Posts Tagged ‘Hospital revenues’

Forget the pandemic, say hospital executives. What have you done for us lately?

There was a time, at the peak of the pandemic, when many of us believed that anesthesiologists finally would get the public recognition and respect we’ve earned – at a painful price – for our front-line work in airway management and critical care.

Some anesthesiologists like Ajit Rai, MD, a pain medicine specialist in Fresno, California, even boarded flights to New York last spring to help hospitals overrun with critically ill COVID patients. News reports nationwide celebrated these physicians as “healthcare heroes”.

That was then.

Today hospitals are struggling to maintain their financial stability in the face of the revenue hit they took in 2020 when elective case volumes plummeted. Total knee and hip replacements were down by 53 and 42 percent, respectively, compared with 2019 numbers, and even cardiac catheterization cases were 24 percent fewer. At least 47 hospitals closed or declared bankruptcy in 2020, with more likely to follow.

The American Hospital Association estimates that hospital revenue in 2021 could be down anywhere from $53 billion to $122 billion from pre-pandemic levels. Hospitals are still dealing with supply chain and labor market disruption, paying premium prices for traveling ICU nurses, and facing the high cost of treating resource-intensive COVID patients.

When a hospital is desperate to stay afloat, administrators are going to look anywhere they can for ways to cut costs. Subsidies to anesthesiology groups are in their crosshairs.

Suddenly, an RFP appears

An estimated 85 to 95 percent of hospitals currently subsidize anesthesiology services to some degree. Reasons vary from underutilized OR time to poor third-party payment for trauma or obstetric services. If the anesthesiology department is perceived as thriving financially, a cash-strapped hospital will want to stop the subsidies even if that could make it difficult for the group to attract or retain well-qualified anesthesiologists.

Rather than bothering to negotiate with the existing group, hospital executives may take the quicker, easier route of putting out an RFP, or request for proposals, to attract bids from anesthesia practice management firms such as NorthStar, NAPA, Vituity, or Envision. These companies advertise their ability to improve efficiency and outcomes while reducing hospital costs. They promise to “align the interests” of the anesthesia department and the hospital while eliminating the need for subsidies.

Sometimes the corporate acquisition of an anesthesia practice is friendly, with a lucrative buyout for the senior partners in the group. Today, though, less amicable transitions are occurring more often. If the current group loses the bid for the contract, the anesthesiologists have no certainty that they’ll be invited to keep practicing at the same location, whether they were full partners or not.

Turmoil in Michigan

In August 2020, Beaumont Health signed an agreement for NorthStar Anesthesia to begin providing services at its Detroit-area hospitals, including the flagship 1098-bed teaching hospital in Royal Oak. News reports noted that many (perhaps up to 50 percent) of the anesthesiologists and nurse anesthetists left as a result of the new NorthStar contract, and some surgeons and other specialists resigned too. Cardiologists protested to no avail, expressing “serious concerns that NorthStar will not be able to provide the quality of cardiac anesthesia services that we have received for several decades.”

The death under anesthesia of a colonoscopy patient in January 2021 spotlighted the ongoing turmoil in Beaumont Royal Oak anesthesia services, as anesthesiologists and nurse anesthetists were brought in from other campuses or hired as locum tenens contractors to cover cases. To advocate directly with NorthStar for “safe staffing ratios and greater patient safety measures”, Beaumont’s remaining nurse anesthetists voted overwhelmingly on March 30 to unionize.

Abrupt changes in care model

When anesthesia contracts change hands, changes in the care model often follow.

At Cedars-Sinai Medical Center in Los Angeles, a physician-only private group delivered anesthesiology services for decades. When the hospital took over recently and “transitioned” anesthesiology into an academic department, a number of the anesthesiologists were not offered employment in the new entity. Instead, Cedars-Sinai is now recruiting nurse anesthetists, offering pay sufficient to lure them from other employers in a market where the average yearly pay for a nurse anesthetist is more than $199,000.

A recent letter from Richard Keddington, the CEO of Watertown Regional Medical Center in Wisconsin, was widely circulated on Twitter after it announced that the hospital, under the guidance of Envision Healthcare, “is moving to a 100% CNRA [sic] model in our anesthesia department.” Mr. Keddington went on to say that “the literature is clear that care quality and outcomes are just as good with CRNAs…You shouldn’t see much of a change.” Any responses from the internist, the emergency physician, and the orthopedic surgeon who first received this missive haven’t been made public as of this writing.

Wisconsin and California are among the 19 states that have “opted out” of the federal physician supervision requirement for nurse anesthetists. However, since March 2020, a “temporary” waiver by CMS of the federal supervision requirement has been in effect for all 50 states. The decision hasn’t been made yet whether the temporary waiver will become permanent; the period for submitting comments to the Federal Register ended in December. If I had to bet, I would wager that CMS will make the waiver permanent despite our objections.

The “zone coverage” model gains traction

Even if state law or hospital bylaws mandate physician supervision of nurse anesthesia practice, there is nothing to prevent an anesthesiologist from overseeing more than four cases at a time as long as there is no billing claim that “medical direction” was given. Typically, claims submitted for more than four anesthetizing locations use the “QZ” billing modifier to indicate “unsupervised CRNA” practice even though an anesthesiologist may have been available for assistance or rescue.

The Anesthesia Business Consultants newsletter opined even before the pandemic, in the fall of 2019:  “While the alternative to physician-only anesthesia care used to be medical direction, now unsupervised CRNA care, the QZ model, is gaining popularity. In fact, new models of delivery such as the zone model are being developed to restrike the traditional relationship between doctor and nurse. The zone model assumes that a physician oversees, not medically directs, a squad of CRNAs.”

Will hospital financial woes continue?

Though elective surgery has resumed, financial strain may plague most hospitals for some time to come. CMS has started to eliminate the Inpatient Only (IPO) list of 1700 procedures for which it pays only when they are performed in the hospital inpatient setting. What this means is that money-making procedures including total hip arthroplasty likely will move to free-standing ambulatory surgery centers if the patient is relatively fit, leaving hospitals with the older, sicker population.

Many health system administrators know little and care less about what we do every day, or what so many of us did to help our patients and our colleagues survive the terrible COVID surges of last spring and this winter. We can expect more corner-suite interest in cutting anesthesia subsidies and signing deals with practice management corporations.

It’s possible that nurse anesthetists eventually could price themselves out of the market, or tarnish their image with unacceptable complication rates in their independent practice. We can predict with confidence a downward trend in what insurers are willing to pay anesthesiologists for our services. If these market forces converge, it may once again make sense from a hospital’s point of view for anesthesiologists to do cases personally rather than cover nurse anesthetists in “zones” that grow ever larger.

Only time will tell us how anesthesiology practice and American healthcare are going to evolve. Only this is certain: we would be foolish to think that anyone’s gratitude will last longer than yesterday’s news.

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This article and image appeared originally in the June 2021 issue of the ASA Monitor

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