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The Hospital is Your Practice’s Client—Understand Client Satisfaction to Retain Your Contract

Jerry Ippolito, MBA, MHSA
President, OR Efficiencies, LLC, Naples, FL

The past several years have, once again, brought major changes to the anesthesia community and have greatly impacted private practice anesthesia. Whereas the early nineties were a time of “anesthesia surplus” when anesthesiologists struggled to find opportunities paying as little as $100,000, those days were followed by a shortage of anesthesia providers. Supply and demand economics dictated that during the days of anesthesia staffing shortage, prices and compensation for anesthesia staff increased to the highest levels in history. Now, a new day is on the horizon where hospitals have many choices for anesthesia coverage. Smaller, private practice anesthesia groups struggle to sustain financial viability. Many groups are exploring mergers to achieve economies of scale and hoped-for negotiation leverage with private payers. Larger and mega-groups continue to liquidate their value and sell to publicly traded companies such as EmCare or MedNax. A growing number of large anesthesia staffing companies continue to enter the market. Daily, hospitals are approached by multiple anesthesia staffing providers in attempts to contract for a hospital’s anesthesia business; large, publicly traded companies offer hospitals the opportunity for “one-stop-shopping” for hospital-based physician services. In summary, this means increased competition among private anesthesia groups to retain their contracts with hospitals.

With hospitals under increased financial pressures and needing to focus on the bottom line, a group’s preaching to the hospital about quality care and loyalty is insufficient to retain its contract. The fastest way to encourage a hospital to seek an alternative anesthesia provider is for the group to request an increased stipend without demonstrating commensurate financial and service value to the hospital. The hospital is the anesthesia group’s client. Groups need to quickly understand and provide high levels of client service in order to retain their contracts.

In healthcare we speak a lot about “the customer” and providing “customer service”; many hospitals engage organizations such as Disney, Marriott and Studer to educate them about customer service. Alas, most of this customer service is of the “softer” kind and is really about “customer satisfaction” or what we typically refer to as “soft and fuzzy” and making the patient feel satisfied or valued. For anesthesia, this element of customer service needs to be understood and provided. The service must provide quantifiable, financial value, however, in addition to the historically intangible value of clinical quality. Pay for Performance tools assist in measuring the lack of, or deficits of, clinical quality, but not necessarily levels of exceptional clinical quality. What this means for your group is that the unwritten and unspoken expectation of performance is clinical service at an exceptional level. All too often anesthesia is heard to whine, “anesthesia gets no respect.” To this we reflect on “The Serenity Prayer” which states in part: Allow me to accept the things I cannot change and provide me the wisdom to change the things I can. Anesthesia groups need to accept the existing finances of healthcare reimbursement and focus on changing their hospital’s perception of them. Groups need to earn the respect of their hospital clients by providing and demonstrating measurable, financial value, which for anesthesia, extends well beyond the practice of good medicine. For the hospital, the operating room is the single greatest producer of revenue and typically accounts for at least 65 percent of hospital revenue and profit. Anesthesia groups need to reprogram their thinking and stop focusing on “how much money anesthesia and the OR make for the hospital,” and begin focusing on How Anesthesia Can Assist the Hospital to Make More Money! This is the primary way to demonstrate your group’s value and retain your contract!

Anesthesia’s ability to demonstrate value rests in four primary buckets:

  1. Exceptional clinical outcomes – this is an expectation that seldom gets recognition; deficient outcomes get recognized and have associated financial penalties. 
  2. Development of new clinical service offerings (chronic pain management, etc.). 
  3. Assistance with improving perioperative program operational efficiencies, which is the foremost factor in:
  4. Assistance in increasing case volume, which is the greatest revenue producer for the hospital and best enables anesthesia to demonstrate its value.

The remainder of this discussion focuses on anesthesia’s ability to assist in increasing OR case volume and associated revenue, by developing OR programs that are surgeon service oriented and make optimal use of surgeon time.

In the operating room we regard the surgeon as the customer. The surgeon wants to be seen as a patron of the hospital; the customer maintains the option to shop elsewhere. The hospital-business will not survive without the physician (and patient) customer(s). As in the retail environment the physician-customer maintains an expectation that the vendor (hospital) delivers a quality product. However, in the hospital setting, the product is a service vs. a tangible product; physician-customers place primary emphasis on the hospital meeting their service oriented expectations. Anesthesia is a driving force in meeting surgeons’ expectations which primarily are:

  1. Quality patient care, which is taken for granted. 
  2. Experienced OR staff who can anticipate surgeon and case requirements, and also good equipment/instruments. 
  3. Sufficient OR access, in balance with surgeons’ practice needs, by hour of day and day of week. This requires staffing by OR and anesthesia. 
  4. Optimized/efficient use of surgeons’ time. This requires a collaborative effort, by all parties, including OR, anesthesia and the surgeon. Anesthesia needs to be the driver, or champion, of efficient perioperative services operations.

The reality is that anesthesiologists do not refer patients to hospitals. Anesthesiologists must pose a question to themselves: Do you consider yourself a consulting specialist, and if so, then, don’t consulting specialists need to garner referrals; don’t consulting specialists need to develop and protect referral sources? The surgeon is anesthesia’s referral base and anesthesia must assist the hospital to accommodate surgeons’ needs and expectations and to build case volume.

