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Anesthesia Stipend Requests in Today’s Environment

April 18, 2024

BY DAVID J. PLATT, MPA, Senior Vice President, Anesthesia Division, Coronis Health, LLC, Everett, WA 

Anesthesia provider shortages have been commonplace across health systems since the turn of the century, resulting from fewer anesthesia residency graduates and increased demand for surgeries, especially in the outpatient setting. In turn, we saw a surge in hospitals providing anesthesia stipends so anesthesia departments, mostly staffed by traditional private anesthesia groups, could maintain provider retention and successfully recruit for adequate anesthesia group maintenance. 

According to a survey by the American Society of Anesthesiologists, overall, 50 percent of hospitals provided an anesthesia stipend in 2000 and 57 percent by 2005. Today we seem to have reached another new high in the anesthesia provider shortage, which has fueled the stipend trend as this percentage has increased to greater than 80 percent today, according to most industry surveys. Chances are, if you are a staff member of a private anesthesia group or a private equity-backed anesthesia corporation, you are already the recipient of a stipend.

BUT IS IT ENOUGH FOR CONTINUED VIABLE OPERATIONS?

A theme becoming increasingly common are anesthesia providers, especially anesthesiologists, working more hours and with fewer days off to maintain the same salary, or worse, for lesser income, while staff retention and recruitment suffer as the average cost of hiring an anesthesiologist has risen twenty to forty percent since 2022.1 It’s no surprise that this is causing anesthesia stipend requests to surge even higher. This trend is expected into the foreseeable future with a predicted shortage of 12,500 anesthesiologists by 2033, according to the Association of American Medical Colleges. However, potentially tempering this impact is that the current CRNA shortage may subside by the end of the decade with approximately 2,400 CRNAs graduating each year.2 So, while the number of anesthesiologists is projected to decline, CRNA numbers are expected to show a growth trend and can offset the anesthesiologist shortage.

While many anesthesia practices have secured a stipend from their facilities, many feel the need for an increase in that stipend. As such, this article covers key preparations an anesthesia group may consider in advance of approaching its facility for a stipend or additional subsidy support.

KEY STEPS TO OPTIMIZE THE RESULT OF YOUR STIPEND REQUEST:

1. Positive Facility Engagement and Communication:

Ideally, this starts at the inception of the Anesthesia Services Agreement, though it’s never too late to embrace this concept. So, rather than providing baseline anesthesia coverage to meet contractual requirements, strive to work as a partner with the facility. The group should appoint an Anesthesia Chair or leader, who attends medical staff meetings and participates in the facility’s committees. Taken a step further, this may involve taking the lead on OR management, aligning with the facility’s goals of ideal OR utilization and meeting quality metrics. Tracking and sharing such data with the facility via routine reports will go far in this regard. Frequent, formal and casual communication with facility administrators reinforces both sides’ understanding of each other’s goals and challenges, and as such, financial support requests should not be a surprise. 

2. Prudent Business Management:

With the need and degree of the anesthesia stipend being key drivers in adequately staffing the anesthesia department, along with net patient revenue to the group, be ready for full disclosure to support the market reasonableness of each. The facility will oftentimes utilize an outside consultant to evaluate the need, based on the following areas. 

