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Practice Management Companies' Acquisitions of Anesthesia Practices

Every private anesthesia group in the United States knows that practice management companies (PMCs) in the business of acquiring and operating anesthesia practices are growing rapidly.  This is part of a general acceleration in health care merger and acquisition activity driven by healthcare reform and by the economic uncertainty of the last few years.  Physician practices have become one of the fastest-growing targets; larger entities such as health systems, insurance companies and PMCs are buying up hospital-based specialties with a view toward participating in accountable care organizations (ACOs) and receiving bonuses for improving quality and decreasing costs.Hospitalists, whose specialty barely existed twenty years ago, now number more than 30,000.  Hospitalists attract the interest of venture capital and expanding corporations because of their role in managing acute inpatient care.  Emergency medicine has a long history of PMC partnerships.Anesthesiologists, as specialists in the management of perioperative care, are likewise attractive candidates for acquisition. ...
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2012: There Is Much To Do

From day to day, the great majority of anesthesiologists, nurse anesthetists, anesthesiologist assistants and their group practices provide excellent patient care.  Most enjoy comfortable relationships with their hospitals and surgery centers, too. The world of health care is changing all around us, though.  Every anesthesia practice needs to understand the more important changes and to adapt, or plan to adapt.  In this issue of the Communiqué, you will find a number of articles that will help you prepare for the short-term and long-term future. We start with Mark Weiss, Esq.’s Protecting Your Exclusive Contract, Your Practice and Your Profits.  Mr. Weiss aptly shows that the process of negotiating your next hospital contract starts the moment you have signed this one.  The anecdote about Walt Disney’s arrival at Universal Pictures’ headquarters in New York to renegotiate the terms of their deal, only to find that Universal, not he, held the copyright in his cartoon character and...
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The Benefits of Strategy

There are many forces affecting anesthesia groups today such as the pending Supreme Court ruling on the Patient Protection and Affordable Care Act, high unemployment, pending cuts in Medicare, and a very slow economy.  Regardless of what one believes, strategically addressing these issues is paramount in providing the necessary road map for the future.  Otherwise, a group may find itself in an unfavorable position.  This article seeks to explore the benefits of strategy for anesthesia groups. By definition, strategy[1] is “a plan, method, or series of maneuvers or stratagems for obtaining a specific goal or result: a strategy for getting ahead in the world.”  Clearly, developing strategy positions a group for success.  Furthermore, Sun Tzu describes the importance of thinking through strategy as such, “the general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many...
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Protecting Your Anesthesia Practice from a Patient Privacy Breach

Have you heard about the federal privacy and security compliance audit pilot program?  The Health Information Technology for Economic and Clinical Health (HITECH) Act, passed as part of the 2009 stimulus package, requires the Department of Health and Human Services (HHS) to conduct periodic audits to ensure covered entities and business associates are complying with the Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules and Breach Notification standards.  To implement this mandate, the HHS Office of Civil Rights (OCR) is piloting a program to perform up to 150 audits of covered entities to assess privacy and security compliance. The pilot phase began in November 2011 and will conclude by December 2012. The HITECH Act enhances HIPAA’s privacy and security provisions by requiring “covered entities” such as physicians and their business associates to provide for notification in the case of breaches of unsecured protected health information (PHI).  The breach...
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CMS Finally Speaks (Again): The Medicare Shared Savings Program Final Rule and its Relevance to Anesthesiologists

Written by: Neda Mirafzali, Esq. and Kathryn Hickner-Cruz, Esq.The Health Law Partners, P.C., Southfield, MIIn the Summer 2011 issue of the Communique, we analyzed the then-new Medicare Shared Savings Program (“MSSP”) accountable care organization (“ACO”) proposed rule (“Proposed Rule”) (issued by the Centers for Medicare and Medicaid Services (“CMS”) on April 7, 2011) as it related to anesthesiologists. At that time, physicians’ desire for involvement in the MSSP (which was born as part  of President Obama’s healthcare reform law) was bleak, at best.  The Proposed Rule introduced barrier after barrier after barrier that left the medical community disappointed and angry.  Anesthesiologists were left with no clear understanding of the role they would play in the new push for better care for individuals, better health for populations, and lower growth in expenditures—CMS’ three-part aim for ACOs.  Anesthesiologists were dubious as to whether they would actually enjoy a piece of the Medicare shared savings...
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What is Your Value Proposition? Is Your Practice the Steak or the Sizzle?

