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The Business of Office-Based Anesthesia for Cosmetic Surgery

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Introduction

The practice of office-based anesthesiology (OBA) is nearly a century old. 1 However, published articles on the subject did not appear in the medical literature until 1981. 2

As with the traditional applications, the goal of office based anesthesia services is to provide patients with a lack of awareness of surrounding events, to keep the patient still to allow the surgery to take place, to enable access for the surgeon through muscles to bones and body cavities. All cosmetic surgery avoids body cavities and is therefore, minimally curative to prevent dangerous surges in hemodynamics.

Compared to hospitals and licensed ambulatory surgery centers, office based anesthesia and medical practices currently have to abide by significantly fewer regulations. Therefore, it is imperative that physicians adequately investigate areas taken for granted in the hospital or ambulatory surgical facility, such as organizational structure, governance, facility construction, and logistical equipment, as well as policies and procedures, including fire, safety, drugs, emergencies, staffing, training, and unanticipated patient transfers.3

In addition to the core functions of any business, OBA possesses many unique elements compared to traditional hospital-based anesthesia. At its core, OBA more closely resembles any other community-based referral practice with a long list of business considerations. The benefits of OBA have made it one of the fastest growing sectors in anesthesiology. Patients enjoy the heightened privacy, efficiency, and familiarity of an office setting (lower costs, too) Surgeons appreciate the increase convenience and control of operating in their own offices. Many save time in travel and eliminate many of the hassles associated with hospitals and surgery centers. For an anesthesiologists, an office-based practice can usually provide a better lifestyle with unique challenges. Catching this wave of the future requires careful consideration of these unique circumstances, pressures, and challenges.

There are many business issues an anesthesiologist experiences when entering the cosmetic surgery market. This chapter covers some of the more important business issues that any physician should consider before embarking in a career that, either in whole or in part, includes cosmetic and plastic surgery.

Choosing an Appropriate Client

Due Diligence and Surgeon's Credentials.The first thing one needs to take care of is due diligence. This means carefully researching and making sure that things are what they seem to be and that the circumstances of the opportunity have been adequately and appropriately represented. The main concern here is not to enter a situation where the economic and clinical well-being of the anesthesiologist can be held in the balance.

Cosmetic surgery is one of those specialties that are inhabited by various competitors from multiple specialties. For instance, the "gold" standard in cosmetic surgery is certainly a board-certified plastic surgeon. Plastic surgeons have generally completed a residency in general surgery, a fellowship in plastic surgery, and some additional training in special techniques. These physicians are board certified by the ABMS specialty of plastic and reconstructive surgery. A 2006 court case in California held that board-certified cosmetic surgeons were equivalent to ABMS-certified plastic surgeons. The California Medical Board is considering an appeal. Having said that, one must note that cosmetic surgery is also performed by dentist, oral surgeons, dermatologists, general surgeons, EMTs, obstetrician-gynecologists, and even gastroenterologists. In this regard, the specialty is unlike anesthesiology. Anesthesia may be administered by anesthesiologists, nurse anesthetist, and anesthesia assistant. The medical specialty of anesthesiology is practiced only by anesthesiologists.

Oral surgeons and dentist have become involved through extension of their related area of expertise. In other words, oral and maxillofacial surgery, which was once a profession that was limited to the teeth and the structures that support the mouth, has now expanded to the point where some oral surgeons are performing rhinoplasty, facelift, liposuction on the neck, and facial laser resurfacing. Anesthesiologists need to understand that these alternate providers are the people who are actually providing care. Some of them may or may not have completed medical school, internship, and formal residency training.

Although not a hard fast rule, it seems as though most oral and maxillofacial surgeons tend to limit their cosmetic surgery to the head, neck, and related structures. If, in fact, the oral surgeon is providing service in an area that is already somewhat saturated by cosmetic surgeons, it may not be unusual that competition will be based on price. Anesthesiologists should be especially cautious of alternate providers, such as oral and maxillofacial surgeons, if during negotiations for anesthesia fees the contractee appears to be aggressive.

