec:

Yeah. So 1st of all, thanks, Dan, for inviting me for this this great topic today. And yes, you're correct in in the post pandemic world. We've seen a shift in how providers both perform their duties, anesthesiologists as well as CRNAs roles expanding, roles changing. We've also seen a shift in the employment models which we're going to talk about today as well. And the primary kind of stressor we see is that anesthesiologists still want to take care of their patients, work with their surgical colleagues. Yet sometimes they do feel they're caught in the middle of a battle between, say, a National Service Provider company as well as the hospital. And they feel that sometimes this creates a barrier to them, providing the care they need for the patients that they see each day. And importantly, I think we mentioned already by Tim, the expansion into this ambulatory surgery centers as well. Yeah. Prior to the pandemic surgery, centers were often taken care of lower acuity patients with a small diverse, not so diverse set of surgical procedures. But now we're seeing the rapid expansion of surgery centers, some with 24 to 40 h days, doing more complex procedures that require different skill sets. So we're seeing we're seeing these 30 centers expanding with a higher demand for higher sets of skill sets, and yet a national shortage of anesthesia providers both CRNAs as well as anesthesiologists. So as you can see, there is a production pressure as well as a service pressure that's placed on all the providers.

 

Daniel Marino:

Well, and you know the basics of supply and demand. Right? There's the supply is limited, the demand is high, and it's, you know, as a result, there's a lot of economic pressures. But you made one interesting comment, Dave, that I want to dive into a little bit. So are you starting to see more of a trend towards employment? And if so, why is that the case? Is it because of those economic pressures, or do hospitals feel like they could, I don't know, create a better relationship with their anesthesiologists, and align that with the surgical providers. What's the big driver of this?

 

Dave Lebec:

Great question, Dan. And what we're seeing is more a shift of more towards the employed model by the hospitals. Traditionally, this has not been a very appealing model to anesthesiologists or CRNAs in the past, prior to the pandemic, as hospitals often would only be able to provide certain compensation packages. They were very stringent, very strict, that we're not very dynamic, reflective of the types of cases each provider was doing as well as the demands placed on those providers. Post pandemic, when we saw a lot of the private indices of practices become stressed financially as well as operationally, being unable to support financially their own practice as well as recruit providers. With the national shortage. We saw those private groups go under. and that created a market for both the Prn. Or the per DM. Providers, independent contractors, which we're seeing a large spread of that throughout the northeast, especially. As well as also having the providers move towards a hospital models, and the hospital models have become more transparent, have been able to reflect incentive based compensation which is a key for anesthesia employment going forward. And the hospitals being able to adapt their models to attract these providers, notwithstanding the new legislation out there for non-competes. But also allow the anesthesia providers, if they do have a non-compete, it's now not geographically widespread, is with a national company, but more focused on just a hospital. In most cases the hospitals don't even have a non-compete or non solicitation clause in their contracts. So it allows the providers to maintain their place of practice where their families have grown up, with the hospitals and surgeons they've worked with throughout their careers, with less stress, more transparency, and more importantly, compensation models are aligned with what they want to do with a work life balance as well as being rewarded for the work they're doing clinically as well as engagement with the hospitals.

 

Daniel Marino:

Well, and I'm sure it. It allows the hospitals to have more influence as to what's occurring with their providers. And especially if you have all of these dynamics around shortage and recruitment, and so forth. You know, the hospitals may not be able to solve the problem, but at least they can influence it. Tim, when you're when you're having conversations with your CFO counterparts or the administrative counterparts. What are they seeing as some of their economic opportunities related to employment?

 

Tim Hanners:

You know, they well, 1st of all, they're also sort of struggling with that right, Because to Dave's point, they haven't done this with anesthesia. The staffing models are different, and they're really scratching their heads on what is the right way to do this? What's the right structure to have for my staffing models and anesthesia? I don't know if how many MDs I need compared to CRNAs, or even in some States AAs. And so they're really trying to figure out where is my financial opportunity? I can't. I know I can't sustain what's what we're doing. These subsidies continue to increase. But I don't know how to restructure it. And what are my options for employment? You know Dave can speak to some various different models. It's not always with anesthesia, Just employ or not to employ or to contract. But there's a lot of, you know, variables there of they can employ CRNAs, but maybe they aren't by state regulation allowed to employ the MDs. But there's a lot of hybrid models. And, and, Dave, I think you can speak to some of those things of what you've seen and some innovative ways to structure it.

