June 5, 2023

Over the past decades, anesthesia providers have noticed a dramatic migration of surgical cases from traditional inpatient venues to a variety of outpatient venues—including outpatient facilities at hospitals, free-standing ASCs and doctor’s offices. Strategically, this has created some interesting opportunities, especially in certain markets. Our data reflects a simple reality: the larger the practice and the more facilities it covers, the larger the percentage of outpatient cases. Some of our largest clients see as many as 75 percent of all surgical procedures performed in outpatient venues. 

Challenging Convention

Conventional wisdom used to hold that this was a very positive trend. Outpatient facilities typically provide services to healthier patients with better insurance. Many a business strategist has argued that practices should follow the patients as much as possible in order to optimize cashflow. What most of the country’s largest practices have come to understand, however, is that the potential of these new venues also involves an entirely new set of challenges that are logistical, financial and strategic. In other words, the practice model that supported a team so adequately at a single hospital facility may not work so effectively for the practice that must deploy providers to a variety of sites, especially if they are not all local.

The greatest challenge for most anesthesia practices is to be able to recruit and retain a team of qualified providers capable of meeting the expectations of the hospital. Coverage and call requirements can be challenging to accommodate, especially when certain call types are inherently unprofitable, such as 24-hour in-house OB coverage. When the practice starts to expand to other non-hospital venues, the scheduling and manpower management challenges increase. Many a practice has had to develop a separate provider scheduling team to manage requests for anesthesia and the deployment of staff.  Tracking staff across a variety of facilities may involve the use of new management tools to consistently meet client requirements and ensure the consistency of customer service. 

Challenge Examples

While most practices get significant subsidy support for inpatient facilities, it is rare that an ASC will provide any financial support because the expectation is that there will be sufficient revenue generated by surgical cases. To the extent that the ambulatory facility is consistently busy and has a favorable payer mix, this is not a problem. Operating room utilization at ambulatory facilities, however, is notoriously variable and unpredictable. This makes it imperative that the anesthesia practice track the average yield per anesthetizing location day so that the practice can monitor the ongoing profitability of each venue. In other words, while hospital subsidies provide a certain degree of financial risk mitigation, there is no such guarantee in the outpatient environment. 

Strategically, there is a tendency to want to control a given market. We have worked with practices that have gotten themselves spread so thin—because of all their ambulatory commitments—that there was not enough revenue left to pay providers a competitive wage. This is why a practice considering expanding its coverage to ambulatory facilities must have clear financial goals and objectives for each site. Ultimately, every new site should enhance the financial position of the practice. To this end it is critical that each practice calculate and track its actual cost of staffing per hour or per day. The chart below is an example of a particularly favorable set of productivity metrics where the addition of ambulatory facilities actually enhanced the overall profitability of the practice.

If you have questions on this topic, please reach out to your account executive.

With best wishes, 

Rita Astani
President—Anesthesia