Anesthesia Business - Dr. Ryan Fields

9/22/2021 Case conference

Transcript

1. Economics and Business of Anesthesia Ryan Fields D.O., M.B.A. Assistant Professor of Pediatric Anesthesia
2. Economics in Anesthesia • The study of the distribution of scarce resources. • Understanding the systems that have developed to balance the supply and demand for Anesthesia services
3. Supply of Anesthesia Providers • Currently approximately 51,000 Anesthesiologists in US • Currently approximately 45,000 CRNA in US • Relatively advanced age of average Anesthesiologist higher than mean physicians. 56% over 55 years old (Merritt-Hawkins) • Tend to retire younger. • Tend to cluster in metropolitan areas 91.6% of Anesthesiologists • Medicare limitations on new Anesthesia Residency spots. (1997 Balanced Budget Act)
4. Demand for Anesthesia Providers • Rapid expansion of outpatient surgery in last 2 decades • Increased use of anesthesia services in out-of-OR locations. Cath labs, radiology suites, etc. • Drags on Demand: • Impending shortage of surgeons and surgical subspecialists, esp. regionally
5. Supply and Demand Conclusions • Estimated to be a shortage of 12,500 Anesthesiologists in nect 20 years. • Need 25% growth to cover attrition and new needs • Shortage especially worse in rural,southern, and south central regions of the US
6. Business in Anesthesia • Understanding the business structures that have developed over time to meet the economic supply and demands for Anesthesia services
7. How Anesthesia Services are reimbursed • Most services billed on a UNIT basis • Initial rate based on case complexity – BASE UNITS • Base units set by CMS, they are reviewed and updated annually • Base Units are added to Time Units • Every 15 minutes = 1 unit The addition of the Base units and time units determines the units billed for that case.
8. Base Unit Examples:
9. Base Units examples • 00796 Anesthesia for Liver Transplantation 30 base units • 00620 Anesthesia for Spine Surgery 10 units • 00546 Anesthesia for Thoracotomy 15 units • 00820 Anesthesia for Intrabdominal procedures of lower abdomen, including laparoscopy 5 units
10. Unit Billing examples: Anesthesia for Diagnostic Laparoscopy – 1 hour case 5 base units + 4 time units = 9 units Anesthesia for Thoractomy – 2.5 hours 15 based units + 10 time units = 25 9 units per hour vs. 10 units per hour Multiply units by unit rate to get payment per case
11. How are unit Rates determined • Medicare rates set by CMS administrators • Medicaid rates set by formula looking at total covered lives • Private insurance rates set by negotiation for in-network rates • Out-of-network rates set by provider, but not necessarily accepted by insurance companies
12. Typical Unit Rates (Approximate) Medicare $20/unit Medicaid $6/unit Managed Medicaid $15-$35/unit Private Insurance $50 - $110/unit Out-of-network billed to private insurance >$100/unit • Same 9 unit Diagnostic Lap. could range in value from $42 - $900
13. Payer Mix The percentage that each insurer represents of total billing INSURER Percent of Units billed Medicare 45% Medicaid 5% Horizon 20% Oxford 10% United 10% Managed Medicaid 10%
14. Average Unit Rate (Blended Rate) The weighted average of unit rates from all insurers INSURER UNIT RATE Percent of Units billed Weighted rate Medicare 20 45% 10 Medicaid 6 5% 0.3 Horizon 94 20% 18.8 Oxford 82 10% 8.2 United 75 10% 7.5 Managed Medicaid 16 10% 1.6 Average Unit Rate 46.4
15. Impact of Payer Mix Based on previous example: Private insurance in aggregate = 40% of billable units BUT = 74% of billable dollars Small changes to payer mix can have large implications for revenue!!!
16. How to effect Payer Mix • Little to change within a specific institution • Usually set by local demographics and hospital referral/transfer patterns However • Work with institution to create new programs • Expand services to ASC or other Hospitals with better mix • Negotiate better rates!
17. Negotiated Flat Rate and Bundled Rates: • The Insurer pays a set rate for a proscribed service Common in Labor Epidural billing, perioperative nerve blocks, and other perioperative procedure eg. Aline, CVP • Bundled Rate – Insurer pays one global rate to hospital for a service, including the professional fees. The physicians negotiate with the hospital for their share of the bundle.
18. Performance based pay • Mostly done through Medicare billing. • A percentage of billings is withheld and has to be “clawed back” • Submission of satisfactory performance data releases money back • MACRA/MIPS
19. Business Structures in Anesthesia • Academic 15% • Small-Medium Independent Private Group 65% • Large National/Regional Corporation 20% • Other structures: Independent providers, locum tenums employment
20. Academic Practice / Hospital Employed • Approximately 15% of anesthesiologists • Typically salaried position with/without overtime and call pay • Considered most stable practice model • Opportunities for research, teaching, and innovation • Easier foray into hospital administration • Built in HR advantages • No ownership, only economic value is in salary and benefits • Typically lower salary than non-academic salary
21. Private Group – Small/Medium Sized • 65% of anesthesiologists • Contract with hospitals and ASCs for services • Only as stable as relationship to hospital/health system • Partnership vs. Salary • Local Governance Board of directors
22. Private Group – Small/Medium Sized cont’d • Partnership • Not all partnerships are created equally • Voting membership? • Full profit sharing? • Equity ownership? • Do you have ownership interest in all ventures? • Buyout? • Everything must be in writing!
23. Private Group – Large National/Regional • 20% of Anesthesiologists • Contract with hospitals and ASCs for services • Ownership may not be physician – Private equity • None or little input on governance • Distant ownership • NO real partnership - Salaried position, some local profit sharing • More stable than smaller groups • Large economies of scale
24. Private Group – Large National/Regional • Economies of Scale • HR – Human Resources : Hiring, retention, benefits • Hospital Contracting • Float pools – rapid response groups • Insurance Contracting • Other services: accounting, billing, etc.
25. Hospital Contracts • CMS requirements • Term – length of contract • Stipends • “Wish Lists” – Subspecialty care, call requirements, etc
26. Employment Agreements - “Contracts” • Components: • Salary – hours, call requirements • Bonusing (profit sharing vs unit based) • Benefits – Health insurance, retirement, malpractice (occurance vs claims made), dental, etc • Restrictive Covenants • Severance requirements • Thoughts on partnership