The Impact of Coronavirus on Anesthesia Practices

Summary:

A closer look at the actual impact of the coronavirus on anesthesia practices is both dispiriting and enlightening. While the short-term impact is traumatic, the long-term prognosis is not so bleak.

Over the course of its history as a specialty, anesthesia has been the subject of many legislative and financial challenges, including Medicare concurrency billing guidelines, capitation and managed care contracting. In each case, the advanced press ultimately turned out to be much more traumatic than the actual implementation. And now another next-level challenge threatens the specialty status quo: the coronavirus. While it is now clear that this virus will forever change the way medicine is provided and administered in this country the impact on anesthesia may not be so grim. A review of the actual impact of the virus on surgical case volumes is clearly eye-opening but may provide some useful insight into what a recovery could look like.

Figuring the Falloff

Now that we have some perspective on the impact of this virus on surgical volume across our client base, we have identified some relevant themes and useful metrics. The following tables represent a sample of anesthesia groups within our client base. For purposes of this analysis, we have summarized data by week. The assumption is that the virus hit most practices during the third week of March. We consider week two—the last normal week—as week 0 and the first week of March as week -1. Weeks one, two, three and four thus represent weeks during which surgical activity was determined by the impact of the virus. We specifically focus on surgical case volumes because, for the most part, as indicated, obstetric volume was unaffected. Data for week four may be slightly understated because of the time it takes to get, code and enter charges into the bill

Actual collections are a function of production levels and a waterfall effect, which represents the percentage of each month's expected collections that are posted each month. If a practice expects $100,000 for a month's services, typically 10% is collected in the first month, 35% in the second month, 25% in the third month and so on as collections ramp down. A drop in volume is clearly a predictor of a drop in collections but there is a considerable lag. While April and May collections may be down somewhat, the real drop off won't occur until June or July.

What Goes Down Must Come Up

The purpose of assessing the drop in volume is to gain insight into the potential recovery. Each venue and line of business will respond to different factors that will ultimately determine its recovery potential. Inpatient hospital operating rooms where emergencies and critical cases can be done must remain open while outpatient and ambulatory surgery centers have for the most part closed down as a result of coronavirus concerns. It may also be useful to examine volume trends by specific line of business such as OB, cardiac, endoscopy, orthopedics and general surgery.

Perhaps the most significant factor impacting surgical volumes is the percentage of cases performed on an outpatient basis and in ambulatory surgery centers (ASCs). To some extent, the migration of cases to outpatient venues has exaggerated the impact of the virus. Although most ACSs were closed completely in March, many are surgeon-owned, which means the owners have a strong financial incentive to start doing cases again. A number of hospitals in California have already announced their plans to open for elective cases on May 4.

The following graphs reflect the impact of the national health emergency on case volume base on case type:

Endoscopy has been one of the fastest growing lines of business for most of our clients. It is also one of the lines of business to shut down in response to the virus. Because these cases are not urgent, it may take a while for case volumes to ramp back up. If we use week three as our benchmark, the average client has seen endoscopy volume drop 85%.

One of the surprises in this study was the impact on cardiac cases. Despite the urgency of patient status, the volume of these cases also dropped off dramatically. One can only speculate what the impact will be when heart rooms are opened up again. There are those who believe that anesthesia providers will have to work overtime to catch up.

Of particular interest to many anesthesia practices will be the volume of orthopedic cases. Not only do these cases tend to represent a more favorable payor mix, but many of these cases involve the use of nerve blocks and ultrasonic guidance. It will be interesting to see how the volume of these cases ramps up.

As mentioned, the volume of obstetric cases has been relatively unaffected by the virus. This may or may not be good news as in many practices obstetric anesthesia is somewhat of a loss leader.

Without a doubt, this coronavirus has represented one of the most significant challenges to impact the specialty of anesthesia. In one fell swoop, the bottom has fallen out of the O.R. schedule and every practice has been scrambling to adjust their staffing and minimize the number of providers that have to be furloughed. The good news is that eventually work will resume. The question is, when? Current indications are that there is plenty of incentive to return to normal. Clearly, April will be a slow month; but, by May, things should start returning to normal. While a number of practices cannot withstand such a hiatus, those that can will ultimately recover. The key is to have a plan and the commitment of providers to see this through.

As always, should you have any questions about this or any of pur other alerts, you can reach out to your client manager or email us at info@anesthesiallc.com.