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Spring 2009

The Future of the Anesthesia Care Team

Jody Locke, CPC
Vice President of Anesthesia and Pain Management Services, ABC
Frank Rosinia, MD
Chair, Department of Anesthesiology, Tulane University

has been said that very often the beliefs and strategies that got us to where we are today will not get us to where we need to be tomorrow. There is no more acid test of this proposition than the current economic environment. There is no more appropriate application than to the unique feature of anesthesia services: the variety of configurations of the anesthesia care team (ACT) that exist across the country. Many will view the current challenges as a threat but others may find them an opportunity to reevaluate old assumptions and reconsider new options. Despite the potential emotion associated with such discussions this could well be a timely and strategic issue for the specialty. As is so often the case, the option facing individual practices may well be a question of taking control of one’s destiny or being at its mercy.

rently, all anesthesia care is provided in essentially one of three ways. The vast majority of anesthesia services are provided by a team of anesthesia clinicians, typically involving an anesthesiologist and a CRNA, AA (anesthesiologist assistant) or resident. Some anesthesiologists, mainly in the western states, prefer to provide care themselves, referred to as a physician-only model. There are also hospitals where CRNAs work alone; historically, such practices tended to be in isolated rural areas, but opt-out legislation has encouraged the expansion of such a model.

special note is the distinction within the largest category of anesthesia care: the medical direction model. For a combination of historical and financial reasons some anesthesia practices employ the CRNAs they work with, while in other facilities it is the hospital that employs the CRNAs. There is an ongoing debate as to whether hospitals actually profit from the employment of CRNAs. Some administrations have been known to threaten their private anesthesia groups with the prospect of the groups’ having to employ their CRNAs. The fact is that employment of CRNAs by a hospital is clearly a form of subsidy. There is some speculation that ultimately hospitals prefer not to employ the CRNAs, but despite all the discussion of options few facilities have effected the change in the past few years.

Advisory Board white paper published in 2004, “Navigating the Anesthesia Shortage” clearly recommends the increased use of CRNAs: #7 Integrated CRNA model leverages anesthesiologists, boosts physician revenues.The most effective way to boost individual anesthesiologist productivity and income potential is by using integrated CRNA teams. A fully leveraged team allows anesthesiologists to nearly double anesthesia revenues per hour of coverage. Successful implementation will necessitate overcoming several political hurdles, as many surgeons and anesthesiologists are opposed to integrated care teams.

While such categorical recommendations tend to support the position of proponents of the care team, they also give pause for thought to those who for a variety of historical and philosophical reasons have chosen not to work with CRNAs. It is one thing to say that a particular model has distinct financial advantages, but it is quite another to agree to the necessary transition plan; what is desirable in principle may actually be impractical in its execution. Such observations and the inherently logical perspective that the leveraging of more expensive physician time over less expensive CRNA time will reduce the overall cost of care has clearly conditioned the thinking of many a hospital administrator. Rare is the administration that does not ask the question, “Wouldn’t more CRNAs reduce your need for financial support?” It is a good and important question. Unfortunately, the answer is not as simple or clear as the question would suggest.

As is always the case when the same service is provided in a variety of ways, the very diversity of delivery options tends to encourage a discussion of best practices. Historical preferences and cultural norms tend to prejudice an objective evaluation of the facts. Nowhere is this more evident that in the heated debate that has accompanied the revision and refinement of Medicare reimbursement for anesthesia in Washington.

The politics of clinical autonomy versus supervision and of anesthesia reimbursement have pitted the Association of Nurse Anesthetists (AANA) against the American Society of Anesthesiologists (ASA) since the late 1970s. The year 1984 saw the implementation of the first set of reimbursement rules that would attempt to define the monies due the medically directing anesthesiologist and the medically directed CRNA. (The first step was fairly modest in that it carved a portion out of the physician’s payment and redirected it to hospital CRNAs.) Before long the scope of the discussion would be expanded to include independent practice for CRNAs. The ensuing evolution and refinement of the Medicare payment system for anesthesia was anything but a smooth and orderly process. Certainly many anesthesiologists expressed profound concern in 1994 that splitting the allowable equally between the medically directing anesthesiologist and the medically directed anesthetist would undermine the value of physician anesthesia. Anesthesiologists were convinced that a reimbursement system that allowed the same level of reimbursement irrespective of whether the care was provided by a physician alone, a physician directing a CRNA or a CRNA alone would ultimately compromise the quality of care provided. Perhaps the jury is still out, but despite the dire predictions, the ratio of physicians to nurses has remained relatively constant and the quality of care, as measured by the rarity of adverse outcomes, continues to improve across the board.

