1. There are just over 32,900 anesthesiologists practicing in the United States. Anesthesiologists represent 5.2 percent of the 633,000 practicing physicians in the country, according to the Bureau of Labor Statistics’ Occupational Outlook Handbook, 2008-09.
2. Many anesthesiologists are salaried employees of a healthcare facility or anesthesiology practice. Forty-four percent of anesthesiologists were salaried employees in 2009, while 32 percent were either owners or partners in some type of healthcare practice. Nineteen percent serve as locum tenens or contractors, according to LocumTenens.com’s 2009 Compensation and Employment Survey –Anesthesiology.
3. An anesthesiologist shortage has increased competition for anesthesia providers. The number of medical students entering anesthesiology training programs dropped greatly in the late 1990s, causing a shortage of practicing anesthesiologists, according to a study 2006 by University of Michigan researchers published in Anesthesia & Analgesia. The shortage led to increased salaries for the specialty due to increased competition and the rise of certified registered nurse anesthetists.
According to Marc Koch, MD, MBA, president and CEO of Somnia Anesthesia, the shortage of anesthesiologists still exists and it has now spread to CRNAs. “There is a nurse anesthetist shortage of approximately 5,000, and this is expected to worsen over time and a “graying” of current practicing anesthesiologists,” he says. According to some estimates, 85 percent of the approximately 30,000 practicing anesthesiologists today are 45 or older.
4. Anesthesiology is a top-paying specialty. Due in part to the shortage of practitioners, anesthesiology is one of the top-ten highest-paying physician specialties, with an average annual salary of $344,000, according to Merritt Hawkins & Associates’ 2009 Review of Physician and CRNA Recruiting Incentives.
5. CRNA salaries approach those of primary care physicians. The average CRNA salary in the United States was $189,000 in 2008-2009, according to Merritt Hawkins & Associates’ 2009 Review of Physician and CRNA Recruiting Incentives. The average salary for a primary care physician reached only $173,000, according to the same report.
6. The economic downturn has reduced the demand for anesthesia services. Despite the exponential growth of ASC-based surgeries, the economic downturn has affected volumes at ASCs across the country. The downturn that has taken place over the past year has decreased the demand for many medical services, and anesthesia is no exception. As the number of elective procedures decreases, so does the need for anesthesia coverage for these procedures. A study completed by the AAAHC Institute for Quality Improvement revealed that 67 percent of ambulatory facilities indicated a decrease in demand for anesthesia services in recent months.
According to board-certified anesthesiologist Sterling “Chip” Wood, MD, partner at Atlantic Ambulatory Anesthesia Associates, decreased volumes are definitely a concern for anesthesia practices. “With the drop in number of elective surgeries, we’re looking at ways to generate more cases, whether that’s more hours of service, offering services on the weekends, or other things that we can do to increase the number of patients coming in the door,” he says.
7. There are three core models for the provision of anesthesia services. ASCs generally employ one of three core modes for providing anesthesia services — the traditional model, the employment model and the owner-provider model. In the traditional model, ASCs contract with independent service groups to provide anesthesia services. In the traditional model, there is usually no compensation agreement between the facility and the anesthesia group outside of perhaps a medical director agreement or stipend. The anesthesia group, then, receives all professional fees for anesthesia services. In the employment model, the ASC employs the anesthesiologists and pays them a salary. In return, the ASC retains all professional fees. In the owner-provider model, a physician-owned ASC incorporates its own anesthesia group to provide services to its facility. The anesthesia company then pays its anesthesiologists a fee, and profits from the anesthesia services go to the owners of the anesthesia group, which are assumedly the same owners of the ASC. The owner-provider model is growing in popularity, though it has been criticized by anesthesiology trade groups as having substantial legal risks. There trade groups also argue that only anesthesiologists should profit from providing anesthesia services.
8. Outsourced anesthesia models may be a profitable option. ASCs that work with an anesthesia group may achieve greater profitability than other anesthesia models, according to Dr. Wood. While the employment-model seems to be growing in popularity as ASCs look to improve profit margin, Dr. Wood warns that employing anesthesia providers could reduce productivity. “ASCs that employ salaried anesthesiologists can fail to provide incentives for being efficient, while anesthesia groups provide incentives for efficiency because groups are compensated by the number of cases they perform,” he says. Dr. Wood also says that ASCs who employ their own anesthesiologists may be tempted to use the least expensive anesthesia services possible rather than the highest-quality in order to increase profits from billing anesthesia services. As a result, ASCs should look for anesthesia providers that are high quality, first, and, then, available at a reasonable cost.
