Key Issues Impacting Anesthesiology Programs – Part 1: Understanding the History
Hospital administration typically recognizes that “Surgery” is the “Financial Engine Powering a Hospital”. As reported by the Clinical Advisory Board, 65 percent of a hospital’s profit and 60 to 70 of hospital revenue originates from the OR. While a hospital’s anesthesiology program is a paramount support service to a number of hospital programs the anesthesia service is a vital component of perioperative services.
A high quality and service oriented anesthesiology program which focuses on patient and surgeon satisfaction is generally a champion of business development for hospitals and ambulatory surgery centers (ASCs). Conversely, anesthesiology programs can restrict business growth. High quality medicine and a service oriented culture alone are not sufficient to successfully support a hospital’s or ASCs programs. Even where anesthesiology maintains a service orientation, anesthesiology can and does frequently restrict program growth due to a shortage of anesthesiologists and CRNAs and a lack of ability to provide staffing in balance with programs’ need. The existing shortage of anesthesia providers can restrict hospitals and ASCs in their staffing of additional anesthesia sites required to provide surgeons the OR access required by their practices. Surgeons rely on OR access to generate a livelihood and must take cases to / perform cases at facilities maintaining OR access in balance with their practice needs. In a Clinical Advisory Board survey of 118 hospital executives, 50 percent responded that “Our Greatest Barrier to Doing More Surgical Cases Is Limited Anesthesiology Coverage”. Additional surveys performed by the Clinical Advisory Board reported that 47 percent of hospitals closed ORs due to insufficient anesthesia coverage. In my own experiences as a perioperative services management consultant, review of financial data indicates that, on average, the value of an OR case to a community hospital or medical center ranges between $1,800 to $2,500 of margin per case (prior to indirect cost allocation and including all hospital revenue and expense associated with the surgical encounter). Therefore in settings where on average four to six cases are performed per OR per day, closing an OR can result in a financial loss to a hospital of, on average, $10,000 per day or approximately $2.5 million per year. This factor needs to be considered when an anesthesiology group requests and income guarantee to recruit additional staff. A return on investment analysis needs to be considered (e.g. potential revenue from an additional room = $2.5 million annually; potential cost of an anesthesiologist = $450,000 annually; potential cost of a CRNA = $200,000)
Key Issues Impacting Anesthesiology Programs is a series. Please book mark our blog and check back each week for new updates. Coming soon:
Part 2: The Anesthesiology Shortage
Part 3: The Financial Impact
Part 4: The Hospital Dilemma
Part 5: Understanding Anesthesia Billing
Part 6: The Care Team Model
Part 7: Conclusion – Issues Every Anesthesiology Practice Must Face to Succeed
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