Any issue viewed through the lens of politics becomes distorted. Battles fought in the political arena tend to turn more on sound bites and exaggerated claims than those in the board room. The AANA contends that more extensive reliance on nurse anesthesia will allow for more cost-effective care without compromising quality. Unfortunately for the AANA, the facts simply do not support this argument. To put it another way, it is true that CRNAs tend to have lower salaries than anesthesiologists, but this does not mean that the cost of anesthesia care to the patient or the patient’s insurance goes down when there is a higher reliance on nurses.

Surveys by a variety of organizations including the AARP tend to reflect the reality that to the extent that a patient understands the potential risks associated with anesthesia they prefer to have a physician involved. Whether patients fully understand the relationship between the anesthesiologist and the CRNA in the operating room is not the key issue; they simply want to know that they are in the best possible hands. There is no turning back the clock. Those hospital administrators and surgeons who make such decisions no longer give much consideration to operating rooms without anesthesiologists. The operative question is simply can they afford the cost. The evidence supporting this view is borne out by current levels of hospital subsidy for anesthesia.

Politics notwithstanding, economic factors have a compelling way of influencing business decision-making. Economists are convinced that in a free and competitive market the forces of supply and demand will ultimately determine both how services are provided and what their value will be. The real economic question in medicine is to what extent a truly competitive market exists. Some would argue that medical economics are conditioned by a phenomenon known as supplier-induced demand which suggests that since providers of medical care have more knowledge of the options than patients, they unduly influence decision-making. While this may have been true historically the government and insurance industry have taken the lead in outmaneuvering the provider in determining the true value of medical services.

The economics of anesthesia are actually quite simple. Since rates are set irrespective of the mode of delivery (personally performed versus the care team), then the most important consideration is not revenue potential but cost. This is where the analysis and the conclusions can vary dramatically from practice to practice. It is at this level that three factors must be considered: cost, productivity and profitability.

The calculation of the cost of anesthesia care begins with a basic assessment of provider compensation as defined by some unit of measure such as a case, an hour of care or a day of coverage. Given the level of compensation paid to each category of provider, it is relatively easy to establish the most cost-effective mode of providing anesthesia services. In fact, as the following examples clearly indicate, it is the ratio of total physician compensation to total CRNA compensation that determines when the use of CRNAs will reduce the overall cost of the service and when it will not.

Our analysis begins with the establishment of some assumptions for our baseline calculations. The following are based on the most recent MGMA compensation survey data for the country as a whole. The assumptions are then used to calculate per hour and per day costs per category of provider. For purposes of analysis we should note that in the baseline data the total cost of a physician is 2.3 times the cost of a CRNA. These costs include W2 compensation, benefits, malpractice and overhead costs. (See Table 1).

Given these calculations we can compare basic staffing models and assess the impact of each option. Most practices will view these data through one of two lenses. Many will ask what level of medical direction is necessary to materially reduce the cost of anesthesia care. The answer is that the savings at a consistent level of 1 physician to 2 CRNAs is nominal. It takes at least three CRNAs for each physician to effect a meaningful cost savings. (See Table 2). Other practices that have revenue guarantees per anesthetizing location with their hospital will ask what level of coverage is necessary to meet the compensation expectations of the physicians. In other words, they will back into the cost per day calculations by adjusting the ratio of physicians to CRNAs.

It should also be noted here that it is the ratio of total physician cost to total CRNA cost that has the greatest impact on profitability. The greater the delta between the two, the more the practice will benefit financially from a reliance on CRNAs. It also follows, then, that the lower the delta the less the potential value of the care team. Historically, this has explained the preference for physician only anesthesia in the West where physician compensation is lower as is consistently identified in MGMA compensation surveys.

Such calculations and the conclusions they appear to suggest raise a number of very significant questions. The first is why any physician, given this information would choose to personally provide care, and yet many do. The second is why don’t all practices default to the highest level of medical direction allowed, which would be one physician to four CRNAs. Hospital administrators might even look at these numbers and ask why they need anesthesiologists at all. The answers to these questions speak to the complexity of the anesthesia market place and the other factors that condition such decisions. They are the real keys to predicting the future of the care team.

But if one were to look for examples of the market imposing a solution on an anesthesia practice, one need look no further than the Baylor Medical Center in Dallas. Having long supported independent anesthesiologists in a unique practice model called surgeon request, the administration has finally concluded that it does not really need to be in the business of employing CRNAs. In one fell swoop a contract was negotiated with Pinnacle, one of the nation’s largest anesthesia groups to take over the entire practice and employ the CRNAs. It was one of those career altering events that could have been anticipated but which wasn’t. It was also a good example of the truth of Nikita Khrushchev’s observation that economics is not a discipline that respects one’s wishes.