Anesthesia is the quintessential service specialty. Establishing and maintaining a consistently strong  relationship with a hospital, a clinic or an ASC is no easier for an anesthesia group practice than for any other type of service provider, be it car mechanic, internet provider or hair stylist; today’s medical consumers know they have options that give them leverage in demanding services and loyalty. For too many anesthesia practices this is a relatively new and somewhat disconcerting state of affairs. Anesthesia vulnerability to replacement has grown in direct proportion to the amount of financial support provided by the facility; practices that receive no subsidy support clearly have the strongest support, at least to the extent that they provide quality care. Competition for anesthesia contracts has ushered in a new era of service expectations and changed the perception of the role of the specialty in the facility. Quite simply consistently good outcomes are simply...
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What Anesthesiologists Should Know about Medicare Prepayment Reviews

In any financial transaction, the person holding the money is at an advantage.  Getting money back from someone who should not have been paid is harder than not making the payment in the first place.   CMS knows this, and that is why it is placing a new emphasis on prepayment review of claims.  Originally slated to begin on January 1, 2012 the prepayment review initiative will now formally launch in June.  The number of prepayment reviews is going to increase from 1.2 million to 2.7 million claims per year. There is a large amount of taxpayer dollars at stake.  In 2011, the Medicare fee-for-service improper payment rate was 8.6 percent, or $28.8 billion in estimated erroneous claims payments.  Medicaid adds another $21.9 billion.  During 2011, CMS recovered $5.6 billion in fraudulent payments, an increase of 167 percent over 2008. The increase in recoveries is attributable in major part to the $350...
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Federal Insurance Legislation - Can It Help Me?

WHY FEDERAL INSURANCE REGULATION?Normally, insurance companies are regulated by the states. As a result there are hundreds of statutes and rules affecting companies that operate in multiple states. The National Association of Insurance ComNAIC, missioners (NAIC) issues guidance to standardize insurance laws, but states are not required to follow its recommendations. As might be expected this results in increased costs as companies design multiple products to comply with diverse and sometimes conflicting state regulations and formalities.For the most part the Federal Government has not interfered in state insurance laws, leaving the regulation of the industry to state regulators. Non interference has worked adequately during soft markets in which insurance is easy to find.IMPACT OF A “HARD MARKET”During “hard” markets in which insurance coverage is difficult to obtain, the federal government has stepped in to allow an insurance company to operate in many states as long as one state agrees to license...
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Performance Based Compensation: Benchmarking, Monitoring, and Improving Quality

 Last week we discussed the growing trend toward including performance measures in contracts between hospitals and anesthesia groups.  We identified clinical quality, efficiency and patient satisfaction measures developed by the Surgical Care Improvement Project (SCIP), the Medicare Physician Quality Reporting System (PQRS), the American Society of Anesthesiologists (ASA), the Anesthesia Quality Institute (AQI), Press-Ganey and the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS).  All of these measures can be the basis of hospital or ambulatory surgery center contracts for performance-based payment.Many contracts set forth the quality, efficiency and customer satisfaction activities that are part of the anesthesia group’s quid pro quo for their hospital compensation package without explicitly linking performance rates to payment.  Increasingly, though, the anesthesiologists must meet or exceed agreed-upon benchmarks to earn their payment.Choosing BenchmarksThe benchmarks can be external or internal.  External benchmarks allow for comparison to similar institutions or providers – or to national or...
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Compliance Corner: Anesthesia Practices Should Prepare for More Audit Activity

Written by: Abby Pendleton, Esq. and Jessica Gustafson, Esq.The Health Law Partners, P.C., Southfield, MIThe administrative burden and financial pressure on physicians and other healthcare providers, as a result of increased scrutiny of claims and audit activity by third party payors, is not expected to end anytime soon.   Many physician practices around the country are already feeling the impact in the form of pre-payment audits and edits, voluminous record requests, and post-payment audit review activity.  By way of background, over one billion claims are submitted to Medicare each year.  This means that Medicare processes over four million claims per work day (over 9,000 claims per minute).  Because of this volume, Medicare contractors process most claims without investigation or even reviewing any clinical records.  As a result, the Medicare Trust Funds are vulnerable to the submission of false and fraudulent claims as well the submission of claims failing to meet certain documentation and...
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Continuing to Reach For Quality and Efficiency in Ways Old and New