Additionally, ASCs with outsourced anesthesia services may be more able to adapt to periods of lower volumes, such as the volume dip ASCs are currently experience due to the recession. William Hoffman, MD, corporate medical director of Anesthesia Healthcare Partners, says that anesthesia groups are often willing to work with centers and adjust contracts so that the center can remain profitable. “If a center decides it’s better for them to run three ORs rather than four, we can cut down on the number of CRNAs at that center and reassign that person to a new site,” he says. Centers that employ their own anesthesia providers may find it more difficult to reassign these providers.
9. Most ASCs continue to contract with outside anesthesia groups. Employing anesthesiologists and other anesthesia providers can help centers improve their profits, but the challenge of negotiating employment contracts with these providers, arranging coverage, such as for when providers take vacation, and managing coding and billing for these services can outweigh the potential financial benefits for many ASCs.
Brent Lambert, MD, president and a founder of Ambulatory Surgical Centers of America, reports that none of ASCOA’s centers currently employ their own anesthesiologists, though the company has done so in the past. “Anesthesia is a separate business altogether than running an ASC. It’s more similar to practice management. Personnel issues are different and billing is very different,” he says. “When we [managed anesthesia services] in the past, we were always negotiating employment contracts with anesthesiologists. We don’t like to get involved anymore because it saves us the headache.”
Dr. Lambert admits that managing anesthesia services can be profitable, but has noticed that most ASCs who do this have only done so to make up for lacking profits in surgical service lines. “Most ASCs that I’ve come in contact with that are employing anesthesiologists are looking for another way to profit. Typically, it’s an ASC that is not doing well and thinks they can make up losses through employing and anesthesiologist and then profiting from the anesthesia payments,” he says.
According to Ed Hetrick, president and CEO of Facility Development and Management, local anesthesia groups provide the best quality service with the least risk, such as staffing and other expenses required for such arrangement, especially for new ASCs just starting up. “We currently contract with local groups that our surgeons are familiar with and know their quality and their ability to service the ambulatory market,” he says.
If ASCs decide to outsource their anesthesia services, Dr. Lambert recommends that ASC leaders discuss their expectations with the anesthesia group upfront. ASCs should look for groups whose physicians will assist in timely room turnovers, are assigned only to the center (as opposed sending a new anesthesiology team every day) and “treat patients like royalty,” says Dr. Lambert. “Patients should leave thinking the anesthesiologist was the nicest physician they’ve ever met, and when they tell others about their experience that helps market our centers,” he says.
Dianne Wallace, RN, BSM, MBA, executive director of Menomonee Falls (Wis.) Ambulatory Surgery Center says that her ASC has contracted exclusively with the same anesthesia group more than 14 years. “The biggest benefit to us is that we don’t have to ‘manage’ the physicians and/or their billing. The advantage to them is that we provide all supplies and equipment and a large volume of procedures,” she says.
10. Outsourcing to anesthesia groups without the same managed care contracts as the ASC may create headaches for patients. ASCs that outsource their anesthesia services should consider selecting a group that has contracts with the same managed care organizations as the ASC. If an ASC is in-network for a certain payor, but the anesthesia group in out-of-network, patients enrolled with that payor may be unprepared for the higher out-of-pocket expenses associated with out-of-network anesthesia services, says Dr. Lambert.
11. Opinion is divided on bringing in anesthesiologists as investors. ASCs with anesthesiologists on their medical staff may improve profitability by bringing on these anesthesiologists as co-owners in the facility. Having anesthesiologists as co-owners can help ensure anesthesia staff and the owners share the same goals, and decisions regarding cases are made with the benefit to the ASC, not just the anesthesia staff, in mind, says Keith Smith, MD, founder of Surgery Center of Oklahoma in Oklahoma City, Okla.
However, others believe that anesthesiologists should generally not be investors unless they will provide a significant number of pain management patients to the centers. “Anesthesiologists generally don’t meet safe harbor requirements,” says Dr. Lambert. “According, we don’t generally bring them in as investors except in some rare cases where they would be performing pain management cases at the center.”
12. ASCs that use MD and CRNAs may be best situated for anesthesia provider shortages. The anesthesia provider shortage has created competition for anesthesia services, which could result in newer anesthesia providers willing to work holidays, weekends and nights or be on-call, says Dr. Koch. Facilities that use a MD/CRNA cooperative model, where anesthesiologists and certified nurse anesthetists work together to provide services, will be best equipped to handle the anesthesia provider shortage, says Dr. Koch. Additionally, ASCs, which tend to be more efficient than hospitals and do not require physicians to be on-call, will be attractive sites for anesthesia providers.
