Five Rules for Choosing the Right Anesthesia Management Company
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Most practices struggle with issues relating to staffing, department development, contracting, revenue management and quality improvement. The issue is how to solve these problems in the most efficient and effective manner. Using an anesthesia management company [AMC] involves considerable risk—both financial and operational—as well as the loss of some degree of control. For these reasons, the decision should be taken seriously bearing in mind several key points.
Rule 1: Identify the most appropriate type of AMC for your practice
Some AMCs provide short-term consultation, others concentrate on implementation and several offer both services. The AMC you choose should have a core focus on anesthesia and the infrastructure to support it. Moreover, their staff should have a mix of businesspeople and anesthesiologists, since nearly all matters have both clinical and administrative components.
It has become fashionable for many physician practice management companies [PPMs] to enter the anesthesia management space and vice versa. Be very cautious. Anesthesia is unique in several respects. The operational, financial and administrative issues have limited relevance to other specialties. Similarly, an AMC entering a new specialty may divert its time and attention away from anesthesia. AMC’s that focuses on more than just hospital anesthesia might be useful if practice growth is an objective since ASC and office based anesthesia are undergoing expansion.
Rule 2: Consider a Limited Engagement before Making Big Commitments
Prior to signing a management agreement, consider bringing in an AMC to help you define the breadth and depth of the problems affecting your practice and to discuss potential solutions.
The on-site component of this consultative engagement may be three to five days and involve meetings with clinicians, administrative personnel and hospital leadership. Expertise in both the clinical and operational aspects of administering an anesthesia department is critical. Similarly, an Anesthesia Management Company appreciation for local, regional and national anesthesia issues, as well as insightful “expectation management” concerning operational limitations, is pivotal. For example, hospital administrators often anticipate improved efficiency by shifting more volume towards regular weekday hours, but surgeons may be accustomed to scheduling “elective” procedures after hours, thus causing accommodation difficulties. Anesthesia departments can knowingly or unknowingly be caught in the middle as financial goals clash with operational demands. Although an AMC can provide an objective assessment and suggest remedies, they are not a magic elixir, and unhappy surgeons, anesthesia providers and OR staff often persists.
Rule 3: The Most Common Anesthesia Service Issue is Staffing
For nearly a decade, demand for anesthesiologists has outstripped supply. Depending on the number of new residency graduates and the overall growth in the number of surgical procedures requiring anesthesia, this deficit may persist for some time. Staff shortages have impacted hospitals more than ambulatory anesthesia settings since many anesthesiologists and CRNA favor less stressful cases, better hours and no call or weekend work. Moreover, the insurance demographics of the typical ambulatory patient tend to favor higher unit rates, higher case rates and often better take home pay for many anesthesia providers.
These obvious attractions are good news for ambulatory surgical facilities—but not for hospitals. Recruitment remains difficult and expensive. Furthermore, a hospital’s expectations of provider costs and work schedules frequently fail to mesh with what the market commands. By marshalling data, an AMC may be able to help educate hospital administrators on the relative acceptability of various work schedules and support the conclusions of the anesthesia group.
An AMC can suggest ways to achieve staffing objectives and describe the range of expected costs. They also can provide a detailed analysis of the rationale for the department census and the most cost-efficient staffing model given the acceptance of nurse anesthetists and anesthesia assistants. Administrative needs are also important to consider, since not all anesthesiologists desire to sit on hospital committees or have the zeal to troubleshoot administrative problems.
Beyond the staffing assessment is the challenge of filling positions at the right cost. Some AMCs have internal recruiting departments; others use external recruiters; many blend the two. AMCs that lean on external recruiters have higher expenses for recruiting that ultimately get passed along to the client. Knowledge concerning basic human resource tasks such as compensation, benefits coordination, training, education and conflict resolution represent core AMC skills that help improve clinician retention.
Rule 4: Revenue Management is Critical
An AMC should have comfort assessing and discussing the three components that contribute to the overall financial resources of an office-based anesthesia department—insurance payments, patient payments and facility-based subsidies. Similarly, expertise on the common anesthesia service engagement models is essential since nearly all are impacted by these three inputs. For instance, in a “revenue guarantee” model, the facility may have to augment payer collections when they fall short of projections.
Since collections are the lifeblood of most anesthesia departments, thorough examination of how an AMC manages the anesthesia revenue cycle is vital. Some AMCs simply outsource the entire function to billing companies. As with recruiting, however, an AMC that has brought the anesthesia billing process “in house” can provide significant savings and lower AMC fees to the anesthesia groups they serve. In addition, an AMC with its own billing department has more discretion than one with a pure outsource model, and may be better able to troubleshoot issues before they come to the attention of surgeons. In either case, complete utilization of technology for electronic submission, payment posting and report generation helps improve financial outcomes and AMC communication with their clients.
Rule 5: Facility Engagement Models—Seldom a One Size Fits All
Carefully assess an AMC’s ability to discuss and implement sophisticated engagement models and adroitly tackle contract renewals. Your AMC should be comfortable developing fair and reasonable subsidy arrangements, as anesthesia departments in many hospital and some ambulatory surgical centers require some financial support. Although revenue guarantees, case guarantees or flat subsidies are the starting points for most agreements, the variability is substantial. In cases where a facility is trying to access the anesthesia department’s revenue stream, an AMC’s comfort with compliance implications as well as applicable state and federal prohibitions is of paramount importance.
Conclusion
An AMC should be able to define and assess various financial, operational, clinical and contractual issues and make suggestions on the best way to address shortcomings and prepare for the future. Choosing an anesthesia management company whose undivided attention is on anesthesia and whose staff is a mix of anesthesiologists and businesspeople can prove very helpful. A limited consultative engagement has less financial and operational risk. It provides the anesthesia group a chance to assess an AMC’s ability to lend value to staffing model development, clinician recruitment and retention, revenue cycle management and payer and facility contracting matters.
Marc E. Koch, MD, MBA
President & CEO, Somnia Inc.
www.somniaanesthesiaservices.com
Robert Goldstein, MD
Executive Vice President & Chief Medical Officer, Somnia Inc.
http://www.somniaanesthesiaservices.com/