 

Daniel Marino:

If you're just tuning in, I'm Daniel Marino, you're listening to Value-Based Care Insights. We're having a great conversation around the impact both the operational, clinical, and financial impact, of anesthesia related to some of the shortage and sort of that changing dynamics. Let's build off of your last comment there, Tim. Let's talk about what does that staffing model look like? Right? So we're starting to hear, and have for the last couple of years, CRNAs are playing a larger role in delivering anesthesia services, but obviously not going to take the place of the physician. So what is that right compliment? And how are employment, how is an employment structure working through that or managing it, or providing a little better solution? Dave any thoughts?

 

Dave Lebec:

Yes, and to your point, I think that all revolves around kind of the change in dynamics between the anesthesiologist and the CRNAs. The anesthesia also has seen a role transformation post pandemic into a parry operative physician moving away from the clinician in the room, providing one on one direct anesthesia care. With the growth of the CRNA schools and the CRNAs moving to a highly skilled set of providers with both regional techniques as well as anesthesia techniques. The CRNAs are expanding into roles up to one on one providers doing that care daily to the patients from pre-OP to post OP.

Where the anesthesiologist has been able to move to a perioperative role, managing the risk of the perioperative department, working closely with the perioperative nursing director, who in essence is running one of the largest P. And l's of a hospital by managing the perioperative environment in the surgical services. So by having them work together to manage, risk, manage, patient, flow, to look for efficiencies, to look for ways in which we can improve the quality of care throughout the continuum of the perioperative process. That is the big change. And with that change comes a new employment model, because now that they were looking for a die, add partnership within the perioperative Services service. We are seeing the hospitals want to employ that perioperative medical director to align their incentives with hospital incentives to help drive these processes for higher quality, more efficiency, and a better financial impact for the hospital.

 

Daniel Marino:

So the hospitals really do have to think about then, sort of a 2 pronged approach on recruitment, you wanna make sure that you're recruiting the physicians, but also the CRNAs seems to me that the CRNAs complement under the employment model would be, say, a 1 physician to 3 CRNAs or one to 4, one to 5, depending upon what that structure looks like. But economically, certainly, as we adjust to the shifts inside of services, the ambulatory arena. In my mind that's really where I think the rubber hits the road and then becomes important to sort of overcome some of the shortage issues.

 

Tim Hanners:

It absolutely does, Dan. And where this CEOs get worried is they don't know. What is that? How far can you go? Can you go one to 5? And obviously it depends on the what's going on in each, or you're not going to have the same staffing ratio for all day for every single or and proceeded room. But how, how or can you go? And I'll tell you what it's frustrating to the CEOs is in this dialogue, where, between the administration and the anesthesiologist is the anesthesiologist who don't want to see that change, who don't want to embrace the CRNA, you know, in different staffing models, they push back and say, Well, it's a safety issue. That's a quality problem you're going to run up against, you know safety problems and create an unsafe environment. Well, of course, that panics any CEO. They're not, you know, to the doctor plays that card. The CEO is not going to be the one that goes down for creating an unsafe environment in the OR. And so it takes someone like Dave. Who knows this 1st hand to be able to say, No, no, no, let's talk through this.

 

Daniel Marino:

Yeah, so the CRNAs urination are not going to take the place of the physicians, but they're going to align within the care team. And I think he has the comfort level, the competency levels and so forth of the CRNAs improve. That's where you know. Again, then you're able to provide a larger. Let's say the overall staffing model that would accommodate what the needs are of the organization. I want to talk for a few minutes around the economic opportunities here, right? Because at the end of the day. There's 2 important drivers, right? The clinical performance and the financial performance. We talked a little bit about maintaining that clinical performance with the right staffing model. But from the economic the financial perspective, what are some of those the key economic drivers that you're seeing that are influencing it, or what's creating the challenge right now. I mean, we're hearing all over the place that the stipends or the subsidies are really high, and they grow year in and year out. What are some things that can be controlled by the hospital to ensure that the financial performance is aligned with the organization?