Clearly the specialty of anesthesia has evolved significantly over the past few decades. The complexity of anesthesia practice management has increased as individual practices have coalesced into groups and mega groups. One might even suggest that the evolution has been from the ‘I’ to the ‘us.’ Various factors and considerations drove this process. Generally, they were practical, financial and cultural. In many cases, it took a hospital contract proposal or a managed care contract to force the change. As Peter Senge reminds us in The Fifth Discipline, medical decision-making is often subject to a lag. Information and insight takes a while to sink in and take effect. The management of anesthesia practices is fundamentally conservative and cautious. Organizationally, most anesthesia groups are actually structured to resist change and maintain the status quo. Changes do occur, but usually only after all other options have been exhausted. Many are the practices that have considered a change in staffing model, but few are those that have actually taken the next step to effect the restructuring.

The most obvious and practical consideration is the availability of providers. Certain markets such as California have thwarted the growth of CRNA care for so long that a decision to increase the number of CRNAs in a given practice will be difficult to implement. Any increased reliance on CRNAs must presuppose a consistent standard of care.

Most physician-only practices simply do not have the infrastructure and management expertise to deal with the recruiting and human resource issues associated with the employment of non-physician providers. Many of the physicians in such practices also worry about the potential impact on retirement plan benefits if they change the mix of highly compensated employees. Clearly, these are not insurmountable challenges, but they do engender second thoughts about a fundamental restructuring of the practice.

There is also the issue of what happens to the down-sized physicians. Few shareholders are going to endorse a transition plan that marginalizes them. Conventional wisdom suggests that physician partners are tenured, while CRNAs are expendable. More often than not any potential changes in ratio of doctors to CRNAs must be based on attrition and phased in over time, which obviously diminishes the potential benefit.

An argument can also be made that a change in the structure of an organization that introduces non-shareholder employees will inevitably have a significant impact on the culture of the organization. Physicians who practice alone tend to assume that they are solely responsible for the care they provide, that their group practice is a confederation of equally committed providers, and that they never have to worry about what is happening in the room next door. They may not be willing or comfortable delegating decision-making to non-physician providers. Many anesthesiologists pride themselves on having chosen practices that are physician-only.

The result of regional approaches to anesthesia care has created unique cultures and patterns that tend to permeate the medical staff. Not only do the anesthesiologists tend to have a preference for one model over another, but their preference has rubbed off on the surgeons. A CRNA in Jackson, Mississippi was once quoted as saying that the surgeons would never put up with having to deal with the anesthesiologist in the room all the time. She believed that the CRNAs were more responsive to the surgeons’ needs. By contrast, of course, certain markets such as Las Vegas, Phoenix and Honolulu have evolved as a partnership between an individual anesthesiologist and a specific surgeon.

The focus and orientation of the specialty is changing. For much of its history, the evolution of anesthesia has focused on the mastery of pain, the pursuit of safety and the enhancement of the patient’s surgical and obstetric experience. The administration of good anesthesia care is often described as both art and science. Committed practitioners have learned to create something magical in that crucible of experience defined by their skills, experience and insight, the requirements and expectations of the surgeon and the unique requirements, fears and concerns of each patient. The world is now coming to understand and appreciate the powerful role of anesthesia in medicine. As the light shines in on the specialty, its practitioners are having to come to terms with the expectations they have created in the market. It is no longer enough to just have good outcomes, customers now want good service. They have bought the promise of a pain-free and pleasant surgical experience. Anesthesiologists and CRNAs no longer operate in a vacuum. They are partners in a service proposition. The time has come to deliver more than good outcomes. The means is now as important as the end.

It is time to revisit the three goals of an anesthesia practice: ability, availability and affability. They represent a new hierarchy of objectives: ability is now a given; availability a must and affability an essential survival skill. Each of these highlights different advantages and disadvantages of the care team. The Silver study supports the view that a team of providers is better equipped to manage unanticipated complications. The fundamental challenge of meeting a variety of coverage requirements may also suggest a team approach to the delivery of care. Nurse anesthetists may even play a critical role in enhancing the public face of the specialty. Achieving optimum results and good customer service is more a matter of commitment than means. Just as there is no one right way to deliver a safe and artful anesthetic, there is no one way to structure an anesthesia practice: form must follow function, and each function is unique. Just as anesthesia is an ongoing process of feedback and modification, so too, is the effective management of the successful practice.

So what can we conclude about the respective roles anesthesiologists and nurse anesthetists will play in the provision of anesthesia services in the years to come? History suggests that change is inevitable. For some practices, change will come too quickly and as result of a combination of political, economic and social factors seemingly beyond their control. Others will seize the opportunity to shape their own destiny. They will be the serious students of the market who have mastered the tools of business management, whose environmental scanning is more finely tuned, and whose vision is focused not on what is but what isn’t. There is no doubt that tough times test organizations in ways that they often do not want to be tested. One thing is for sure, though: anesthesia is an essential component to the success of any operating suite and hospital. The country needs reliably consistent, cost effective and customer-oriented anesthesia care. There is no one best solution, just many very good options. While the discussion of best practices was once considered a good idea, it is now an essential survival skill.