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Welcome Aalap Shah, MD!

Welcome Aalap Shah to the AnesthesiaStat family!

AnesthesiaStat has had a proud 15 year history of serving the needs of Anesthesia groups, Hospitals and Enterprise Health.  As the needs of our partners has changed and expanded, we have also!  Dr. Shah is joining us with a wealth of experience to offer new opportunities to all providers who wish to improve the quality and value of the care they provide.

“Providers are looking for opportunities to embrace, not fight, the transition to the new healthcare economy.  This may take the place of improved outpatient and hospital services.  It will also take the place of better remote patient services to meet patient needs at home and closer to their lives.  Dr. Shah brings us this expertise in so many ways to complement the work we are doing at AnesthesiaStat Consulting and Pain Scored“, said Amar Setty, MD, CEO of AnesthesiaStat consulting.

Aalap Shah, MD, is a board certified anesthesiologist, specializing in general adult and pediatric anesthesiology. He attended medical school at the University of Pittsburgh School of Medicine, thereafter completing a general anesthesiology residency at the University of Washington and fellowship at Boston Children’s Hospital/Harvard Medical School. Dr. Shah lives in Southern California and provides clinical anesthesia and pain relief services for several outpatient surgical centers in the Los Angeles Area, as well as independent consulting services in healthcare quality improvement and research.

Dr. Shah is passionate about introducing process improvement strategies in the perioperative healthcare arena, in the pursuit of simultaneously improving both the healthcare provider experience and patient outcomes. He has obtained Six Sigma and LEAN certification and completed fellowships outside of his medical training. He has authored publications in peer-reviewed journals on topics ranging from nerve injury to compliance measures with evidence-based practices, as well op-ed pieces for physician media outlets including KevinMD. He is a recipient of the ACGME David Leach award for his leadership with a multidisciplinary team in improving communication between physicians and nurses after surgery. Aalap is actively involved with global medical volunteerism initiatives, widening his cultural context of care and sharing his experiences with perioperative teams abroad. Dr. Shah is also the Founder and Principal of PRPmobile, a concierge medical aesthetics company in Beverly Hills.


The Road to Smarter Alarm Management for Hospitals in 2018 & Beyond

Alarms are meant to command your attention. They are annoying and loud by design. In a hospital, however, alarms without management can be dangerous to patients and employees. It also reduces patient and employee satisfaction.

The common strategies used by hospitals to manage alarms focus primarily or exclusively on reduction. This makes sense for several reasons:

– The majority of bedside alarms are not indicative of patient deterioration;

– Alarm fatigue in clinical staff is a documented patient safety threat; andThe Road to Smarter Alarm Management in 2018 & Beyond

– Alarm proliferation and its attendant noise is disruptive to the recovery process.

However, alarm reduction is only part of the equation. Hospitals are challenged with striking a balance between communicating essential, patient-safety specific information in addition to minimizing excess, spurious and non-emergent events. In other words, clinical alarm management should be both quantitative and qualitative.

This can be achieved first by understanding the current state of alarms within an affected unit. Then, by leveraging a solution capable of capturing and filtering high-resolution data from multiple physiologic devices—not just individual alarms—and distributing it to the right clinicians at the right time in order to facilitate the appropriate intervention.

More than quantitative reductions, modern alarm management is an essential component of real-time healthcare and clinical decision support.


Read the rest of my post from HIT consultant here.

Opioid Addiction Is Evidence Of Our Failure To Address Chronic Pain

This is an article I wrote that was published in Investors Business Daily. Please click through to read the whole post!

America’s worst drug epidemic shifted into high gear ten years ago when the Centers for Disease Control and Prevention warned fatal drug overdoses in 2008 were poised to overtake the numbers of deaths caused by motor vehicle crashes.

Today, the most recent data show over 42,000 annual deaths caused by opioid abuse, which surpasses the mortality rate of car accidents by several thousand.

How is it that car crash fatalities peaked at over 51,000 in 1979 and in recent years are less than 40,000 despite more drivers? Innovations such as airbags and three-point seatbelts among other technologies engineered into modern vehicles account for life-saving improvements in automotive safety.

Yet we have relatively few visible signs of similar advances in treating pain, which is what caused this drug epidemic.

Read the rest here.

Opioid Abuse Cause for Pause Among Physicians

Baltimore Sun

JANUARY 12, 2017

The opioid dilemma puts pressure on every physician to pause and reflect. Physician anesthesiologists are dedicated to providing pain relief in the safest manner possible, which includes prescribing and managing opioid therapy when medical conditions warrant. What we face now is too many tragic instances of patients emerging from pain treatment regimens only to see their lives destroyed later through addiction.