 

Tim Hanners:

I think, and Dave will speak to this as well. I think one of the keys start with the actual contract or employment relationship that that includes some incentive for the anesthesia providers to help drive financial performance. They need to have some skin in the game, you know, and they need to be in a position where they are more in the drivers seat with leadership and taking some ownership of the ORs. Because they're the ones who can make things happen on time without delay and help drive the financial performance of the OR. But they have to have some incentives and some scaling games to be motivated, to do that.

 

Daniel Marino:

Aligned. It's really the aligned incentives right.

 

Tim Hanners:

Right, right, absolutely.

 

Daniel Marino:

So, Dave, what are some of the elements that you would include in an aligned incentive compensation model? Or what are you seeing?

 

Dave Lebec:

Yeah. So what we look for to do in line incentive compensation. If we look at both the both the re, the clinical aspects and the efficiency aspects, things that the anesthesia providers can control and align with hospital goals that are related to their incentives in their reporting metrics. So we look at efficiencies. We look at ways in which we implement. Our eras programs provide a more standardized high quality, best practice approach to patient care which allows for a decrease in length of stay, which helps all of us in terms of the cost of the system. We look at ways in which the anesthesia group can also affect post-operative pain, the use of regional techniques. We look at ways in which the Anesthesiologists complete their charting efficiently and effectively as to not hold up any billing or denial of claims because of inappropriate or inaccurate charting. And we look at ways in which we can engage the hospital. Hospitals want partners nowadays. They don't want a service. They want a partnership.

 

Daniel Marino:

That’s a good point.

 

Dave Lebec:

Drive their process through. Now, what we do see on some sides is we get these partnerships. Sometimes the hospital may struggle on the aspects of the billing or the business side of anesthesia, as Tim mentioned before, and that's where companies such as the company I work for, as well as lumina health could help kind of manage that aspect to the business to help make that more seamless as a transition, and more transparent to both sides. So that's what we look for in terms of engagement. But the one thing we I will state, though it's very important that any incentives are completely separate from any type of billing or charges that the anesthesia providers create, because that we create, therefore an issue with compliance legally, so that must be kept separate.

 

Daniel Marino:

So the compensation really needs to be on operational efficiencies, clinical outcome performance, those things that really help to advance a lot of the perioperative surgical services. But at the end of the day, Tim, we have to be cognizance of the administrative activity, and I guess. What I'm referring to is maybe you can speak to the to some of the revenue cycle challenges as well as the payer challenges revenue cycle for Anesthesia’s is kind of own little animal. Right? Are these hospitals do they? Are they equipped to be able to provide the revenue cycle?

 

Tim Hanners:

No, most of the time. They're not because the anesthesia has always been separate right? And that's also part of the frustration is the the lack of transparency around the anesthesia billing. You know the Administration is not familiar with the coding, which is a little bit different. They're not familiar with the billing, and all they suspect is that, you know, I'm paying this subsidy, I have no idea what you're doing on the billing side. And are you making any improvements, or are you keeping current? Or are you just looking to me to just write that check because you came up short? And so it's that.

 

Daniel Marino:

Which ends up happening time and time again.

 

Tim Hanners:

Yeah, they just keep coming back to the well, right? That's how this administration feels. The CEOs and they just realize, okay, I can't keep doing this right. I like, I'm just writing checks. And I have. There's no accountability. There's no improvements. This just keeps happening. You know. I had one CEO tell me that, the contracted providers told him “Hey, we think we're going to need about. It's going to be a 4 million dollar subsidy.” Well, in Q. 3 of the finite fiscal year they are 7 to 8 million dollars. And he's thinking what gives. I don't even know what's happening here. So they need some deep understanding, someone to study their revenue cycle and the management and oftentimes, you know, that comes. It mostly comes from some outside helps people who know this business and can understand it.

