Owning Our Future
Deciding on new models for an anesthesiology practice is one of our very biggest challenges. It is not realistic for anesthesiologists to continue believing that if they consistently provide good quality care, all of their financial and business issues will take care of themselves. “The beliefs and strategies that have gotten us to where we are today will not get us to where we want to be tomorrow,” as ABC Vice President Jody Locke writes in his article The Road Not Taken in this issue of The Communiqué.
The transition to value-based payment, combined with the strong trend toward larger anesthesia groups and tight affiliations with national anesthesia companies and/or with health systems, has changed the landscape for traditional independent practices. Bill Britton sums up the current environment in Critical Issues to Consider When Exploring the Sale of Your Practice: hospitals are facing mounting pressures to minimize operating costs, including the costs of subsidizing anesthesia groups; coordinated care is pressuring margins, and uncoordinated quality reporting mandates are increasing operating costs for all.
Mr. Britton, who runs a private equity firm he co-founded, believes that it will become more and more difficult for anesthesia groups to remain independent and that every such group “should begin discussing preparation initiatives that will streamline operations, reduce costs, improve financial transparency, and other specific measures to increase their overall enterprise value.” It may be tempting to consider employment by the hospital or a bigger group, but this option does not realize the equity value of the practice. He urges group leaders instead to consult with the “right M&A advisor” to steer them through the six- to twelve-month process of negotiating a one-time sale to a strategic partner.
A very different option comes from Rick Bushnell, MD, MBA who is working with his hospital in Pasadena, CA to put in place a perioperative surgical home (PSH). An anesthesiology group that, like Dr. Bushnell’s, offers its hospital partner a solid PSH may secure its place with that institution at least for the medium term while CMS rolls out the Merit-Based Incentive Payment System and other pay-for-value programs. In the third of his series of articles on the experience, The Perioperative Surgical Home: Of Economics and Value, Dr. Bushnell lays out the calculations for revenue streams that will help to support the PSH taking shape at his facility.
There are some difficult decisions to be made. Mr. Locke’s article is a plea to groups to be very sure whether to sell or merge or whether to fix one’s own practice, through a PSH or any other strategy that truly enhances the value of the practice.
Will Latham, MBA, CPA explains in detail how to improve an anesthesiology group’s board meetings and decision making in his article Strengthening Your Board. This manual could not be more timely as the pace of change continues accelerating. As evidence of that pace, Computer-Assisted Personalized Sedation—The Beginning of the End of the Anesthesia Provider? by Steven Boggs, MD, MBA was written just before Ethicon ended sales of the Sedasys® system. Dr. Boggs used the opportunity to remind us all that anesthesia providers are going to remain indispensable for the foreseeable future. What technology could replace their combination of “deep technical expertise, human flexibility, problem solving [skills], creativity and compassion?” Once again, we salute the professions of anesthesiology and nurse anesthesia.
With best wishes,
President and CEO