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 a well-funded or publicly traded multispecialty group. Besides the financial benefits of size such as leverage and access to capital, consolidations may offer cross-privileging and a greater provider pool, quality data with more robust denominators, access to superior employee benefit plans and other advantages.

The form of consolidation that commands the greatest portion of our attention continues to be joining Accountable Care Organizations (ACOs). Two lawyers from the Health Law Partners, Neda Mirafzali, Esq. and Kathryn Hickner-Cruz, Esq. provide an exhaustive review of the proposed regulations released by CMS on March 31, 2011 in our lead article.

The ACO proposed regulations were a disappointment to many. According to CMS itself, the up-front costs of launching an ACO would be around $1.8 million. Furthermore, ACO participants would be penalized for failing to keep patient costs in line with CMS targets, increasing the risk that they would not see a return on investment. Negative reactions led to CMS’ announcing, on May 17, a new shared savings program, a “pioneer ACO model” that would allow physicians and hospitals to start coordinating patient care as early as October. Advance payments may be available from CMS. Applications to form a pioneer ACO are due by July 18. The requirement of a minimum of 15,000 patients makes it virtually impossible for anesthesiologists to lead a pioneer ACO, but you may read more about this initiative on the CMS web site.

ASA filed an interesting “comment” on the proposed ACO regulations, suggesting that CMS expand its horizons from the “medical home” for primary care services and consider the savings and quality opportunities that would be afforded by a “surgical” or “peri-operative” home. As we have stated in a number of publications and presentations, we agree strongly with ASA that anesthesiologists have a key role to play in a surgical home. “Anesthesiologists routinely interact with providers from virtually all care settings and assess and monitor the patient from an overall perioperative perspective; thus, anesthesiologists are ideally suited to effectively assess and manage risk across the full continuum of the perioperative setting. (ASA Letter to Donald Berwick, MD, CMS Administrator, June 3, 2011.)

Whether by managing risk across the perioperative setting or simply by managing operating room productivity, anesthesiologists continue to feel pressure to make the surgeons want to bring their patients to the hospital where they work. Jody Locke, CPC, ABC Vice President of Anesthesia and Pain Management Services, addresses this ongoing challenge in his article “Getting Paid for Anesthesia: Mastering the Challenges of Viability.” One of the trends discussed in Mr. Locke’s article is the fact that “Some of the nation’s largest hospital organizations have come to identify the improvement of operating room productivity as a key strategic objective,” and that “anesthesia practices are having to develop an entirely new set of reporting and management tools to both monitor the appropriateness of operating room utilization and help hospital administrations reset surgeon expectations.” Other trends are the transfer of financial responsibility from employers and health plans to patients themselves and the increasingly common insistence of hospitals on examining their anesthesia groups’ books when negotiating stipends.

The financial risks are there, even for practices willing to adapt as much as possible to new demands. We are constantly engaging in strategic planning for our clients’ organizations and for our own. There is much more to the process than we can convey in a newsletter, but we hope, as always, that our information is valuable to you.