Dermatology is another example of a specialty that has been competing on the cosmetic surgery front. No deaths were reported from dermatologic cosmetic surgical offices in Florida between 2000 and 2003 in the Coldiron paper.4 Liposuction was formerly a procedure associated with general anesthesia and a substantial amount of blood loss. One of the reasons this technique was safe and successful was that it utilized an anesthesiologist. In 1987, it was shown that by using a high volume of dilute local anesthesia with epinephrine, and by encouraging homeostasis, less tissues trauma and a safer overall technique for patients would result.5,6 Just as there good and bad board-certified plastic surgeons, there are dermatologists (and other cosmetic surgeons) who are aware and those who are unaware of the pharmaceutical limitations of high-volume local anesthetics. (see Chapter 8)

Ask questions (vide infra) and make sure that the anesthesiologist who is embarking on a career that includes the coverage of cosmetic surgery clients obtain all the information necessary. Only then can the anesthesiologist gauge his comfort level and determine if it meshes well with the opportunity at hand.

Beyond establishing the surgeon's credentials, do not forget about real life experience. With rapidly emerging changes in technology, it is no unusual for new techniques, new drugs, and new procedures to be offered to patients. The skill of the surgeon, however, needs to be evaluated. Is this the first time a given surgeon is providing a procedure? Is this the tenth time? Is this the twentieth time? Nevertheless, it is important that each individual anesthesiologist set their own guidelines as to what they consider a necessary and indicated amount of experience prior to providing anesthesia to a given client. Another hint about the surgeon's experience is to inquire about the "redo" or reoperation rate. In most competent practices, it is 1-2 %. A 5-10% redo rate should raise a red flag! A marginally competent practice may be completely unprepared to provide those statistics because a "redo" would not be considered particularly unusual.

Be Prepared

The Stark Act, Malpractice Liability, and Compliance Issues

The Stark Act is generally known as the "self-referral" law because it basically prohibits physicians from referring Medicare patients for certain health services to entities in which they (or immediate family members) have a financial relationship. Office-based cosmetic surgery practices are not affected by the Stark Act. These health services include laboratories, physical/occupational/speech therapy, radiology and imaging, radiation therapy, DME, home health, prosthetics, outpatient prescriptions, and in-patient and out-patient hospital services, among others. Originally, there was an exception for physicians referring Medicare patients to an entity where they had an ownership interest. However, under the 2003 Medicare Modernization Act, that exception was limited to exclude specialty hospitals.

It is rare that a cosmetic procedure will be covered by insurance, especially by Medicare.

The basic issues are not different from malpractice liability for anesthesiologists providing anesthesia services during any other kind of procedure or venue (see Chapter 18). In order for malpractice liability to have occurred, tow conditions must be met. First, the patient must be harmed. Second, the anesthesiologist must depart from the standard of care. Thus, theoretically at least, a patient with an undesirable outcome must still prove that the anesthesiologist's care was not within standard of other anesthesiologists under the same circumstances. With that said , however, one cannot rule out the sympathy that a jury might feel for a patient who suffers an injury while undergoing cosmetic surgery. It is sometimes difficult to overcome the juror's prejudice regarding cosmetic surgery. The average juror often feels that the surgery is probably unnecessary in the first place and that the physicians are undertaking a purely money-making pursuit rather than helping a truly sick patient.

Another consideration is that, unlike a hospital, a company employing the anesthesiologist is vicariously liable for the anesthesiologist's negligence. It therefore behooves any such company to obtain separate and additional insurance.

Compliance issues are somewhat less significant for the anesthesiologist providing care in the office-based cosmetic surgery setting. On the assumption that the vast majority of cosmetics surgeries are not paid for by any insurance carrier, the usual Health Insurance Portability and Accountability Act (HIPAA) requirements do not apply. The federal Anti-kickback Statute is not applicable, nor is the Federal False Claims Act and its requirements regarding proper coding and billing. However, rules regarding physician conduct are enforceable.

However, in those cases in which the cosmetic surgery is, in fact, paid for by an insurance company, including the Center for Medicaid and Medicare Services (CMS), all of these statutes must be complied with.

Self-Promotion

Sales, Marketing, and Business Development One of the most important components of OBA is spreading the word about one's services and capabilities. Therefore, marketing sales, and business development is a crucial investment for OBA providers. Developing new clients within the specialty of cosmetic surgery can be a challenge. When presenting an anesthesia solution to cosmetic surgeons, there are two question that immediately arise:

1. Are your anesthesiologists board-certified?
2. What are your fees?

Board-certification is important in part because of a large number of cosmetic surgery practices being accredited by national accrediting such as AAAASF, AAAHC, and JACHO. Although these organizations do not require that the anesthesiologist be board-certified, they do require that the anesthesia provider have the appropriate credentials to manage patients at whatever level of sedation and anesthesia is achieved. In addition, owing to the length of the case, along with the level of invasiveness of many of them, working with a board-certified anesthesiologist may also help the surgeon with malpractice insurance and liability.

