Anesthesia Practice Size: Is Big Better?
Summary: When it comes to assessing the appropriate size of your anesthesia practice, several factors must be considered. Understanding the practice's constituent parts and other variables will aid in determining what size works best.
As Americans, we have a fascination with bigness. We are raised in the belief that bigger is better, especially when it comes to business. There is a famous joke about an international book competition where the topic was elephants. The American submission was entitled: "How to Make a Bigger and Better Elephant." The real question is, when is size an advantage in the structure and operation of an anesthesia practice? It is a good question, especially in the current environment where hospitals and health plans keep merging and growing.
Our good friend, Amr Abouleish, often reminds his audiences of the three basic truths of American medicine: healing is an art; medicine is a science; healthcare is a business. Successful medical practices must find a way to balance all three, and anesthesia is no exception. Delivering compassionate care in a cost-effective manner that meets the needs and expectations of patients and the surgeons that operate on them is no simple feat. While the general goals of providing quality care may be true for all practices, the specific circumstances of each practice are unique. What works for one practice may not be applicable to another.
Ever the Artist
Let us begin with the important notion that healing is an art. Anesthesia providers can be trained in pharmacology, clinical standards and the basic elements of good patient care but how they communicate with patients is a very personal thing. Some providers have it innately and others don't. Anesthesia care relies on decision-making and good judgement. Providers must often make critical clinical decisions in a matter of seconds. It is often said that anesthesia providers must make critical decisions faster than any other specialty. Picking providers who possess good judgement and the ability to respond effectively in stressful situations is a leap of faith. The reality is that, given the current manpower shortage, it is increasingly difficult to pick the best providers.
Let us not forget that it is the administration of anesthesia that does more to determine the quality of the patient's surgical experience than anything the surgeon does. The use of amnestic agents may make the patient forget the trauma of surgery but was the patient properly prepared for the experience?
The challenge of large groups is that of consistency. The administration of anesthesia is an autonomous act performed in isolation. The provider must formulate a clinical plan based on the specifics of the patient's condition, the requirements and expectations of the surgeon, and his or her own clinical experience. It is both art and science. Every large practice must assume that each provider is appropriately qualified and that, if they need help, they will ask for it. As groups continue to expand and cover a wide variety of venues, this is sometimes a perilous assumption.
Large entities would like you to believe that they are like Starbucks where every latte tastes the same. The good news is that, for most patients, they are at greater risk driving to the hospital than undergoing general anesthesia. The bad news is that, in the current environment, customer service is often more important than good outcomes. Even so, it is not easy to manage providers who are trained to be independent and autonomous. The bigger the practice, the greater the challenge.
Isn't it interesting how practices try to overcome this challenge with technology? Automated anesthesia records make monitoring clinical interactions easier, but they never tell the whole story. Big practices must make serious investments in the tools and resources needed to ensure a consistent product, especially in the current environment where there is a shortage of providers and where staffing is often a problem.
The Scientific Method
What does it mean when we remind ourselves that medicine is a science? Anesthesiology is the study of anesthesia and finding ways to best manage patients through the entire perioperative continuum. It is an ongoing process focused on finding ways to make surgical and obstetric patients safer and more comfortable. The good news is that the American Society of Anesthesiology has continued to raise the bar and set the clinical standards for anesthesia care around the world. The society and its various meetings and symposia are an invaluable resource. As in so many things, the successful provider must be a committed student of the specialty.
The question is to what extent anesthesia practices take advantage of this resource and to what extent they use their own clinical database to keep redefining that standard of care. There was a time when M&M conferences and journal clubs were an essential part of a group's meeting schedule. It would appear that, for many practices, these are archaic relics of the past. Today's market realities have changed the context. Time is precious. Cost matters. Too often, the only clinical changes that get implemented are those that will enhance the bottom line.
Many large practices and staffing companies go to great lengths to demonstrate the tools they use to monitor and assess the quality of care provided. It is the rare practice, however, that is truly innovative. All too often, innovation is the antithesis of the consistency of care that practices strive to deliver.
The Business of Big
There was a time when the refrain to every political question was "It's the economy, stupid." That may be the case today in anesthesia where the goal of virtually every practice is to provide as cost-effective service as possible. There is no doubt about the fact that the greatest challenge for most practices is to generate enough revenue, from whatever source they can, to recruit and retain an appropriate staff of qualified providers.
This may be the one aspect of practice management where large groups have an advantage but not always. Remember the advice we give to our kids: success in life is about discipline and focus. Managing a large practice with various lines of business disbursed over a variety of venues requires careful cost accounting, which is an arcane and novel concept to most anesthesia providers. The basic reality is that one cannot manage a large practice the same way one manages a small practice. This is why most large practices have come to rely on well-paid administrators and administrative staff.
Anesthesia practices have typically prided themselves on having the lowest cost of doing business. Billing fees and general administrative costs are a much lower percentage of revenue collected than would be true of almost any office-based specialty. It is true, though, that large group practices often pay a premium for the administrative services they provide their members. The question is whether the net return justifies the expense.
We have seen some very dramatic developments in the specialty over the past 20 years. Many of the 25 largest practices 25 years ago either no longer exist or have morphed into large national staffing companies. North Shore Anesthesia Associates is now NAPA. Sheridan is now Envision. We have seen the impact of venture capital encouraging the aggregation of many practices. There have been lots of invaluable lessons from their experiences. It would appear that the only constant is change. Some who thought they would be better off hitching their practice to a bigger provider have come to learn that swifter, quicker, nimbler was a more effective strategy. When we ask the question, is bigger better, the real answer is that it depends.
None of this should imply that we are trying to discourage our clients from growing their practice or from exploring merger opportunities; quite the contrary. American medicine has become so competitive that every practice must actively define its own strategic plan. No, what we are suggesting is that form must follow function. Every practice must assess its own unique market and market potential and develop an appropriate strategic plan. The devil is in the details. The demands of business are often quite different than those of medicine. Learning to embrace the fact that healthcare is a business requires considerable focus and discipline. As you consider the challenges and opportunities for your practice, feel free to reach out to us. We have lots of experience helping practices identify the best opportunities in a wide range of market situations. As your business partner, let us know your thoughts. Afterall, your success is our success.
As always, you can reach out to us at info@anesthesiallc.com.
With best wishes,
Tony Mira
President and CEO