Healthcare Performance Strategies is engaged in all aspects of strategic, analytical and supporting roles in the contracting, subsidy analysis, governance and group redesign of anesthesia provider groups. This case study describes the avoidance of a large requested anesthesia subsidy facilitated through a detailed subsidy assessment and an anesthesia provider group change.
Situation Description
A local anesthesia group in the Southwest was covering a Hospital and affiliated Surgical Center with a model utilizing anesthesiologists and CRNA’s; with the CRNA’s covering much of the night call. As part of the service mix, obstetric and cardiac anesthesia coverage was required. Due to escalating salaries, difficulty recruiting and retaining the required anesthesia subspecialty expertise, and flat collections, the group was requesting a subsidy of $1 Million (from $0 at the time).
Engagement Objective
HPS was engaged by the Hospital to evaluate options for subsidy reduction, seek alternative staffing models, assess the anesthesia revenue cycle and consider other viable options for anesthesia coverage.
Approach
1. Financial Analysis/ Pro-Forma Development
Several anesthesia group pro-formas were developed utilizing detailed caseload/payer mix, coverage requirements, several alternative coverage models and other key anesthesia metrics. Operating Room log analysis looked in detail at utilization of staffed time for the facility. Utilization data uncovered an opportunity for consolidation of anesthetizing locations at the Surgical Center.
2. Staffing Model Review
HPS evaluated the current and several alternative staffing models at the facility. An opportunity was uncovered where a nurse anesthetist could safely cover a location currently occupied by an anesthesiologist. This model was acceptable to the group and facility, and reduced anesthesia costs by $200,000.
3. Analysis of Key Subsidy Drivers
HPS analysis identified opportunities in 3 of the 4 main drivers of anesthesia subsidies. In addition to the $200,000 identified through staffing model efficiency, another $400,000 reduction opportunity was identified in the anesthesia revenue cycle and CRNA compensation.
4. Onsite Evaluation
The onsite portion of the evaluation included an HPS physician consultant engaging in discussions with the administrative team, OR leadership, key surgeons, and the anesthesia group. The picture which emerged from these key stakeholders was a group with strong service levels and clinical care, but poor business oversight. Other local provider groups were identified with more robust business infrastructure, and an ability to enhance revenue realization through stronger payer rates.
5. Analysis and Recommendations
The analysis supported a change to a larger local provider group to provide business infrastructure and revenue cycle strength. It was recommended that the facility seek competitive bids from several established anesthesia service providers.
6. Outcome and Implementation
Several local and regional provider groups were contacted, all of whom expressed an interest in providing services at the facility. HPS was involved in the evaluation of several competitive bids, and a strong regional group was chosen to become the exclusive contract holder. The previous anesthesia providers were kept informed as the process progressed, and all of the providers (MD’s and CRNA’s) joined the successor group. The contract was signed with no subsidy.
Results
The anesthesia subsidy assessment and completion of negotiations was achieved in 2 months, maintaining high quality coverage for the facility and retaining all of the anesthesia providers. The anesthesia group was larger and more stable, while a request for a $1 Million subsidy request was reduced to zero.
