Why Scope Creep Is Today’s Most Pressing Anesthesia Management Challenge

Summary: Two new words are now an integral part of the anesthesia management conversation. They are scope and creep, and they have everything to do with the future or a practice. Understanding how to manage their impact is the key to ongoing viability and success.

Anesthesia Market Dynamics

The vocabulary of anesthesia practice management is now focused on two new terms: scope and creep. They are especially relevant to the negotiation of anesthesia service agreements. It used to be that the objective of each negotiation was to establish a reasonable subsidy, but it turns out there is more to the establishment of a reasonable subsidy than hospital administrators are often willing to admit. As has been said many times, anyone can get the number right today, but will it be right tomorrow? 

Contracting Basics

As in any business arrangement, the purpose of an anesthesia services agreement is to define the scope of services required to meet the service expectations of the facility and to clarify what services the practice can reasonably provide. This should be a discussion of the value proposition for each party. Any agreement needs to be mutually advantageous. The problem is that anesthesia is a quintessential service and so defining the scope is often more of a wish and a prayer than a precise definition of expectations and requirements. In addition to which—and this is where the creep comes in—service expectations are ever changing. What is clearly understood today may not be sufficient tomorrow. In a fiercely competitive medical environment, hospitals are always changing and expanding their focus and scope to outpace the competition. Too often, such vagaries impact the anesthesia practice in a negative way. While there are numerous market factors that will ultimately impact the revenue potential of the practice, the primary impact of scope creep is on the cost side of the ledger—even though there are always revenue implications.

As we've seen before, you cannot manage what you do not measure. Understanding the concept of scope creep can be compared to dieting. One can have all the best intentions and even make behavioral changes but, unless there is a consistent and objective measurement of the impact of one's efforts, there may or may not be any progress. So too, if an anesthesia contract does not clearly specify the scope of services required, it will be subject to ongoing and flexible interpretation. Suppose the contract indicates that the practice must provide sufficient qualified staff to manage all the surgical and obstetrical cases at the hospital. There was a point in time when this would have been well understood by all parties. But let us explore how things have changed. How have pre-op assessment requirements changed, especially for ambulatory cases? Does the practice now have to cover a pre-op clinic? When and where are the cases performed? Providing staff to cover call is an ever-increasing challenge especially when 75 percent of the revenue is generated between 7 AM and 3 PM. It is also true that many hospitals are increasing the number of NORA (non-O.R. anesthesia) cases, which are typically an add-on responsibility. Expectations for acute and chronic pain management care are also not uncommon. There used to be a saying in anesthesia: when the hospital asks the anesthesia practice to jump, the only appropriate response is "how high?"

In any negotiation there is always somewhat of a disconnect between what the customer wants and what the provider is offering. Suppose you are buying a house; the appraisal provides a benchmark for the price. Hospitals don't work that way. For them, the contract is an aspirational document. There is great peril in taking its terms too literally or in accepting its lack of specificity. Too often, the anesthesia practice is simply grateful to have the franchise.

A New Paradigm

So, if scope creep is the problem, what is the solution? It is a very good question, because the specialty of anesthesia does not have much experience managing and resetting customer expectations. We used to say that anesthesia practices occupied the bottom rung of the medical food chain. They are captive to the surgeons, the OR staff and administration for their income and lifestyle. They have little control or influence in determining their own destiny. Today's anesthesia practice managers must find ways to exercise more leverage in the decision-making of the hospital administration.

The reality is that anesthesia groups are not alone in experiencing this kind of challenge. The story of Southwest Airlines, as articulated in the book Nuts, is a good example of how a service organization figured out how to reset customer expectations by undoing some of the sacred cows of the travel industry. Initiating and managing change is never easy, but it is an essential survival skill. Most hospital contract negotiations now focus on the amount of subsidy needed. This is where the process breaks down. Effective negotiations need to focus on scope first, then subsidy requirements, because—as well all now know—the scope will evolve. And that will be the undoing of the viability of the contract.

And once a scope of services is clearly defined, objective and verifiable metrics must also be established to monitor its applicability. A good ongoing relationship between a hospital and an anesthesia practice should be based on a sharing of data that lets both parties monitor and respond to changing service requirements and market factors. Sharing data and making decisions based on actual trends is the key to long-term viability. If you have any questions, please contract your account executive or reach out to us info@anesthesiallc.com.