Health information technology has become the colossus of high quality, high- efficiency medical practice. Anesthesia Business Consultants continues to expand our resources in the area of HIT – as do all of you. With the lead article in this issue of the Communiqué, we introduce to you a major new resource: Bryan Sullivan, Director, EMR and Clinical Integration. Bryan’s article on cloud computing explains an important direction in which HIT is moving.Anesthesiology is on its way to becoming a complete perioperative discipline – as it must, in an environment that will be dominated by integrated, accountable healthcare delivery systems. Richard P. Dutton, MD, MBA, Executive Director of the Anesthesia Quality Institute, describes the role of the AQI in pre- and post-anesthesia assessment in his latest article. In the write-up of his interview with Parish Management Consultants’ Al Patin, “Anesthesia Leadership in the Preoperative Clinic,” ABC Vice President of Client Services Bart...
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How Does Cloud Computing Fit into Anesthesia?

“Cloud Computing” is a phrase we hear thrown about constantly in the technology industry these days. To the casual observer, it can be synonymous with the internet or perhaps used to identify a specific program available over the web. Large organizations such as hospitals typically understand the nuance that exists when discussing and integrating cloud computing concepts, but since many anesthesia practices must double as their own internal IT departments, confusion may arise as to what cloud computing is and how it affects your business.Many tout the cloud as the next evolutionary step to the traditional software and support models but fail to evaluate the true benefits and costs. As this software and platform model continues to mature, we must ask, “How will cloud computing affect my practice and how can I benefit?”WHAT IS CLOUD COMPUTING?This seems to be an ever evolving answer. While many industry experts expected to have a...
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Pre- and Post-Anesthesia Assessment: Role of the AQI

Electronic capture of patient information before and after surgery is an essential component of an effective anesthesia quality management program.Postoperative data are the outcomes of our work. These include rare safety issues related to intraoperative care, but not always apparent in the OR or PACU: events like neurologic injury, myocardial infarction, aspiration pneumonia or complications of pain management. More common, and increasing in importance, are the “patient-centered” outcomes which will be used by external regulators to judge us: the occurrence of nausea and vomiting, the adequacy of pain management, and overall patient satisfaction.Preoperative information, on the other hand, is the substrate for understanding anesthesia risks. Comparison of outcomes across institutions will require careful risk adjustment, and electronic capture of pre-existing conditions, chronic medications and pertinent diagnostic studies will enable this process. Even information as simple as the ASA physical status can be a powerful tool for understanding anesthesia outcomes across broad...
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Anesthesia Leadership in the Preoperative Clinic

Anesthesia practices looking to optimize their value proposition at their respective facilities have sought a greater role in the preoperative preparation of their patients. The emphasis on efficiency and the continuity of care in recently suggested models of healthcare reimbursement, including Accountable Care Organizations, have drawn renewed attention to opportunities within the preoperative clinic. The economic reality is that providers and facilities are not getting paid to provide those services under current reimbursement rules. Preoperative clinics can provide benefits in quality of care and cost reduction, in addition to the significance of improving patient and surgeon satisfaction. Anesthesia practices are in a unique position to develop the preoperative clinic into a valuable resource.The expenses of a poorly performed preoperative assessment are borne by both the surgical department and anesthesia provider (as well as by the patient) in the form of poor utilization. Patient satisfaction and outcomes are affected by delays and...
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The Institute For Safety in Office-Based Surgery (ISOBS)

In recent years, the economic pressures of medicine have incited a paradigm shift in health care delivery, such that surgical procedures are moving from the hospital to the office-based setting. Often called the “wild west of health care,” office- based procedures continue to increase at a rapid pace, with an estimated more than 10 million procedures performed in 2010. A growing body of literature calls for greater leadership in the field of office-based surgery, and for leaders who are educated in all facets of quality improvement. In addition, a recent study found that a comprehensive checklist used in an interdisciplinary, team-based setting resulted in a reduction in surgical complications as well as cost savings.Development of such a checklist and education of practitioners, patients, and office personnel is the mission of the Institute for Safety in Office-Based Surgery. An independent, non-profit 501(c)(3) organization, ISOBS has developed a safety checklist for use in...
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Putting Your Anesthesiology Practice on Wheels