In general, customers’ expectations, regardless of who the customer is, will not be met unless expectations are reasonable and clearly defined. Most frequently, for anesthesia, this involves establishing how many anesthesia sites are staffed by hour of day and day of week. The number of staffed sites can not be a moving target if customer service is to be effectively delivered; however, anesthesia must be reasonably flexible to accommodate varying activity levels and must be service oriented. In addition to agreement on the number of staffed sites, in order for anesthesia to effectively provide customer service, anesthesia must be able to rely on:

  • An OR committee (or governance body) having developed effective scheduling policies and procedures and further, consistently enforcing them, 
  • Surgeons’ offices effectively communicating with OR scheduling, 
  • Surgeons effectively communicating with anesthesia with regard to difficult cases or sick patients, 
  • Nursing effectively implementing preadmission screening protocols that have been developed jointly with anesthesia, 
  • Charts being completed on the day of surgery, 
  • Patients being appropriately prepared for surgery in either a preop unit or on the hospital floor,
  • Ability to transport the patient to the OR in a timely manner in order to have on-time case starts, 
  • Surgeons reporting to the OR on time for on-time case starts,
  • Experienced OR staff and appropriately set-up cases in order to reduce case times, 
  • Experienced charge nurses working with anesthesia to run the day’s schedule, and 
  • Experienced PACU staff who can function with relative independence.

In turn, an effective anesthesia group, demonstrating value to its client hospital, will be providing services as outlined in the anesthesia contract and services agreement and will be measured and monitored on a regular basis through use of some type of score-card. Where anesthesia stipends are in place, a portion of the stipend should be placed at risk and evaluated based on mutually agreed “riskreward” criteria. The score-cards are used to measure anesthesia’s performance, to provide anesthesia financial incentives for good performance and to penalize deficient performance against the stipend. This is how anesthesia groups come to the negotiating table as true business partners of the hospital. Anesthesia groups need to provide at least the following elements of services value to their hospitals’ perioperative programs: 

  • Be current in state-of-the art anesthesia care with an emphasis on ambulatory anesthesia, 
  • Maintain reasonable flexibility with regard to agreed expectations—maintain an attitude of meeting or exceeding expectations, 
  • Assure consistent and reliable staffing for all anesthesia sites agreed to, 
  • Take ownership in developing and providing oversight for effective preadmission screening programs. Agree as a group to established guidelines and algorithms. Collaborate with nursing on the administration of the preadmission screening program and assist with nursing education, 
  • Screen all ASA III and above patients and visit with all inpatients prior to the day of surgery. Develop processes to administer anesthesia consults for the preadmission unit. Call patients on the evening prior to surgery. Be as familiar as possible with patients’ conditions prior to the day of surgery,
  • Review patient charts at least the day prior to, if not several days prior to surgery, 
  • Proactively work with nursing on schedule planning and management and proactively assist nursing to enforce scheduling policies. Assign a lead charge anesthesiologist to work with the charge nurse/OR Manager on schedule planning and daily schedule administration, 
  • Begin reviewing the schedule with nursing several days prior to surgery,
  • Facilitate getting patients into the OR for on-time case starts, 
  • Facilitate expediting turnaround time, 
  • Where appropriate, maintain an effective medical direction model where CRNA direction is based on case complexity, patient acuity and CRNA skill level, 
  • Be promptly available to CRNAs during on-going cases and also to CRNA cases to expedite induction and emergence, 
  • Develop a staffing model and service agreement model whereby anesthesia staffing requirements of remote sites does not disrupt OR staffing, 
  • Develop a quality improvement and education model for all anesthesiologists, CRNAs and hospital staff (RNs, RTs), where appropriate, 
  • Assign lead individuals to foster skills and business development in key services such as cardiac/ vascular, OB, ambulatory, pain (and, potentially, neuro, trauma, pediatrics), 
  • Focus on delivering the highest level of patient care with respect for the patient’s time and provide hospitality, 
  • Focus on defining expectations and then exceeding those client/ customer expectations in efforts to assist the anesthesia practice to flourish, 
  • Depending on expectations, payor mix and OR efficiencies and case times, there may still be a need to approach hospital administration for a stipend payment to deliver on expectations, 
  • Play a key role in developing and sustaining your business/your practice by focusing on what is required to develop a marketable and financially viable surgical program with increasing case volume.

Indeed, all of the above will require a reinvented approach and mindset on the part of anesthesiologists in private practice. Providing increased value to your hospital client will require increased effort and time on the part of group members. The motivating factor must be the drive to remain in private practice as long as possible; to sustain the financial viability of your practice/business. Every business, regardless of its service offering or discipline, must continue to reinvent itself, to remain marketable, in changing times. Anesthesia is no exception. The group will incur increased expenses in providing these services to the hospital. The expense of losing your contract, however, is far greater.

Jerry Ippolito, MBA, MHSA is President of OR Efficiencies, LLC, Naples, FL. OR Efficiencies, LLC is a management consulting firm specializing in assisting hospitals and ASCs to improve their perioperative services and anesthesiology programs. Mr. Ippolito can be reached at