Menu

The True Basis for the Anesthesia Subsidy

Share    

THE TRUE BASIS FOR THE ANESTHESIA SUBSIDY

by: Michael Hicks, MD, MBA, FACHE
 

 

 

 

TABLE OF CONTENTS

 

Why are subsidies necessary?
What do hospitals gain by paying a subsidy?
How can hospitals reduce subsidies?
Case study
How EmCare helps reduce or eliminate subsidies

 

WHY DO HOSPITALS SOMETIMES HAVE TO PAY SUBSIDIES? WHAT FACTORS CONTRIBUTE TO SUBSIDY AMOUNTS?

Changes in the industry continue to impact revenue and costs associated with providing anesthesia services, and the subsidy required to operate at the same level of service is similarly affected. Other factors within individual facilities can also cause specific challenges for the anesthesia practice, including increases in the overall work load with fewer clinicians, more operating rooms to cover and elevated pressure for surgeon satisfaction.

The general factors impacting subsidies may include:
  • Decreasing reimbursement by Medicare, Medicaid and private payers which in some cases may be disproportionately lower for anesthesiologists
  • An increasing number of Medicare and Medicaid patients
  • Patient and surgeon demands
  • Loss of procedures to ambulatory surgical centers
  • Staff shortages and competition for clinicians
  • Increases in the starting salaries for certified registered nurse anesthetists (CRNAs) and anesthesiologists
  • Underutilized operating rooms and gaps in surgical cases with no break in staffing requirements
 

WHAT DO HOSPITALS GAIN BY PAYING A SUBSIDY?

If added rooms and coverage result in costs that cannot be recouped by the anesthesia provider group — but provide a benefit to the institution — a subsidy may be warranted. This becomes the business case for anesthesia services. The hospital must decide if factors such as surgeon satisfaction offset the costs for extended hours and additional operating room availability.

Anesthesia subsidies should be driven by the actual and agreed-upon needs of the institution, not the economic desires of the anesthesia providers. It is fair to expect the anesthesia group to work in partnership with the facility to optimize the operation. For example, implementing targeted lean approaches for the operating room can inspire ideas for increasing efficiency and impact clinical outcomes, surgeon satisfaction and revenue enhancement, which can impact the subsidy.
 

HOW CAN HOSPITALS IMPROVE PERFORMANCE AND REDUCE SUBSIDIES?

Some costs are unavoidable. Some are not. Digging deeper into the process may reveal opportunities to reduce the subsidy while still achieving excellent performance. A good anesthesia group will be able to provide expertise and leadership to optimize the practice. Effectively coordinating workflow between operating rooms and unveiling cost containment opportunities often lead to the subsidy reductions that make a difference for the facility.
 

Evaluate and Optimize Utilization

Before trying to calculate the need for, and amount of, any future subsidy, it is critical that anesthesia and facility leaders drill down on issues such as block utilization, scheduling efficiency, on time starts, case delays, preoperative patient preparation and evaluation and room turnover times.
 

Improve Efficiency

Quality improvement process including the CMS Surgical Care Improvement Project (SCIP) matrixes help improve patient outcomes and prevent medical errors. One way to improve efficiencies is to eliminate multiple choices for interchangeable products. Uniform purchasing efficiencies improve productivity and reduce time wasted on sorting or reassessing use of a product.
 

Standardize and Address Variation

Standardized practices that are efficient and compliant contribute to facility’s bottom line. Lean works to reduce variations and improve overall performance. What’s even better … with lean, the team makes the decision. This broad involvement in the process means everyone understands why a change is being made and how it is in their best interest as well as the best interest of the patient to adopt the standard.
 

A Systematic Approach

In order to minimize subsidies, your anesthesia services provider must take a systematic approach to problem-solving, improving efficiency and satisfaction. An experienced, professional anesthesia group practice management company can help the hospital by sharing expertise, supporting change and providing creative solutions for the factors that may impact subsidies such as:
  • Scheduling efficiency and allocation of block times
  • Proper utilization
  • Customized and flexible staffing solutions
  • Onsite clinical leadership through an anesthesia chief
  • Maintaining a true business partnership between the hospital and anesthesia group
  • Lean processes, quality improvement and productivity-based incentives
  • Strong reimbursement through contract negotiation, billing and collections
  • Effective group management serving as an interface to reduce/manage politics
  • Negotiations with surgical staff by experienced anesthesiology leaders
 

EMCARE CASE STUDY

 

Anesthesia Related Savings Stack Up for Hospital System

 

TEXAS HOSPITAL WITH 5,400 OR CASES

It is simply not enough to do a good job anymore. Engaged departmental leaders know they must be able to view the operation through the eyes of hospital administration for inspiration on how to move the department from good to great.

In this case study, a strong commitment to patient care and safety and a focus on surgeon satisfaction to keep the O.R. running smoothly made the department good. The anesthesia department needed to find new ways to make it great and deliver more value to the hospital. As a result, within months of being under the experienced management of EmCare Anesthesia Services, the savings were stacking up.
 

