A quick look at the MGMA data over the past 10 years reveals a staggering trend. Independent private anesthesia groups are quickly being replaced by Anesthesia Management Corporations and Hospital Employed models. What is fueling the rapid change are decreasing hospital profits, decreasing insurance reimbursements, hospital consolidation, and the millions of dollars private equity firms are pouring into purchasing anesthesia groups. Partnership tracks are becoming increasingly tenuous as the survival of the old anesthesia models wane. Your group does not have to succumb to this trend. You have all the control in your hands to save your contract, and I want to show you how.
First, this article is not for the group that finds themselves in the middle of a hospital consolidation, purchase, bankruptcy, major lawsuit, or at the center of a compliance violation. Those situations can be completely out of your control. This article is for those groups who are eager to take the steps to remain independent and thrive through this tumultuous time in our field.
There are several steps you have to take as a group to achieve this goal. First, DO NOT WAIT! Act now, especially if you do not have a great relationship with your hospital’s administration. Your contract is only as good as the notice “without cause” period. For most groups, it is 90 – 180 days. So your 5 year or longer contract is really a 90 – 180 days contract. I find it amazing how many groups fail to understand the true terms of their contract. Once you agree to act and have all the members of your group on board, follow these 10 steps:
1. Focus on the 2 important aspects of any anesthesia contract: service and financial efficiency. If you fail at either one, you will give another group or AMC an opening to take over. Someone can always do it cheaper, but not everyone can do it better.
2. Assess the goals of the corporation who owns the hospital. Is your group in line with the corporate goals for the hospital. Those goals are often centered around quality, patient satisfaction, and expansion of services. Remember, the owner of your hospital has the power to determine who will provide anesthesia care for the hospital. If you are not in line with their vision, you are not in line with their future. Meet with the corporate directors and administrators and ask the tough questions.
3. Assess the goals of the hospital’s CEO. While the corporation has the ultimate power, the hospital’s CEO is the local representative of the owner and he or she develops the plan to meet the goals of the corporation. You have to develop a strong positive relationship with your CEO. Under no circumstances should you have an adversarial relationship with your hospital’s administrators. If you do, you need to fix that relationship ASAP!
4. Assess your group’s ability to meet the needs of your clients (patients, hospital, surgeons, nurses, and other physicians). Too often, this is where there is a huge disconnection between the group’s assessment and the clients’ assessment. Get assistance from a third party on this so your clients can speak freely.
5. Assess your quality indicators and advertise them. Do you know what your patient satisfactions scores are? Do you know how well you comply with SCIP standards? All of these questions can be immediately answered by the big Anesthesia Management Companies and they are very happy to advertise those to your administrators. You should know your scores and exceed those of your competitors.
6. Are you an evidence based practice? This is important to assess because it has potential for saving lives, preventing injuries, lowering the cost of care, and falls in line with the future of medicine.
7. Do you receive a supplement? If so, start worrying! There are potential groups that can provide the services cheaper while paying their providers more money. Just saying to yourself that no one can do it cheaper doesn’t make it so. Evaluate your usage of CRNAs, AAs, and NPs. Are you maximizing your ratios? I rarely find anesthesiologists who understand the QX, QZ, QK, QY, AD, and Q6 modifiers. Thus, they fail to understand how to maximize the ratios beyond 4 to 1.
8. Do you have an acute pain service? Patient satisfaction scores are very important to the hospital. No other indicator of satisfaction may matter more than the management of post-operative pain.
9. Do you have an impaired or underperforming provider? One of my clients was a CEO who discontinued a group’s contract after he heard inappropriate statements from a provider. Do not allow one provider to damage the viability of your contract. Intervene ASAP and help the provider address their personal problems.
10. Consider strategic alliances. These can take the form of partnerships with other groups, consolidation with larger groups, private equity buyouts, hiring a former hospital CEO to manage your group if you are very large, etc. These partnerships can help you manage risks, improve staffing, adapt for the future, negotiate better or bridge the gap between you and the hospital. A good consultant can help you navigate the best options and find the best fit for your organization.
Harold Pierre, MD
AnesthesiaStat Consulting and Perioperative Management