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Understanding Anesthesia Metrics | Improving Anesthesia Group Profitability

There are lot of ideas that you could focus on when trying to improve the financial health of your practice. Practice management fads come and go. Which ones should you pay attention to?

After decades in the business, we can confidently tell you that these are the five critical metrics that impact on the financial health and profitability of anesthesia practices year after year.  Get these right and you’ll be doing well. Ignore them at your peril.

Controlling and understanding these factors ensures current and future profitability.

Key Anesthesia Metrics

Payor Mix

Anesthesia has more disparity between private and government reimbursement rates than any other specialty. Other specialties regularly collect 1.5-2.5x more from private versus government payers but for anesthesia, the difference is closer to 4x.

A 5% swing in your government/private payor mix is like getting a 6.5% pay decrease.

This means that even a small change in the payor mix can have devastating impacts on your finances if left unaddressed. Make sure you know what your current breakdown is and be ready to negotiate a hospital subsidy if those numbers change even a little bit.

Pro-tip: Keep a close eye on your payor mix. If the percentage of government work increases, you must prove that to the hospital and negotiate a stipend to keep your own financials on track.

Private Contracts

It is critical that you ensure your private contract rates are competitive. While there isn’t much you can do about your government reimbursement rates (other than ensuring maximum revenue through appropriate billing and collecting) you can negotiate private rates that are competitive within your region. We often find that anesthesia groups aren’t keeping their contracts up to date, resulting in rates that can quickly be as much as 20-30% below market.

Pro-tip: Make sure your private rates are competitive and up to date. Undercharging can be financially devastating to your practice.

Concurrency and Non-Physician Anesthesia Providers

Concurrency is the number of cases an anesthesia provider is involved with at any time. It refers to not only physician anesthesiologists but also CRNAs, AAs, students, residents, etc.

There has been an ongoing discussion in the anesthesiology community about the use of non-physician anesthesia providers in the operating room and how much supervision is required or appropriate. Without taking a position on this clinical debate, there’s no question that, if utilized, the lower salaries commanded by non-physician anesthesia providers can create a significant financial lever for many anesthesia practices.

If you’re having this discussion within your practice or with your hospitals, be sure to model what the financial impacts will be. No matter which side of the discussion you’re on, you should be aware of the financial implications.

Pro-tip: You can gain important insights by modeling the impact of using CRNAs and various supervision ratios.

Staff Efficiency

Many hospitals require anesthesia practices to have a certain number of available providers for specific shifts – even if they are hardly ever utilized. This essentially forces over-staffing which causes additional issues like bored anesthesiologists, low salaries or high subsidies, and an impact on the bottom line.

Overstaffing due to underutilization can have a large impact on your practice’s bottom line.

You should work with your hospital and show them which shifts are being overstaffed and make appropriate financial arrangements. If the hospital is insisting that you maintain that coverage but hardly ever utilizes your staff, you can negotiate a subsidy that requires the hospital to pay for that access to your staff. Armed with the right data, you can work with your hospital for win-win negotiations where together you can make rational staffing decisions that lower MD strain and decrease financial subsidies for the hospital.

Pro-tip: Keep a record and communicate which shifts have low staff efficiency. Using this information, you can work with the hospital to alter their requirements or compensate your group for lost income.

Billing and Collecting Contracted Amounts

All the key metrics above assume that your group is already billing and collecting the maximum amount from your payors. If you don’t think that is the case, then this is the metric you should focus on first.

Leaving any amount of your revenue on the table has huge impacts on your profitability.

We commonly find that most anesthesia groups are leaving 5-15% of their payments on the table due to inappropriate billing, sub-optimal reconciliation processes, and other mistakes. Make sure your billing department or outsourced company has the systems in place to follow up on contracted payments over and over until they are paid in full.

Pro-tip: If you’re not sure if you are collecting 100% of contracted payments, let’s talk. We can complete a billing analysis for you to understand where you are missing earned revenue.

Improving Anesthesia Group Profitability

By tracking and managing these five key anesthesia metrics you can ensure the financial health and sustainability of your anesthesia practice regardless of regulatory changes or other outside variables.

Read our eBook Anesthesia Group Profitability:The Five Metrics to Focus On.

Download our Free eBook: Transparency in Anesthesiology Billing: Everything Your Billing Company Doesn’t Want You to Know

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Anesthesia jokes are funny - getting underpaid isn′t.

Contact us to learn how you can maximize your take home.

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