 

Daniel Marino:

Yeah, well, and it's you know the revenue cycle is so critical to the service. And you know, with the anesthesia it's a little bit. We've done quite a bit of quite number of anesthesia revenue cycle assessments, and a couple of things that we always find out those organizations who struggle with their revenue cycle the most do not have a good integrated process with the surgical activities. In other words, they don't get the pre certification information. They're not their documentation, and billing is not coordinated with the surgeons. I mean, those are really where we find the big, the big crux of the issue, but also to, I think, the reimbursement. I feel like a lot of times when hospitals start to employ anesthesia groups, or anesthesia providers. They've not given real thought to their payer contracts right what they should be getting reimbursed. And without that, I mean, you really struggle. Dave, when we're thinking about managing, or, let's say, starting to employ anesthesiologists, or even if they're independent. talk a little bit about how you, I mean, how do they evaluate the overall improvement? Or, you know, are there key performance indicators that groups should be looking at? Or are there? Are there certain performance outcomes that ensure that organizations as they start to employ these groups, are really, you know, they're getting off to a good start.

 

Dave Lebec:

Yeah, great question, Dan. And one of the things that's important is to understand where you're starting as an organization. Are you starting as an organization that is inefficient, but yet has a low volume, or inefficient, with a high volume, for instance. And each one of those creates a different set of challenges and a different set of measurements you would use. So a lot of times it starts with letting the hospital understand exactly how our time should be used properly, both prime hours when everybody's costs are fixed, and also what is the cost of that off hours case, or that add on case that may not have had the pre certification that both you and Tim mentioned before. There, if we do the entire case and found there's no reimbursement. So we look in terms of where we are, 1st as an institution or facility, then we base our incentives off of where we want to drive the process to.

 

Daniel Marino:

Yeah, that's a great point. Well, gentlemen, this has been a fascinating discussion. I think something that we certainly I think we just scratch the surface and really, discussing and diving into. Tim. If you know any of our provider listeners or anesthesia groups. If they're interested in in understanding, maybe some new solutions, or some different ways of thinking about how they could better influence or manage their financial challenges with the anesthesia. Any thoughts, or maybe ha! You know, maybe you can provide your information. How can they get a hold of you?

 

Tim Hanners:

Yeah, and that would be my one thing of sort of advice Dan is. And I know this sounds self-serving because we're consultants, but you know, don't go it alone. This is the time to get some outside help. You're talking about millions upon millions of dollars that we're not budgeted for and you're not seeing a change in it. And oftentimes, you know, in the in that hospital, c-suite, even the CMO. Is not a surgeon, right? Like they have a clinical background, you know. And you need somebody who understands the ORs. And you need someone like Dr. Dave Lebec to be able to sit in there in the middle of it, and for us to bring both parties together, and to identify, not just the problems, but what are the solutions? Because there are solutions for these. And we know how to do that. So I'd invite them just to, you know, contact us obviously through our Lumina website, or, you know, find us on LinkedIn. And and we'd be happy to have you know the discussions and to assess it without even having to pose a fee or charge for that.

 

Daniel Marino:

Yep, well, it's great, I think, just to have the conversation. The shared learnings like you said great place to start. Well, gentlemen, thanks for coming on the program. Love to have you back. Since this is such a top of mind topic for many provider organizations. Maybe we can have you back and sometime down the road and dive into another topic. There's think there's quite a bit to discuss, so never a shortage there.

Great. Well, I appreciate it, and thank you to our listeners for tuning in until the next insight. I am Daniel Marino, bringing you 30 min of value to your day. Take care.

 

About Value-Based Care Insights Podcast

Value-Based Care Insights is a podcast that explores how to optimize the performance of programs to meet the demands of an increasingly value-based care payment environment. Hosted by Daniel J. Marino, the VBCI podcast highlights recognized experts in the field and within Lumina Health Partners