Written by: Shawn Michael DeRemer, MD and Gregg M. White, CRNA, MSAnesthesia Associates Northwest, LLC (AANW), Portland, ORHealth care delivery has gradually shifted from in-hospital to outpatient settings, most recently to physicians’ offices. In fact, in 2009 the number of office-based procedures in the United States numbered 12 million. Nevertheless, though outpatient surgery may be more convenient and financially beneficial for both doctors and patients, many physicians are not taking advantage of the full realm of possible procedures that could be offered in an office setting.In 2010, we decided to expand our own anesthesia management and staffing services business by helping physicians expand their practices. Our idea was to bring the surgical suite to physicians’ offices via a fully equipped van that would deliver all necessary resources — and also foster a “culture of safety.”WHAT WE NEEDEDWe went to task outfitting a slick- looking van with everything a physician might need...
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More Pressure on Anesthesiology Groups to Grow

Have you and your group been thinking about how to grow your practice? The trend toward anesthesia practice consolidation continues its momentum. Not only do groups seek more and more opportunities to merge, to acquire other groups and to join larger organizations; they are an increasingly attractive acquisition target.Mark Weiss, Esq.’s article “The Company Model of Anesthesia Services: Will Less Money Lead to Jail Time?” is an excellent review of the development of the troublesome “company model” as well an explanation of the associated compliance issues that you don’t have to be a lawyer to understand.For a different perspective, consider AAA Executive Committee member Franc Galinanes’s article “Anesthesia: The Increasing Consolidation of Our Industry.” As a Senior Director for North American Partners in Anesthesia, Mr. Galinanes is in a good position to discuss the advantages of the three major types of consolidation: practice mergers, joining a larger organization and sale to...
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Anesthesiologists Targeted in CMS’ Review of Existing Rules

On August 22, 2011, as a result of a directive from President Obama, the US Department of Health and Human Services (“HHS”) issued its Plan for Retrospective Review of Existing Rules (“Plan”). The Plan includes a review from all HHS operating and staff divisions (e.g., the Centers for Medicare and Medicaid Services (“CMS”)) that establish, administer and/or enforce regulation. HHS’ Plan aims to review “existing significant regulations to identify those rules that can be eliminated as obsolete, unnecessary, burdensome, or counterproductive or that can be modified to be more effective, efficient, flexible, and streamlined.” While, on its face, a review of unnecessary regulations appears to be beneficial, looking below the surface reveals that the review may create fundamental changes in medical and anesthesia practice. CMS is contemplating reviewing the conditions of participation (“CoPs”) for anesthesia services (42 CFR 482.52) to eliminate the certified registered nurse anesthetist (“CRNA”) supervision requirement, which could...
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CMS Finally Speaks: The Accountable Care Organization (ACO) Proposed Regulations and What They Mean for Anesthesiologists

Written by: Neda Mirafzali, Esq Kathryn Hickner-Cruz, EsqThe Health Law Partners, P.C., Southfield, MISince the passage of the Affordable Care Act1 and the establishment of the Medicare Shared Savings Program (the “Shared Savings Program”), ACOs have become the new hot topic.Section 3022 of the Affordable Care Act provides that Medicare shall establish the Shared Savings Program and that healthcare providers and suppliers will participate in the Shared Savings Program through ACOs. According to CMS, “ACOs create incentives for healthcare providers to work together to treat an individual patient across care settings – including doctor’s offices, hospitals, and long-term care facilities. The Shared Savings Program will reward ACOs that lower growth in healthcare costs while meeting performance standards on quality of care and putting patients first.”2 If an ACO saves money by providing patients with efficient care, then the ACOs can share in a percentage of the savings with Medicare. However, should an ACO fail...
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The Company Model of Anesthesia Services: Will Less Money Lead to Jail Time?

??When asked why he robbed banks, Willie Sutton responded, “Because that’s where the money is.”Ambulatory surgery center (“ASC”) owners, often surgeons, seek to obtain a share of anesthesia fees for the same reason. But instead of a gun, many are turning to a new model of money extraction, the so-called “company model.”The abrupt bank robber approach to demanding a kickback is clearly illegal: “Bob, if you want to provide anesthesia at Greenacres ASC, you’ve got to pay us thirty cents on the referred dollar”.Although there are far more ASC owners willing to take the bank robber approach than the industry likely will admit, some ASCs are choosing a slightly softer approach — forcing the anesthesiologists working independently at the ASC to instead work for an ASC affiliated entity that distributes a share of the anesthesia fees back to the ASC owners.“Bob, if you want to provide anesthesia at Greenacres ASC, you’ve...
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