THE CHALLENGE

 

LEAKS IN HOSPITAL PROFITS CAN BE MUCH LIKE THE CONSTANT DRIPPING OF A FAUCET. FORGOTTEN CHARGES AND UNIDENTIFIED LOSSES CAN ADD UP, ESPECIALLY WHEN MULTIPLIED ACROSS A MULTI-HOSPITAL SYSTEM.


 

The first challenge is knowing where to look for profit drains. The second is knowing what to do about it. Then, the third challenge is how to effectively implement the fix, continually monitor progress and ensure accountability to avoid future leaks.

The anesthesia team began carefully evaluating the business side of anesthesia operations management. Within a few short months, they had identified an opportunity for improving efficiency through team building between the anesthesia staff and the OR staff and two areas of concern for other losses: lost supply charges and lost pharmacy charges.
 

THE SOLUTION

Expectations for the department were reset, and the chief delegated additional responsibilities to each clinician ranging from monitoring compliance with the Surgical Care Improvement Project (SCIP) to ordering and inventory of supplies. The mission was to uncover opportunities to improve performance and efficiencies, reduce waste and capitalize on incentives such as the SCIP 2 percent cash back.

EmCare teams initiated communication training and facilitated a Lean event. New processes and controls were immediately put in place to plug costly leaks in the system. Cost-effective ideas such as using stickers on the patient information as well as a billing checklist to ensure pharmaceuticals and supplies were appropriately charged to the patient proved to bring significant savings.
 

THE RESULTS

With the identification of the leaks, effective controls and accountability systems were put in place and lost pharmacy charges were reduced or eliminated. Plugging these leaks saved the system thousands of dollars each week.


 

HOW EMCARE HELPS HOSPITALS REDUCE ANESTHESIA SUBSIDIES

Effective O.R. management requires experienced clinical leadership; outstanding clinician selection, education and training; quality assurance, risk mitigation and satisfaction programs; and a commitment to the quality expected from a high reliability organization. Together these factors lead to improved performance, optimal utilization and an appropriate subsidy that is in line with the needs of the facility.

At EmCare, caring for others is at the heart of all we do. Whether we are providing treatment for a patient in need or supporting clinicians with operational resources and tools, our purpose is to support the delivery of high-quality patient care. We also share a mission and vision of creating better experiences through caring, creativity and commitment to assist hospitals in achieving greater success.

EmCare delivers exceptional metrics and performance for our hospital clients while making it easy and desirable to do business with us. We offer physicians and clinicians great places to work with the leadership and support they need to provide outstanding patient care. EmCare offers a foundation of trust and respect that allows each person to contribute freely to the betterment of healthcare. This takes a considerable and constant focus on professionalism and growth, delivering positive experiences and building strong relationships and creating a culture in which service and excellence thrive. Together, we are making healthcare work better.
 
FOR MORE INFORMATION, CONTACT EMCARE ANESTHESIA SERVICES AT 877.416.8079.


Robert Kurtz, R. T. (2009, April 3). Anesthesia Subsidy Requests: What They Are and How to Prepare for Them. Retrieved from Becker’s Hospital Review: http://www.beckershospitalreview.com/news-analysis/anesthesia-subsidy-requests-what-they-are-and-how-to-prepare-for-them.html
 

ABOUT THE AUTHOR

 

Michael Hicks, MD, MBA, FACHE

Dr. Hicks joined EmCare in 2009 when EmCare acquired Pinnacle’s management service organization. He was the founding President of Pinnacle, helped form Pinnacle Anesthesia Consultants, (now known as Pinnacle Partners In Medicine), and was the CEO of Pinnacle’s management service organization prior to the acquisition by EmCare. Dr. Hicks has held numerous managerial positions within Pinnacle, and its predecessor DFW Anesthesia Associates. He’s also a Board Certified Anesthesiologist and has been the Anesthesia Department Chair and Medical Director for several hospitals, as well as a surgery center in the Irving, Texas area.

Today, Dr. Hicks continues to practice medicine in the Dallas, Texas, area while holding the position of Regional Medical Director for a national health care company and performing his administrative duties for EmCare Anesthesia Services. He received his M.D. from West Virginia University School of Medicine, and did his residency at the University of Texas Southwestern and Parkland Hospital in Dallas, Texas, as well as the Texas Heart Institute in Houston. Dr. Hicks is a Fellow of the American College of Healthcare Executives.
 

CONTRIBUTORS

Jeff Wagner, MD

Thomas Carpenter, MD

William Hartenbach, MD

Ted Holmes, CRNA, MSN

Linda Caccamo, CRNA, MS, MBA/MHA

Lisa Kerich, PA-C

Ken Stackhouse, RN, MBA, MSN, APRN, FNP-C, ENP-BC