When aiming to improve the performance of your anesthesiology practice you’ll find no shortage of recommendations from industry sources on a wide range of topics. While it’s important to stay informed about trends and best practices, what matters most is knowing where to focus first. Through our decades of experience working with a range of anesthesiology practices, we’ve identified a select group of key factors that have the greatest impact on your practice finances. Understanding how to focus on and improve these metrics paves the way to sustained profitability.
Understanding how to get the metrics associated with your anesthesia contracts under control is one of these critical factors. In this post, we outline how to measure and manage your contracts to maximize the financial health of your practice.
Keep Contracts Competitive
You must ensure that your private anesthesia contracts are competitive and that you are charging within the range of standard rates. When working with government payors there’s very little you can do to influence reimbursement rates, outside of ensuring that your billing company bills and collects appropriately for all procedures. This is not the case for private contracts, where there are specific steps you can take to improve your financial results.
The consequences of not taking the right actions can be devastating. All too often we encounter practice groups that haven’t focused on their anesthesia contracts to keep them up to date. Very quickly these groups can find themselves collecting at rates 20, or even 30 percent below market, given the rising rate of medical inflation.
Outdated contracts can result in anesthesiologists collecting 20-30% less than standard market rates.
We typically find that the majority of practices end up leaving 5-15% of payments for their contracts on the table from not renegotiating contracts when appropriate, reconciling contracted and actual amounts, inappropriate billing, or other fundamental errors.
Since losing as little as 5% of your revenue makes an enormous difference to your profitability, this is a major cause for concern.
Given these high stakes, it makes sense to focus on your next hospital negotiation sooner rather than later. We encourage our clients to have a goal of ensuring that the negotiation plays out as a win-win situation versus a zero-sum game. The best way to do this is by preparing yourself with powerful data and treat negotiations as a regular, collaborative relationship that begins months, or even years before you sign a particular document.
Hospital contract negotiation should be treated as an ongoing relationship – not just as a one-off adversarial process.
It’s critical to ensure you are earning within standard rates. If you’re not certain what you should be making for anesthesia contracts in your region, contact us.
Want to see how this plays out in your own practice?
Read our eBook Anesthesia Group Profitability: The Five Metrics to Focus On.