How to Provide Care without going Bankrupt! (Understanding Risk in a Value-Based Care World)

This is part 3 of a multipart series for physicians learning to understand the economic reality of value based care. Part one, Don’t be Afraid of Bundled Payments! is here.  Part 2, Protecting Income in an Era of Payment reform, is here.


Value based care has gone from dream to reality. Accompanying this transition is a massive transfer of risk from third party payers to providers. We are, in essence, becoming insurers! Physicians have come to accept this new world, but are not in a position to truly understand it. The main reason is that we have never been trained to understand basic concepts in financial risk assessment.


The recent failure of Dartmouth-Hitchcock’s ACO is the best example. “We were cutting costs and saving money and then paying a penalty on top of that,” said Dr. Robert A. Greene, an executive vice president of the Dartmouth-Hitchcock health system. “We would have loved to stay in the federal program, but it was just not sustainable.” In the end, Dartmouth, which was a pioneer in creating the ACO model, improved quality and reduced Medicare spending on hospitalizations, procedures, imaging and testing. Nevertheless, they miscalculated the financial risk of the ACO and had to shut it down.


Why did some of the smartest physicians in the country fail? It may be that we are terrible at understanding and pricing different kinds of risk. For example, in the immediate aftermath of 9/11, the number of air passengers fell while the number of miles driven increased – even though driving is exponentially riskier than flying. This so-called “9/11 Effect,” prompted by a fear of further terrorist attacks and a wish to avoid long waits in airport security lines, had the unintended consequence of creating 2,170 additional traffic fatalities in the three months following the collapse of the World Trade Center. Clearly, travelers did not make their risk calculations are based on objective measures.

Protecting Income in an Era of Payment Reform (Bundle Payment Negotiation Strategies and Pitfalls)

In our previous article, we discussed how payment reform is leading to bundled payments, a single, predetermined payment that encompasses all aspects of an episode of care, which attempts to strike a balance between fee-for-service model and capitation.  We have been studying these issues closely and believe its important for all groups to understand future payment methodologies now.

Its imperative to understand a critical and unique dilemma: You will need to negotiate for and against your physician colleagues, administrators, and insurance companies in order to come out ahead! This is a special skill set which we will begin to describe in the paragraphs below. Most providers and administrators will benefit from some skilled help to create, compile and utilize the data needed to negotiate and monitor the bundle. Contact us at to get started.


Points of Negotiation

In an era of bundled payments, it’s imperative that physicians become strong advocates in order to receive the compensation they deserve. Here are several factors to consider when negotiating a deal:

Risk Adjustment: All patients are not equal. Those with an increased risk for readmission or complications because of factors like age or comorbidities are more likely to require more of your services. Negotiate tiered rates that take into account patient variables.

Know Your Data: You went to school to be a doctor, not an actuary. Nevertheless, you need to have a solid understanding of the literature relating to the risks and outcomes of various conditions and treatments. The key to lessening your financial risk is being able to accurately predict your level of involvement.

Clearly Define the Episode: An episode of care that goes from surgery to seven days post-op should be paid at a different rate than one that extends to 90 days post-op. It’s imperative to agree on the definition of “episode of care.”

img_health_techBenchmarking in Gainsharing: The theory behind benchmarking is that you shouldn’t be financially penalized for another doctor’s less-than-stellar performance. For example, if surgeon X has higher (and more costly) complication rates that another, your gainshare of the savings pool should be greater. While collegiality might take a hit, benchmarking gainshare to performance is not only equitable, but it can lead to increased cost savings. If it’s clear to everyone that surgeon Y uses an approach that curbs costs, that approach can be implemented by others, thus increasing the savings pool and others’ gainshare. When negotiating your gainshare, consider a floor for hitting a minimum target (for example, being in the 85 percentile of a given performance metric) and bonuses for surpassing that target.

Transparency: Insist on transparency in how bundled payments are allocated (including the identities of each party), how payment will be apportioned, and how benchmarking data is collected and used.

Timing: There are a number of timing issues involved with bundled payments. The first – and most important – is the duration of the bundle. If it is a straight bundle, you can negotiate when you will receive your payment. If there is a gainsharing element, you can discuss the lag time for distribution of the savings pool.


Laying the Groundwork

Before you walk into negotiations, it’s important to understand your position relative to the positions of the other parties. “This is one area where groups can really use some help”, says Dr. Pierre of AnesthesiaStat Consulting. “I’ve seen deals become very unprofitable because a group did not do the proper groundwork ahead of time…. And this is not a physicians area of expertise” .