13. Anesthesia is not reimbursed for many GI procedures. ASCs should be aware that payors are increasingly unwilling to separately reimburse for anesthesia services provided during GI procedures. According to William Hoffman, MD, corporate medical director of Anesthesia Healthcare Partners, some commercial payors refuse to pay professional fees to anesthesiologists for certain GI procedures. This refusal restricts the type of pain control that can be provided to patients undergoing GI procedures and also potentially slows the throughput of cases, he says. For example, the use of propofol during colonoscopy provides greater pain relief and quickly wears off, allowing GI patients to get out of the center quicker. Narcotics, such as Demerol, may not provide complete pain relief and take longer to wear off, says Dr. Hoffman.
Although GI physicians can direct the use of propofol, some anesthesiology groups argue that the practice is safer when directed by anesthesiologists. As a result, a number of anesthesiologists, including Dr. Hoffman, are working with payors to try to explain the benefit of reimbursing anesthesia services during these procedures. If an ASC contracts with a carrier that currently does not provide separate reimbursement for anesthesia, it is important that the gastroenterologists on staff are competent at offering various types of pain relief during these procedures.
14. Inefficient ASCs risk difficulties in securing anesthesia services. ASCs that do not employ or have anesthesiologists as investors will likely have to compete with other facilities, including hospitals, for the service of anesthesia groups. If the anesthesia group is compensated based on anesthesia unit production, and the market is experiencing anesthesia provider shortages, facilities with gaps between cases could risk increased costs in securing anesthesia services, including possible requests for anesthesia stipends to make up for down time, warns Robert Welti, MD, corporate medical director and COO, Western region, for Regent Surgical Health. ASCs with strong volumes and little downtime remain an attractive location for anesthesiologists.
15. Anesthesia reimbursement varies greatly between public and private payors. Professional fees for anesthesia services are determined by adding the time units required (one time unit typically equals 15 minutes) for a procedure with the procedure’s base units, which vary according to the complexity of the anesthesia service, and then multiplying by a conversion factor, which is determined by the payor. The current average Medicare conversion factor for anesthesia nationwide is $20.92, which is about one-third the rate of managed-care contracts, according to Sharon Merrick, coding and reimbursement manager for the American Society of Anesthesiologists. For example, from Oct. 2006-Feb. 2007, conversion factors for managed care contracts ranged between $52.16 and $65.06, on average, according to the ASA’s 2007 national survey of anesthesia conversion factors. At the time of the ASA’s 2007 study, the average conversion factor for Medicare was $16.19. Additionally, some private payors allow coding for a qualifying circumstance or modifying factor, such as for varying degrees of comorbidity, which increase payments because of increased complexity, while CMS does not reimburse for these modifying factors, says Ms. Merrick.
16. ASCs with high levels of Medicare patients may be more at risk for subsidy requests. Medicare reimburses at a very low rate, compared to most managed care providers, for anesthesia services, says Thomas Wherry, MD, a practicing anesthesiologist and principal of Total Anesthesia Solutions. Thus, ASCs with a large percentage of Medicare patients could be less attractive to anesthesia groups. As a result, these ASCs should be prepared for anesthesia subsidy requests and should begin to analyze if meeting the request is worth maintaining the relationship with the anesthesia group.
However, at present, the majority of facilities paying anesthesia subsidies or at risk for these requests are hospitals, says board-certified anesthesiologist Sterling “Chip” Wood, MD, partner at Atlantic Ambulatory Anesthesia Associates. “Hospitals have a much higher Medicare population, and Medicare reimbursements for anesthesia are low. In order for most ASCs to be profitable, they aren’t able to do large volumes of Medicare cases. However, some ASCs, such as maybe an eye center with a huge Medicare population, could be asked for subsidies,” he says.
17. Knowing anesthesia providers’ needs can reduce the risk of subsidy requests. If an anesthesia group does bring up the idea of a subsidy request, ASC leaders should discuss what exactly the anesthesia provider needs to cover costs. Dr. Wherry recommends that ASCs know exactly the number of anesthesia units that the group requires to remain profitable, and work with them to determine if scheduling or other efforts, besides subsidies, could help them meet this goal.
18. Anesthesiologists also play an important role in the efficiency of an ASC. Therefore, it is important that an ASC bring in anesthesiologists that are committed to efficiency. “Our anesthesia groups to help us make our centers more efficient by being committed to helping us get rooms turnover, and they are willing to do this in order to remain the provider of anesthesia services to our patients,” says Brent Lambert, MD, president and a founder of Ambulatory Surgical Centers of America.
