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Tony Mira, Chairman and Chief Executive Officer of MiraMed

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Strength Means Service, Not Scale, in Today’s Anesthesia Market

A recent analysis of the financial information of 104 leading health systems (more than 2,200 hospitals) found that size and profitability do not necessarily go hand in hand. The report, by Navigant, throws into question the common wisdom that scale is required to deliver the effectiveness, cost efficiency, care coordination, physician recruitment and retention, and risk management needed to succeed in today's environment.

Two-thirds of health systems experienced operating income decreases during the threeyear period (2015-2017) following the expansion in insurance coverage that accompanied the Affordable Care Act. Overall, health system operating margins declined by 38.7 percent, with non-profit system margins decreasing by 34 percent and for-profit system margins dropping by 39 percent. More than one-fourth of the systems experienced operational losses in at least one of the three years, and 11 percent experienced negative margins throughout.

The findings "should compel health system management teams and boards to reexamine their assumptions about the future direction of their markets and organizations," the report concludes. The current economic expansion in the U.S. "will not continue indefinitely," and "when it is over, those who pay for care will place renewed pressure on the care system by pressuring rates and shifting more of the cost onto consumers, many of whom are unable to pay the patient share."

Health systems cannot count on their investment portfolios to offset declines in their operating income, but instead, must look closely at their markets, and size and target services to mirror actual demand, they conclude. They must also demand improvements in efficiency and effectiveness in their asset portfolios and in the value of their services, most notably for their patients.

Though the study does not explore the anesthesia market, one cannot help but ponder the potential parallels between recent findings regarding health system consolidation and the consolidation taking place within anesthesia.

ABC Vice President Jody Locke, MA, touches on that in this issue in "What Is the Future of Private Anesthesia Practice?" when he writes: "To the extent that larger entities can provide a better product cheaper, the consolidation will continue. The real question, though, is when is big too big? Is there a tipping point?" Mr. Locke contends that smaller, nimbler private practices attuned to their customers' (facilities') needs will remain poised to compete.

Achieving and maintaining that viability in a market as volatile as the current one demands attention to an unnerving array of strategic and business concerns. To help group practice leaders organize their thinking along these lines, Mark F. Weiss, JD, of the Mark F. Weiss Law Firm offers . . . questions. A lot of questions. And no answers. Only questions.

According to Mr. Weiss, "questions— questions that you ask yourself, about yourself, about your anesthesia group, about your circumstances and about your business—are far more powerful than generalized answers that are akin to 'take two aspirins and call me in the morning' when your right femur is broken." His list of questions is comprehensive, thought-provoking, and bound to trigger constructive action.

Also in this issue:

  • One of Mr. Weiss's questions is "Do you have an overall business development strategy, or are you simply tactical?" Will B. Latham, MBA, of Latham Consulting, Inc., helps anesthesia groups keep the momentum going once they've held a planning retreat and developed that strategic plan.

    Document planning efforts, develop detailed action plans for projects and initiatives, establish a process for monitoring progress on these projects and initiatives, empower your board to help move the group toward its goals, and revisit and revise the strategic plan, as needed, he recommends.

  • Kelly D. Dennis, MBA, of Perfect Office Solutions, Inc., helps practitioners and coding professionals sift through the confusion of adding value for qualifying circumstances, notably, field avoidance and special positioning. Anesthesia providers need to know that qualifying services may be missed if they're not documented, and coding professionals need to know when and how to document them, and where the information can be found.

  • Kathryn Hickner, Esq., of Kohrman, Jackson & Krantz, LLP discusses the basics of co-management arrangements, a structure being used to compensate anesthesia departments for their work on developing a perioperative surgical home (PSH).

As noted in our May 7, 2018 eAlert on this topic, our sense is that some anesthesiologists have reservations about embarking on a PSH at their institutions because of concerns about payment. Will that payment be fair and reasonable? According to Ms. Hickner, the co-management arrangement offers a viable option through which physicians may receive significant compensation from their involvement, but these agreements require careful structuring in accordance with state and federal healthcare regulations.

We look forward to seeing many of you at ANESTHESIOLOGY® 2018 in San Francisco.

With best wishes,

Tony Mira
President and CEO

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