Imagining Uberism in Anesthesia

Jody Locke, MA
Vice President of Anesthesia and Pain Practice Management Services Anesthesia Business Consultants, LLC, Jackson, MI

Uber has dramatically transformed the taxi business. We no longer talk of grabbing a cab; we “Uber” from point A to B. Airports now send us to ride-sharing pickup points where we see dozens of people staring at their phones trying to find their rides. For many of us, the Uber and Lyft apps are the most used on our phones. Some of us have even given up our cars because it is so much easier to pay for the ride than to incur the costs of ownership.

What started as a clever internet application has not only transformed how we get around, but also how we think about the services we want and use. The genius of the application is that it matches up people who want to earn money with those who want to avoid the hassles of driving, parking or running the risk of a DUI. Uber is now a world-wide phenomenon and a company worth more than $60 billion. The app works just as well in Prague or Chennai as it does in Fort Lauderdale. Uber is the most cost-effective solution to personal freedom and mobility. It has redefined the concept of customer service by simply matching demand with supply.

So what does this have to do with anesthesia? Everything and nothing. Hospital administrators have started to adopt an Uber mentality regarding their requirements for anesthesia services. Yes, they want 24/7 coverage, but they don’t want to pay for providers during the time they are not caring for patients. Administrators would like to add to the three A’s of anesthesia to include a fourth, along with availability, ability and affability: affordability. Like Uber, they only want to pay for actual service.

Their focus is the overall cost of anesthesia, which keeps going up. We all know why anesthesia coverage is so expensive: administrators are selling availability to surgeons, and that requires providers who are ready to go when the surgeons want to operate. Anesthesia practices have a different priority: making sure they have enough staff to meet the variable demand.

On the surface, very large anesthesia practices appear to have a significant strategic advantage. Having more providers gives them more flexibility to meet the demands of the operating room and obstetrics suite. But the basic challenge is universal. Every time an anesthesia practice has to schedule a provider, there is a cost, irrespective of whether the provider is productive or not. In scheduling, we talk of 7:30 am starts because each location requires dedicated staff.

While some practices may use locum tenens on peak days to meet demands, this is not a very cost-effective option. The preferred mode has been to employ sufficient staff for peak utilization, which means the payroll meter is still running when surgical volume is down. However, this is changing as practices are creatively challenged to meet these demands more cost efficiently. Nowhere is this new pressure more evident than in obstetrics, where providers may wait hours for a patient to present.

The Conundrum of OR Efficiency

The scheduling of ORs can be likened to the scheduling of plane flights: the goal is to ensure that every flight goes out full. Thanks to sophisticated computer algorithms, airlines seem to accomplish this much of the time. In fact, they are allowed to overbook, which is something an OR would never be allowed to do, as it would jeopardize patient safety.

So why is it so hard to achieve consistently optimum OR efficiency? While the variability of surgeons’ needs and demands plays a role, it isn’t the entire picture, and few hospitals have found a good solution. Evidence also suggests the problem is getting worse, which explains why 75 percent of American anesthesia practices require financial support from their facilities.

Another major factor driving the need for financial support is the payer mix in hospitals that persists as other surgical settings have emerged over the past few decades. Cases that were once done in the hospital are being done in free-standing surgical centers. These surgery centers may have siphoned off the better payer mix, leaving governmental payers concentrated in the hospital setting.

Many riders still prefer to take a taxi versus an Uber. Taxi drivers are licensed for transport. They are accountable by virtue of their employment by a specific company. Uber drivers, by contrast, are just regular people, some of whom want to make a few extra dollars in their spare time. When you order an Uber, you never know who will show up or what kind of vehicle they will be driving. This is a source of concern to some potential riders, but an advantage to most. With few exceptions, all of my Uber drivers have been courteous people driving nice cars. They are virtually always eager to earn a five-star rating for the trip.

What distinguishes anesthesia from transportation is the challenge of ensuring that every provider is appropriately qualified for the case. This difference may be where the application of the Uber concept to anesthesia breaks down, except that individual practitioners working independently actually is the anesthesia model of the past. Most of today’s anesthesia groups started as loose confederations of individual anesthesia practices. The model worked until managed care changed the landscape and providers needed to negotiate as a unified entity.

A Focus on Cost

Three things have led me to use Uber and Lyft for all my transportation needs: 1) the price is always right. My average fare from my house to the airport is never more than half of what I used to pay for a cab. 2) I love the app. I always know when the driver will arrive, whereas I used to wait impatiently for the local cab service. 3) I find the drivers to be interesting people, which makes the trip especially pleasant. Isn’t this what hospitals really want: to pay only for the level of service they need; to have responsiveness and availability; and to have providers eager to impress patients with their high level of customer service?