Because members of the American Society of Plastic Surgeons (ASPS) are required to obtain accreditation in order to operate in their office is a major component in marketing to plastic and cosmetic surgery clients.

In order to market oneself as a premier anesthesia group, consider aligning oneself with the three major office-based surgery accreditation organizations ( JCAHO, AAAASF, and AAAHC). This signifies to a cosmetic surgeon that the anesthesiologist is dedicated to patient safety. The necessary policies, procedures and processes will be in place in order to administer a safe anesthetic. Sometimes, cosmetic surgeons may even advertise the fact that they will utilize an accredited anesthesia group.

Anesthesia cash fees vary from town to town depending on the availability of anesthesiologists, as well as the competitive marketplace of cosmetic surgeons. In the New York metropolitan area, for example, there is a high volume of cosmetic surgeons, making it an extremely competitive marketplace. The cosmetic surgeons who have lowered their fees in an effort to attract their share of the market will frequently expect the anesthesiologist to do the same. If an anesthesiologist is working primarily at a hospital and is covering a cosmetic surgeon to supplement his income, he may choose to negotiate his fees downward. However, if the cosmetic surgeon is using an anesthesia group that is specializing in outpatient anesthesia, then there may be less room to negotiate because of the anesthesia group's higher overhead and overall costs.

In general the anesthesia rates will be charged hourly, with the first hour ranging between $400 and $600 and subsequent hours ranging from $225 to $400. These hourly rates are charged on a per-case basis. Some practices will charge flat fees per case however, this is normally done after performing the surgery a minimum of three times with the surgeon to gauge how long the procedure takes them and to price it accordingly. The offer of a flat day rate is cost effective for surgeons who can schedule two or more cases, or five or more hours of anesthesia time. Flat day rates range from $1800 to $3000 and may or may not include medications and supplies or ancillary staff.

Logistical arrangements vary and the anesthesiologist may bring their own medications and supplies at an added fee of $175 - $250 per case. It behooves the surgeon to review closely what materials and personnel the anesthesiologist is supplying and to make sure that he is equipped to handle any untoward event. One possible scenario is for the anesthesia group or solo provider to adhere state guidelines and/or accreditation guidelines. The surgeon then knows that a high level of patient safety issues has been addressed. Once this realized, the surgeon may conclude that he is better off having the anesthesia medication and supplies provided by the anesthesiologists, since he may bring an added layer of protection.

Although the lowest hourly rate may win the surgeons business initially, they may soon realize they are compromising their schedules to work with the lower fees anesthesia providers who may provide coverage only during non-hospital hours. Weighted in with the knowledge that they may be receiving the anesthesia provider post-call, after eight to twelve hours of work, the cost-saving rationale often dissipates and inquiries additional coverage options resume.

The cosmetic surgeon who appear to be most satisfied with anesthesia coverage arrangement and have been successful in maintaining a lengthy relationship with their group are more often that not the ones who view the anesthesia service as an extension of their own surgical practice. Therefore, the surgeons may place high "worth" on what is brought to the table.

Marketing to cosmetic surgeons is very different than marketing to other office based anesthesia specialties. One significant difference is that, in most cases, the patient pays out-of-pocket for anesthesia instead of billing an insurance company. In order to be successful, OBA providers must offer the most competitive daily and hourly rates. Since patients are primarily responsible for the costs, accepting all types of payments, including credit cards, makes good business sense.

Cosmetic surgeons often cater to an educated, affluent population. These are generally people who look for seals of approval, such as board certification and accreditation. For this particular clientele, it is important to build one's practice with exemplary physicians and highlight their impressive credentials in promotional materials.

It is vitally important that an anesthesiologist demonstrate respect for the patient, surgeon, and office staff. Marketing materials should stress the fact that the anesthesiologist is a guest in the plastic surgeon's office. Promise to deliver the quality of care that their patients expect or even demand.

The cosmetic surgery specialty necessitates flexibility and reliability from office based anesthesia providers. Promote the fact that a large group will guarantee coverage for regular clients and can often provide last -minute or back-up coverage for cosmetic surgeons utilizing other, often smaller, anesthesia groups.

