Outside Forces: Anesthesia and the Current State of Healthcare

You're doing fine. At least in terms of your own personal bubble, things seem to be okay. But there are forces from without that may soon push and poke at that bubble. Consider the chaos that is certain to ensue when the bubble finally bursts.

Summary: While anesthesia groups may be chugging along just fine, there are stressors being felt in the healthcare industry, generally, that may eventually cause disruptions in provider groups' financial well-being. Today's article takes a look at those stressors and analyzes their potential impact on the anesthesia specialty.

You're doing fine. At least in terms of your own personal bubble, things seem to be okay. But there are forces from without that may soon push and poke at that bubble. Consider the chaos that is certain to ensue when the bubble finally bursts.

An anesthesia practice may be humming along just fine. You're handling your cases. Your group is experiencing stability. You're fulfilling the high calling of care. From all indications, things seem right in your world; but how quickly complacency can turn into calamity. Because of this, anesthesia groups must keep track of certain trends taking place within their specialty and within the broader healthcare industry. Doing so, will help them to be better prepared for what's coming down the pike. With that in mind, we thought it may be beneficial to provide our readers with some interesting data points now being noticed in American healthcare.

What's up with Wages?

A survey of 86 hospital and medical group leaders was recently conducted by institutional consulting giant Kaufman Hall (KH). The findings of the survey were released in a report last month. According to the report, two-thirds of respondents witnessed wage increases of more than 10 percent over the last year for their clinical staff. Another third of respondents saw wage increases for such staff top 15 percent or more. It is worth noting that the rate of inflation in the U.S., as determined by the Consumer Price Index (CPI), was 8.3 percent as of August 2022. Accordingly, income for clinical staff is reportedly increasing at a faster rate than inflation.

Now, at first glance, this would seem to be good news for anesthesia providers (as they, too, fall under the term "clinical staff"). After all, there is clearly an upward pressure on wages in the current environment. One must remember, however, that these increases are primarily being absorbed by hospitals. Because of staffing shortages, there is a premium on recruiting qualified nurses and staff physicians. In order to win the recruiting battle, hospitals are entering into what amounts to a bidding war, driving wages higher. That, in turn, is having a negative effect on the facility's bottom line.

But what about the specialty of anesthesia, in particular? If we dig a little further into real income changes for anesthesia providers in the last year or so, will we see the 10 to 15 percent increases that the KH survey is reporting for clinicians, generally? According to medical news aggregator Medscape, the yearly income of anesthesiologists rose seven percent in 2021 over the previous year, with a reported average salary of $405,000. According to a September 26, 2022 report in Salary.com, anesthesiologists in the United States had a median income of $411,000, with the site reporting last year's median at $397,300. Taken together, these reports would seem to indicate a continuing upward tick in year-over-year wage increases, though less of a percentage rise than reported for clinical staff, generally, in the KH survey.

With the release of the 2023 Medicare Physician Fee Schedule (PFS) Final Rule (FR) on November 1, we now have a few more definitive numbers to help us get a better sense of anesthesia providers' potential earnings in the coming year. It's not good news. At least on the Medicare front, reimbursement is heading in the wrong direction. According to the FR, the 2023 conversion factor (CF) for non-anesthesia services is 33.06, reflecting a decrease of 4.5 percent. The anesthesia CF will go from 21.56 in 2022 to 20.60 in 2023. This represents a 4.4 percent decrease in reimbursement for anesthesia services. Remember that these are national CFs, and thus the actual surgical and anesthesia CFs in your area may differ somewhat from the above figures.

While Medicare is only a portion of the typical group's payer mix, it may be a significant and growing portion of that mix—especially given the aging of the American populace. We must also recognize that some commercial payers may attempt to follow Medicare's lead when publishing their own upcoming fee schedules or contract renewals. The take home message here is that groups should brace for downward pressure on insurance payouts over the next year.

The Staffing Equation

Another major stressor that may end up impacting anesthesia groups in the months ahead involves staffing shortages. This may come in two forms. First, there is the issue of hospitals being short-staffed and how that ultimately affects the anesthesia practice. Second, anesthesia groups must deal with the potential of volatility within their own membership in terms of losing members or recruiting. We will look at each of these in turn.

Financial and accounting services giant BDO is predicting that healthcare facilities will continue to experience staffing shortages into the new year, especially in nursing. The continuing phenomenon of burnout may also lead to an exodus of both professional (doctors, non-physician practitioners) and support staff. A short-staffed facility means an inability to sufficiently staff all ORs, PACUs, etc. This means case volume reduction—for both surgeons and the anesthesia team.

In support of BDO's assessment, the KH survey referenced above also indicates current issues with staffing that translate to a lowering of case volume. The survey reveals that 66 percent of respondents reported their facility was running at less than full capacity because of staffing shortages. Summarizing their findings, KH researchers stated:

Workforce concerns are top of mind. There simply are not enough candidates available to fill empty positions, with particularly acute problems in nursing. The need to rely on contract labor to help plug staffing gaps has resulted in labor costs that are unsustainable over the long term,

The KH survey also revealed that 40 percent of participants said that oncology was the only service line that saw a significant case volume increase over last year, as compared with interventional cardiology, general surgery and orthopedics.

Added to the general staffing shortage, anesthesia practices are also facing potential problems in retaining and recruiting within their own group. In a recent report authored by Robert Stiefel, MD and Howard Greenfield, MD, we find the following concerning assertion:

The healthcare industry is facing an escalating anesthesia manpower shortage. Many practices have reported losing anesthesiologists and anesthetists, and even more have had difficulty finding individuals to hire. With a critical shortage of providers nationwide, simply securing minimum coverage is becoming indispensable to managing surgical facilities.

With the potential for decreasing reimbursement and a shrinking pool of providers, anesthesia groups will have their work cut out for them to maintain stability. As far as solutions, here are two things to consider. First, if your group is down a member or two and you are finding it difficult to recruit, it may be fortuitous if you are also in a facility that is facing a reduction in case volume. Less cases may translate to less providers needed, though the complex variables of coverage and hospital contract requirements may complicate this natural assumption. Second, if the administration wants to keep the requisite number of anesthesiologists and CRNAs at their facility, they will have to ensure that each member feels adequately compensated. To this end, the administration may be amenable to greater stipends if it will ensure a continuation of sufficient anesthesia staff.

All is not lost, and this current trend in reimbursement and staffing levels need not last forever. For example, there are indications from certain analysts that case volumes are expected to pick up this quarter. It may take some time for things to get back to pre-pandemic expectations, but that day will surely come. In the meantime, practices will need to be strategic in their short- and long-term planning. If you have questions on this topic, please reach out to your account executive, or contact us at info@anesthesiallc.com.