Let’s be clear about the context for this discussion. In healthcare within the United States, the focus has shifted from quality to cost. Quality care is a given and a threshold that must always be met. Now, cost is where everyone believes the focus must be. According to many analysts, healthcare in the U.S. is too expensive considering the results. There are theories about why this is true, but few viable solutions. The Affordable Care Act addressed many aspects of access to care but did nothing to make it more affordable. This problem affects all areas of healthcare.

In anesthesia, one might argue that the real problem is OR productivity. Inefficient OR utilization costs anesthesia practices a fortune and is one of the main reasons for the need for financial support from the facility. If every OR generated sufficient billable units at a reasonable yield per unit, the problem would be solved. Unfortunately, poor OR utilization limits the number of billable units and eroding payer mix drives down potential yield per billed units. While hospitals spend fortunes on business plans intended to improve utilization and payer mix, rarely do they effect any meaningful change. Most practices are doing well if they can maintain the status quo.

Why is efficiency such a challenge? For one, a hospital contract is a lot like the New York City cab medallion. It gives a group of providers an exclusive franchise. Like the taxi medallion, this means that the facility knows the providers and their qualifications. The arrangement provides a level of accountability that would not otherwise be possible. Ideally, it means the hospital deals with one entity that can ensure consistent customer service. A professional services agreement gives the administration considerable leverage over the practice. The irony is that while the specialty has evolved to a point where virtually all anesthesia practices now have exclusive contracts, this may actually be contributing to the increasing costs of care.

Finding Middle Ground

Anesthesia practices must deal with two types of venues: traditional hospital surgical suites and outpatient ambulatory venues (which is where we are starting to see more creative scheduling and staffing models). Practices that are starting to deploy providers to a variety of ambulatory venues are starting to build scheduling teams that take the bookings and assign the providers, which is not that different from what the Uber app does. So what is different in the ambulatory environment? There is no guarantee of work or any call.

Uber has generated billions of dollars in profit while reducing the cost of transportation. As a business, it is still running at a loss, although this does not appear to discredit the basic model. All we hear about in hospital contract negotiations is that the administration wants to find ways to reduce subsidies. Given the current paradigm, in which anesthesia practices must employ enough providers to meet the facility’s potential needs, that is a tall order. The providers’ payroll and benefits expectations make anesthesia a fixed cost in the equation, while the revenue potential of surgical and obstetric cases is variable and often somewhat unpredictable. The challenge is to align the two, or at least to align the incentives of both the anesthesia providers and the administration. Since the providers want fair and reasonable compensation and the hospital continuously strives to reduce its costs, there is little middle ground. And there won’t be until there is an Uber app for anesthesia. Crazy you say? Who would have anticipated the success of Uber before it happened?

So what is missing? First of all, there is no equivalent software application. However, such an app should not be all that complicated to create. Second, there is not a large enough pool of independent providers in any given geography to make their flexible deployment feasible. But even more important, the provider mindset is more focused on security and predictability than flexibility and availability. Imagine if every anesthesiologist and CRNA had the potential to generate a target number of ASA units per clinical day and get paid a reasonable amount per unit billed. There would be no need for subsidies, and most providers would probably make more. It would clearly be a paradigm shift, but it might prove to be a necessary one.

Applying the concept of Uber to anesthesia would clearly be a paradigm shift, and we all know that change tends to come slowly in medicine and even slower to anesthesia. From a stakeholder perspective, there would be more players opposed to such a change than for it.

There are obstacles. Like Federal Express, it wouldn’t work on a small scale. There are over 1,000 Uber drivers in Fort Lauderdale alone. How could one create a comparable pool of qualified anesthesia providers?

The German word “uber” means over. Deutschland uber alles means Germany over everything. The Ubermensch strives to be more and better than their competitors. It is a very appropriate name for the company and an interesting concept. Thus far, we have mega groups but no uber groups, except in cities such as San Antonio, Phoenix and Las Vegas, which have a surgeon-request market.

The best solution to any problem is the one all the stakeholders hate least. Hospital contracting pits the anesthesia providers against the administration. Contracts do get resolved and implemented, but one side always loses. Imagine if it were different. Imagine if it were truly a win/ win. How can we make it work? Imagine if someone figures it out.

Jody Locke, MA, serves as Vice President of Anesthesia and Pain Practice Management Services for Anesthesia Business Consultants. Mr. Locke is responsible for the scope and focus of services provided to ABC’s largest clients. He is also responsible for oversight and management of the company’s pain management billing team. He is a key executive contact for groups that enter into contracts with ABC. Mr. Locke can be reached at Jody.Locke@AnesthesiaLLC.com.