Most bundles are constructed on procedures that are easily protocolized and have less cost variation than “condition based” ones.  Here are a few examples:

  1. Cardiac Surgery/Cardiovascular Procedures
  2. Major Joint Replacements
  3. Hip and Knee Arthroscopy
  4. Carpal Tunnel Surgery
  5. Colorectal Surgery

For cases like these, it’s best to start by calculating your average revenues and cost (typically labor) for each procedure.  Depending on who you are negotiating the bundle (insurer vs. hospital), you may need to analyze your average reimbursement by procedure.

You will want to start with at least a year worth of data.  We would recommend the following list:

  1. Demographics
  2. Payer(s) information
  3. List of services provided per episode of care
  4. Billable units
  5. Average Anesthesia case time
  6. Anesthesia Case time by surgeon (a slow surgeon can make a case lose money)
  7. Average cost of care (median anesthesia compensation (include benefits) + overhead/total OR minutes= cost per minute)

There are other methods of estimating revenues and costs which we have employed when they provide transparency or added advantage.  At a minimum, you need to know your costs and get a good idea of volume to make sure you are covering your expenses.  As you mix fee for service with bundles, make sure your volumes are keeping up with both payment models to keep your numbers intact.  We have found that most groups need a lot of help in the beginning to get started, particularly with the volume conundrum.  In one example, under pressure from the hospital, a group bundled total knee replacements. In this case, they only had to account for the cost of labor.  The revenue per case value seemed to exceed the cost by a 15% margin.  Any profit, however, was more than offset by the decreased volume and the unreimbursed cost of 4 cancellations, three revision surgeries and a wound dehiscence.  The group ended up with a loss on the TKR’s for a six month period.  Faced with a full year of losses, they turned to help to renegotiate with their hospital.


Here are some issues to consider in assessing your leverage:

Know your goals and strengths: Have a clear vision of your short- and long-term objectives, as well as the unique value proposition you can deliver to your negotiating partner. Understanding your priorities will help you determine which points require steadfastness and which elements are more flexible. An inventory of your strengths serves as both a point of negotiation and a reality check. Always remember that 90 percent of something is better than 100 percent of nothing.

Value and competition: If you’re in a relatively large physician group in a relatively small city, you’ll have more leverage than a small group in a large city. On the other hand, if you have many Medicare patients and are part of an accountable care organization, you likely bring a lot of value to the organization. As a result, your position will be stronger. Research your competition to see the alternate paths available to your negotiating partner. This will prevent you from taking an unwavering stand on a point that isn’t an issue for your competition. In addition, keep in mind that your relative value may change depending upon your negotiating partner. For example, your value to a hospital might be different than your value to an insurer.

Allies and allegiances: Consider the outcome you want and determine who will help you best achieve your goal. Your allies might be other physicians, the hospital, the insurer, or your patients. Forming allegiances to get results is a sound strategy, but one that may have long-term implications. Remember that, over time, allies and allegiances can shift, so review each negotiation with a fresh mindset.



Negotiation Strategies

Knowing how to approach a negotiation is different from proficiency in the actual art of negotiation. Here are four negotiation methods that can help you achieve your goals.

Foot-in-the-door technique: Social psychologists call this compliance technique “successive approximations.” The theory is that it’s easier to get someone to agree to a larger request by first gaining their assent to a smaller request. Once you get the first “yes,” it’s easier to get subsequent agreements. In your negotiation, begin with the least contentious points and work your way up.

Door-in-the-face technique: Those who solicit charitable contributions know that once the request for a large donation is refused, it’s easier to obtain a small donation. It’s a concept called social reciprocity. If your negotiations are stuck in one thread, ask for more than you want in a different arena. Then back down and ask for what you actually want. There’s a good chance you’ll succeed.

Changing the subject: When negotiations flatline, take a break and then come back to a different topic. Once that topic is successfully settled, it will be easier to return to and get cooperation for more contentious point.

Side door tactic: If talks have stalled, it might be time for someone not on the negotiating team to step in. If salient points and potential resolutions are suggested by someone outside of the primary group, the opposing party may be more likely to listen.