Additionally, the use of certain anesthetics, such as propofol for sedation, reduce the time needed to perform cases, which allows an ASC to schedule more cases and schedule more efficiently, according to Stanford Plavin, MD, an anesthesiologist and managing partner of Ambulatory Anesthesia of Atlanta. The use of generic antemetics, to reduce post-op nausea, rather than name-brand medications, can also save ASCs up to $15-$20 per case, says Dr. Plavin.
Mark Schoenfeld, MD, a board-certified anesthesiologist with Columbia Anesthesia Associates who practices at Ambulatory Surgery Center of Union County (N.J.).says that he often forgoes using the “designer drugs of the day” and uses less expensive drug options in order to increase ASC efficiencies.
19. Advances in anesthesia have allowed more patients to be safely treated at ASCs. Traditionally, older and sicker patients were treated in the hospital as opposed to ASCs, but advances in anesthesia have allowed patients that once would have been turned away from the ASC an opportunity for treatment. According to Irvin Thomas, MD, medical director of Safe Sedation, Thomas, an ambulatory surgery anesthesia group, newer medications with shorter half-lives and a shorter duration of action give ASCs the opportunity to treat patients who were once designated to the hospital in the outpatient setting.
However, treating older and sicker patients at the ASC has created more of a challenge for anesthesia providers in the outpatient setting. Traditionally, ASC-based anesthesiologists and CRNAs could take comfort in the fact that they were treating the healthiest patients. Although ASC patients still tend to be healthier than hospital patients, anesthesiologists in the ASC-setting are now seeing more complicated anesthesia cases. As a result, anesthesiologists should be especially careful in determining which patients can safely be treated in the ASC as surgeons are now referring more patients to these facilities, according to Dr. Wood.
20. Offering the latest in anesthesia services may improve volume. ASCs whose anesthesiologists are willing to use innovative techniques with regard for excellent patient safety are attractive to prospective patients who may hear about the facility from other satisfied customers. According to Dr. Thomas the use of peripheral regional anesthesia alone, or in combination with general anesthesia, may provide some of these advantages, which include higher patient satisfaction scores due to excellent post-operative pain control and a lower incidence of post-operative nausea and vomiting.
The improved post-operative pain control provided by regional pain blocks is a result of their effects extending after the surgery. If a patient had undergone general anesthesia, he or she would not have that additional pain control, says Dr. Schoenfeld. Most patients also report less post-operative nausea and vomiting from regional blocks than with general anesthesia, he says. Less nausea and vomiting reduces recovery times, which allows the ASC to see more patients in a day and potentially lowers case costs.
21. Complications from anesthesia have declined dramatically despite more patients undergoing ambulatory procedures. The number of deaths attributed to anesthesia was approximately 1 in 1,500 fifty years ago. Today that number has improved nearly tenfold, despite more patients being treated in operating rooms nationwide. Currently, the chance of a healthy patient suffering an intraoperative death attributable to anesthesia is less than 1 in 200,000 when an anesthesiologist is involved in patient care, according to the American Society of Anesthesiologists.
Dr. Schoenfeld says that anesthesiologists have successfully reduced these complications in the outpatient setting by taking an active role in determining which patients can and cannot be seen at ASCs. He recommends that anesthesiology staff review patient charts and evaluate in person any questionable cases before the day of surgery. Decisions about treating patients should be made before the day of surgery so that patients do not take off work and take up time on the schedule if there is a possibility that they cannot be treated at the ASC. These situations upset patients and are costly to ASC who could have scheduled other cases during those times, he says.
22. Innovative anesthesia services may require investments in technology. ASCs that wish to offer more innovative anesthesia options, such as regional nerve blocks for orthopedic patients, may need to purchase new technology in order to make these techniques available to patients. Although many anesthesiologists use nerve stimulators to detect nerves for administrating regional blocks, new monitoring devices that use ultrasound waves to visualize nerves could grow in popularity, says Dr. Schoenfeld.
However, Dr. Wherry warns that these devices may require a significant investment — the monitors can cost around $30,000.
23. ASCs can benefit from treating anesthesia providers as true team members. According to Dr. Wherry, ASC staff members sometimes fail to appreciate contracted anesthesia providers as true members of the ASC team. However, ASCs that treat anesthesia providers as true team members and include them in the ASC decision-making may find financial benefits from doing so. Anesthesia providers may be more efficient when they feel truly a part of the ASC’s success and may be able to offer ideas to cut costs and improve efficiencies.
As a result, if an ASC is outsourcing its services, they should consider using an anesthesia group that provides anesthesiologists and CRNAs that are dedicated only to serving that center, says Dr. Hoffman.
Contact Lindsey Dunn at lindsey@beckersasc.com.