Who's the Competition?

Competition is present in any kind of business. Medicine and cosmetic surgery is no exception. The cosmetic surgeons compete as do anesthesiologists who primarily work in the ambulatory environment. One strives to provide excellent clinical care and to keep on the forefront of the last techniques that improve outcomes and patient satisfaction. Cosmetic surgeons and their patients want great anesthesiologists too, but unlike other specialties, the surgeons are very cost conscious. One might even say cost savvy.

There is no insurance claim. Instead, the patient writes a check or uses a credit card. This patient wants it all- a great surgery team and a cost perceived as affordable. Cosmetic surgeries are growing at an astounding rate. Patients are price shopping and are not shy about comparing prices.

Competition for the anesthesia component of cosmetic surgery comes in a variety of forms. First, there is the surgeon himself, who may opt to do a local anesthetic. Alternatively, a "conscious sedation" may be administered with the nurse (hopefully) monitoring the patient. Surgeon administered anesthesia is becoming progressively less frequent as cases emerge that have had negative outcomes. The ASPS and other cosmetic surgery organizations have encouraged their members to confirm to standards, such as becoming accredited or state licensed. This is also the case for the surgeon supervising a nurse anesthetist, without the presence of an anesthesiologist; another (potentially) risky situation for all involved.

There are also varying types of anesthesiologist-to-anesthesiologist competition for cosmetic cases. These cases can be very desirable to many doctors, as it is cash in hand and no paperwork. Additionally, the setting is often very "posh." The patients are normally younger and healthy, so complications tend to be minimal. Many hospital-based anesthesiologists vie for these cases and moonlight on their post-call day, vacation, or holiday time off. It is a great way to supplement one's income, especially for doctors recently out of residency. There is even a growing trend of full-time freelancers that transit from office to office. A doctor can work 9 to 5 schedule and have a great deal of freedom. These two type of arrangements offer pretty much just doctor's services. Moonlighters and freelancers often require the cosmetic surgeon to supply all the anesthesia equipment, medication, supplies, and so forth. This arrangement may not be a suitable one for all cosmetic surgery practices.

On the other hand there are anesthesia groups that have found their way into the cosmetic surgery niche. Again, the lure of upfront payment and no insurance claims to deal with is an attraction to groups with idle full-time equivalent (FTE) time. Because cosmetic surgery is a blooming market, groups are also adding to their staff to accommodate the cosmetic surgery office-based surgical facilities (OBFs). These groups can be the type that has a large hospital contract and does cosmetic surgery at an ambulatory surgery center (ASC). Or they can be the type that provides service at a smaller community hospital and does multiple ASCs and OBSFs. And last there is the unique type of group that focuses solely on ambulatory anesthesia, devoting full time to OBSFs and ACSs.

The arrangement with these anesthesia groups does vary from providing only the anesthesiologist's service ( as in the moonlighter or freelancers) to providing everything related to anesthesia. Still, other permutations may be everything in between these two extremes. Because the full-time groups are larger and have a behind-the-scenes staff, the cosmetic surgeon can negotiate the types of service arrangement fits best with his practice. When in this competitive environment, it is important to know one's competition and make sure that proposals are "apples-to-apples" comparisons. Otherwise, another group's rate may look more attractive than one's own rates.

Competition in cosmetic surgery will probably get more intense as the type of procedures increase and the technology enhancements enable more cases to be done in the ambulatory setting. When partnering wit cosmetic surgeons to provide anesthesia, concentrate on longevity. Try to become a trusted member of the team, not just another charge on the bill. Work with the surgeon. Be flexible and keep abreast of market conditions that affect rates. Volunteer to do co marketing events. Contribute to the cost of advertising. Do one's best to promote the cosmetic surgery industry and that surgeon's individual practice. Create a win -win, mutually beneficial partnership to help ensure a long-term relationship that will also be financially rewarding.

Maintaining One's Clientele

As more and more anesthesia providers dabble in the office and ambulatory arena, it's important to develop policies that distinguish one's group from the rest. Once clients are brought on board, one needs to maintain and nurture those business relationships. Having a dedicated staff person or "client advocate" to address concerns on a consistent and one-on-one basis will yield high dividends for the future.

Cosmetic surgeons oftentimes have sporadic schedules and untimely surgical procedures; therefore, scheduling is an evolving and dynamic process. One of the major aspects of scheduling is to ensure every physician is scheduled to cover the correct facility according to licensure, certifications, types of procedures, and travel time. Each facility should have a core group of three to four physicians who consistently provide that client's anesthesia according to the credentialing idiosyncrasies mentioned previously.