Beyond Negotiations

The ability to negotiate your segment of the bundled payment is critical to obtaining just compensation, but so is the ability to create a paradigm shift. For example, orthopedic surgeons who have the ability to discharge joint replacement patients within 24 hours are beginning to move from hospital settings to ambulatory surgery centers. While not every patient is a candidate, those who are slash the episodic care cost by half while decreasing the potential for hospital-acquired infections. Hospitals are scrambling to address this outpatient migration trend, and surgeons and anesthesiologists are dealing with divided loyalties. Is it in doctors’ best interest to collaborate with a hospital to protect its patient volume or to develop innovative protocols that deliver value and, in the process, increase physician compensation?

When CMS proposed a rule to pay for outpatient knee replacements, American Hospital Association lobbyists effectively killed it. While the Ambulatory Surgery Center Association has recently tried to convince CMS to revive the rule, there’s no indication that change is in the offing. Yet a few private payers are agreeing to bundled payment outpatient joint replacements. In the meantime, some practice groups are dividing their patients between hospitals and ambulatory surgery centers, and some hospitals are opening their own outpatient centers and offering ancillary services like patient education programs to accommodate the trend. Yet the central question – partnership vs. competition – has not yet been resolved.



Bundled payments are the wave of the future, but you need to stay on your toes to ensure that you receive the compensation you deserve. In addition to having a thorough understanding of the potential points you can raise and honing your negotiation skills, it’s imperative that you understand every element of an agreement before signing on the dotted line. In order to maximize compensation, be on the lookout for game-changing opportunities. If you can find ways to slash costs, improve patient outcomes, or form strong alliances, you’ll be in the enviable position of garnering a larger slice of the proverbial payment pie.

It will take hard work and help from informed advisors like the physicians at, but you can make it work! Contact us today at to sign up for our newsletter, read our informative articles, or get the help you need.


Anesthesia Stat

Dr. Amar Setty     Amar Setty, MD


Dr. Harold Pierre     Harold Pierre, MD

Sally Smith




Tony Mira, “


Don’t Be Afraid of Bundled Payments!

As fee for service payment arrangements fade with healthcare reform and financial risk shifts from payers to providers, anesthesiologists must become adept at a new style of negotiation. The bundled payment framework – a single, predetermined payment that encompasses all aspects of an episode of care – attempts to strike a balance between the unsustainable fee-for-service model and the one-size-fits-none capitation approach.

Healthcare executives, according to a survey by KPMG reported in Becker’s Hospital CFO, are pessimistic about value based contracts. Forty-five percent of surveyed executives expect a decrease in profits. Healthcare providers expect a modest (25%), significant (21%) or steep (6%) decline in profits. Nevertheless, with proper help and guidance, there does not need to be any fear.

Its imperative to understand a critical and unique dilemma: You will need to negotiate for and against your physician colleagues, administrators, and insurance companies in order to come out ahead! This is a special skill that is a dramatic departure from business-as-usual.


banner_contactInitial forays into bundled payments date back to the mid-1980s, when the Texas Heart Institute charged flat fees for cardiovascular surgeries. Medicare initiated a trial of bundled payments in the early 1990s, when it created a demonstration project that paid a flat rate for coronary bypass surgery and related readmissions. In the mid-2000s, a Pennsylvania health

system began to charge insurers a flat rate that included bypass surgery and any necessary follow-up care for 90 days post-surgery. Soon after, the Centers for Medicare and Medicaid Services (CMS) conducted another bundled payment demonstration project for orthopedic and cardiovascular surgeries.

img_health_techIn 2010, the Affordable Care Act created the Center for Medicare and Medicaid Innovation (under CMS), which in turn launched the Bundled Payments for Care Improvement (BPCI) initiative. This pilot program encompasses four models of bundled payments. The first model is for episodic care at an acute care hospital for an inpatient stay. Under this model, Medicare continues to pay physicians separate from instutions.  The second and third models are retrospective. Medicare makes fee-for-service payments but then compares the total price for episodic care against a bundled target price and either pays or recoups the difference. This second model applies to an inpatient hospital stay, while the third model applies to post acute services, such as skilled nursing, home health, and rehabilitation. The fourth model is a truly bundled approach, covering soup to nuts (including physician payments) for an inpatient stay. In this model, the physician  submits a “no pay” claim to Medicare but is paid from the bundle.

Under the BPCI initiative, participants are divided into two groups: Awardees and Episode Initiators. Awardees are those that assume financial liability for the spending associated with an episode of care. Episode Initiators – such as hospitals and physician groups – trigger episodes of care but don’t bear the burden of financial risk (unless they also happen to be Awardees). Forty-eight different episodes of care – ranging from spinal fusion to coronary bypass to joint replacement – are being tested. Some Awardees are participating in a single type of episode, while others are participating in a range of episodes.