Billing and Collections for Cosmetic Surgery Cases - Billing and Payment

Be flexible. That's the bottom line for anesthesia billing. Plastic-surgery cases can fall under two categories: Elective cosmetic surgery - These procedures are not medically necessary. There are flat-fee agreements according to procedures and special agreements per surgeon: in 2005 dollars, for example, $600 for the first hour of anesthesia services, $300 for each additional hour, and $200 for medications and supplies used for anesthesia. ($600/$300/$200). To be accommodating, it's advisable to accommodate surgeons' individual policies of collecting payment from patients. There are surgeons who collect both the procedure and anesthesia fee from patients prior to the procedure. In this case, the payment is forwarded to the anesthesia provider.

Other surgeons collect a combined fee for the procedure and the anesthesia. These surgeons will then cut a check for the anesthesia portion. In a third scenario, usually for sporadic cosmetic surgeons, patients are given an estimated anesthesia fee, and a check or credit card is given to the anesthesiologist/billing staff. If at the end of the procedure the estimated time is higher or lower than the originally quoted, the patient is credited or charged the difference.

Charge entry is performed as usual (patient demographics, procedure, and diagnosis are entered referencing the anesthesia grid and/or surgeon's superbill). Upon charge entry it's a good idea to reconcile the number of cases billed versus the number of cases scheduled and completed. This also ensures that payments are received according to specific fee schedules

Medical necessity plastic surgery - These cases are usually billed through insurance carriers and are subject to individual payor contracts and negotiated reimbursement rates. In some cases, patients will be responsible for deductibles, coinsurances, and/or copays. Some insurance carriers request and require medical-necessity note from the surgeon in order to proceed with the anesthesia payment. If payment claims are denied, patients with the anesthesia should be billed according to the surgeon's agreement.

The following are some example cases that have constituted as medical necessity depending on the diagnosis:

1. A severed limb/digit hand foot
2. Breast reduction due to back problems
3. Cleft lip
4. Insertion of prosthesis (mastectomy due to breast cancer)
5. Bell's palsy/paralysis (correct eye surgery)

Whether elective or medically necessary, all cosmetic/plastic cases must provide and complete the following:

1. A detailed anesthesia record
2. A signed consent form
3. Q/A form
4. Demographics
5. Insurance, when applicable

Conclusion

The business of OBA has a multitude of unique attributes compared to the hospital and surgery center environments. Comfortable working hours and a more intimate relationship with patients and physicians can provide the forum for a considerable amount of professional resonance. In addition, the limited resources, the itinerant nature of the practice, and the need to innovate on the spur of t he moment can make for both variety and excitement. The gamut of anesthesia techniques, patient co morbidities, and surgeon expectations is generally no more homogeneous than that found in traditional locations. But, then again, no specific area of anesthesia practice or venue is devoid of challenges. Although OBSFs are very different from other settings, this distinction does not necessarily make it superior or inferior. There is little doubt that some of the growing pains experienced by trailblazing ambulatory surgery centers have been and will continue to be felt by nascent OBSF practices as the industry evolves and develops. For the anesthesiologist, a meld between business person and clinician is becoming more a rule than an exception, and efforts to maintain and promote professional sovereignty will help forge continued growth of this unique practice setting.

References

1. Waters RM: The downtown anesthesia clinic. AM J Surg 33:71, 1919
2. Vinnik CA: An intravenous dissociation technique for outpatient plastic surgery:tranquility in the office surgical facility. Plastic Reconstr Surg 67:199, 1981
3. Mihalcik JA: The anesthesiologist office-based anesthesia. ASA Newsletter. Park Ridge, IL, American Society of Anesthesiologist. 60:20, 1996
4. Koch ME, Giannuzzi R, Goldstein RC: Office anesthesiology. North AM Clin 17:395, 1999
5. Coldiron B, Shreve BA, Balkrishnan, R, et al: Patients injuries from surgical procedures performed in medical offices: Three years of Florida data. Dermatol Surg, 30 1435,2004.
6. Klein JA The tumsent technique for liposuction surgery. J AM Acad Cosmetic Surg 4:263,1987
7. Klein JA The tumsent Liposuction. Saint Louis, MO, Mosby, 2000