In November 2015, CMS issued a rule mandating bundled payments to 800 hospitals for knee and hip replacements. Called the Comprehensive Care for Joint Replacement (CJR) Payment Model, it will cover about a quarter of the surgeries for which Medicare currently pays. This five-year CMS test will use the second BPCI payment model, in which actual costs are compared to a bundled episodic care payment, and then CMS pays or recoups the difference. Under this program, the episode of care is defined from admission to 90 days post-discharge.

The CJR is not a true bundled payment.  Basically, all providers continue to operate as they do now by performing services and collecting in a fee for service model.  At the end of the year, the hospital is charged a penalty or given a bonus based on the grand total of all the payments made.  Ultimately, the hospital bears the risk of the system.  They may try to pass this on to providers, but it is not done by the payer.  Thus, it is not a true bundled payment but more of a pay-for-performance system.  The truth is, this can actually discourage innovation.  Let’s say, for example, that better monitoring or a home based rehab/nursing program could provide a good outcome.  This service is not paid for by medicare.  Thus, there would be little incentive to implement it– even though it could save money.  In a true bundle, the providers would work together to create programs like this to avoid utilization of services.  Also, the retrospective nature take the providers “skin out of the game”.

CMS isn’t the only player making the transition toward bundled payments. State-run programs are taking a cue from the BPCI initiative (and receiving support from CMS). Self-insured employers are contracting with health or hospital systems for specific types of surgeries and procedures. And an increasing number of big name insurers are pursuing bundled payment contracts for a range of conditions and treatments.

Bundled payments have distinct advantages. From the payer’s perspective, it reins in superfluous tests and procedures; from the provider’s perspective, it doesn’t extract a capitation penalty for patients who have chronic conditions. Yet, for physicians – especially anesthesiologists and surgeons – bundled payments present significant compensation challenges. At one end of the spectrum is the potential for working “off the clock” when a patient has complications requiring subsequent surgeries and you’re receiving a single payment for episodic care. At the other end is the issue of being compensated fairly – day in and day out – for the services you provide. Put another way, you must advocate for yourself in order to get the slice of the bundled payment pie that you rightfully deserve.



images-2As of April 2016, BPCI had 321 Awardees and 1201 Episode Initiators. Notably, there are only ten participants in the fourth model, where the physician is paid from the bundle and submits a Medicare “no pay” claim. An annual report from February 2015 (the latest available) reported that engaged physicians championed BPCI’s Model 4, both as a program and in selecting episodes of care. It noted that financial opportunities topped the list of Awardee rationales for participating in this fourth model, including the ability to employ a technique called gainsharing. Gainsharing promotes coordinated and efficient care by passing along cost savings to providers. While each Awardee allocates gainsharing as it wishes, one reported calculating monthly internal cost savings (ICS), adjusting for readmission expenses, and then placing half of the ICS into a savings pool. Payments from the pool are distributed (to individual physicians or groups) monthly, but with a 45- to 60-day lag. Because this model is prospective, gainsharing only occurs when cost savings are realized.

Bundled payment arrangements with entities other than the federal government can include gainsharing, yet it’s important to keep in mind that federal laws prohibit certain types of gainsharing financial arrangements. One of the concerns about the CJR Payment Model rule was that it didn’t waive the Anti-Kickback Statute or Stark Law. In response, CMS and the Office of Inspector General issued a notice outlining the process for obtaining waivers. Keep in mind that, while there are federal carve-outs that allow gainsharing, always ensure an agreement’s legality prior to entering into it.

One must also consider applicable state laws that introduce their own complexity. In Maryland, for example, the state Self Referral Law is more restrictive than national prohibitions. Efforts to open up the law to bundle payments have led to competing bills from hospitals, corporations and coalitions of specialty groups each looking to carve out or oppose “profit centers”. Its not certain, at the moment, what compromise will look like.

In our next article, we will discuss details and strategies from expert negotiators to create the ideal bundle. It will take hard work and help from informed advisors like the physicians at, but you can make it work! Contact us to sign up for our newsletter and ask for an advance copy of “Bundle Payment Negotiation Strategies and Pitfalls”.


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Anesthesia Stat

Dr. Amar Setty     Amar Setty, MD


Dr. Harold Pierre     Harold Pierre, MD

Sally Smith


Ayla Ellison, “Majority of healthcare executives expect finances to suffer in move to value-based contracts” Beckers Hospital CFO, June 21, 2016

The Center for Healthcare Quality and Payment Reform, “