  • Staffing Mix: A topic facility administrators and consultants frequently broach when a stipend request is on the table is the care team model consisting of at least a 1:3 physician to CRNA ratio, thus potentially reducing costs from a 1:2 ratio or all-anesthesiologist personally performed model. This, however, may not be practical or feasible, in view of several factors. Patient acuity is always a factor. CRNA wages are increasing sharply each year as the provider shortage persists; Business Wire® recently reported the median total cash compensation for CRNAs saw an increase of 9.6 percent in 2023 alone.3 As such, adding CRNAs is becoming less of an option due to their rising costs and scarcity. Though a lesser deployment of the care team model may be reasonable for certain pockets of the practice, such as in ASCs
  • Compensation & Benefits: Sharing current provider salary information is usually necessary when building the case for additional stipend support, as the facility will want to compare this to industry benchmarks. However, given the rapid annual increases in anesthesia provider salaries as noted in this article, it is difficult to accurately track market wages. Hospitals typically rely on industry salary surveys that utilize the previous year’s data when published. A more “real-time” view would include compensation packages offered in current regional job advertisements on websites among competitive anesthesia practices and larger private equity-backed anesthesia organizations.
  • Practice Financial Data: Additionally, since most anesthesia stipends are driven by the amount of patient revenue a practice generates, the facility will likely request financial reports depicting revenue cycle results. These billing reports should illustrate the effectiveness of billing operations. As such, it is good practice for the group’s business leadership to monitor billing activity monthly with its revenue cycle management (RCM) company. Key metrics a facility may review when considering its stipend support include Net Collection Rate, Days in AR, Percentage of AR >90 or 120 days, and Bad Debt percent. As such, it is essential the group maintains a close working relationship with the manager of its RCM operation to keep their finger on the financial pulse of the practice and be prepared to discuss it during stipend talks. 
  • Managed Care Contracts: Crucial here is to ensure the anesthesia group proactively maintains its managed care contracts. One best practice is to maintain a managed care contract matrix including all key terms and conditions of each payer contract in one location, such as a working spreadsheet. This would include contractual unit, flat fee and modifier reimbursement, renewal dates, timely filing deadlines and annual escalators, to name the most key. It is paramount to always be aware of renewal dates and work with your RCM company’s managed care expert, so renegotiations begin in ample time prior to the renewal date. This ensures a lapse does not occur, thus forgoing a contractual reimbursement increase in the present year but also for future years, since unit increases are typically a percentage increase applied to the then-current rate. It is also critical to have a sense of market anesthesia unit rates and to strive to meet or exceed that level. The group’s RCM company will often deploy a managed care expert to help the group achieve favorable managed care contracts and demonstrate that to the hospital. 
  • Inclusion of Performance Metrics into the Stipend Arrangement. This is a common component and often required for continued financial assistance. These measures are typically operational, or quality in nature. Examples may include: (1) patient experience results via surveys, (2) quality measurements, which are often satisfied via reporting MIPS quality measures, (3) anesthesia related case cancellations or on-time case starts, especially the first case of the day.

3. The Subsidy Evaluation and Request:

Drawing upon the components discussed in the paragraphs above, the group should prepare its own assessment, typically with the assistance of their own consultant (whom may be at an arm’s reach within the group’s RCM company). This approach starts the negotiation at the level of financial support determined necessary by the group for continued viability, utilizing actual practice expense and revenue data via its own due diligence, then shared with the facility and methodically walking through the step-by-step process supporting the request.

This process should involve the following:

1. Financial Practice Assessment

  • An analysis of expected revenue (applying contractual payer rates) vs. actual for the same period, utilizing actual payer & case mix experience. This validates the group is achieving its revenue potential, or close to it. 

2. Anesthesia Coverage Staffing Model

  • Establish expected staffing, considering number of anesthetizing locations and hours of operation for each, work schedule of anesthesia providers and the call demands of the facility. Depending on the situation, it may be prudent to run multiple staffing models, (e.g., personally performed vs. varying physician/ CRNA/AA ratios of medical direction).
  • Apply market-based compensation packages to the providers and other operating overhead

3. Determine appropriate subsidy range based on results of above.

  • Note, this may include multiple scenarios, yielding multiple subsidy ranges. For instance, Scenario #1 may be an “as-is” stipend arrangement. However, if it is deemed OR utilization can be improved without a decrease in case volume, via decreasing daily ORs or alteration in hours, a Scenario #2 may involve an alternate lower subsidy range based on fewer ORs and, hence, fewer anesthesia provider FTEs. 

While requesting a stipend or increased financial support may not be welcome news to facility administrators in this current environment, we have experienced facility receptiveness as the anesthesia shortage is acutely felt by all parties. This shortage directly impacts OR revenue and, hence, facility bottom line. Moreover, these administrators are likely aware of recent public accounts of health systems across the U.S. making sweeping changes in their anesthesia department staffing in an attempt to reduce costs, only to find themselves in a predicament once the terminated group departs. In severe cases, these administrators have seen the majority of cases canceled when the transition is made, in some cases accepting only emergency and OB patients in the short term due to lack of anesthesia providers. With industry evidence for additional financial support to anesthesia groups mounting, and health systems realizing the necessity of anesthesia stipend arrangements to sustain OR case revenue, it is incumbent upon anesthesia groups to build its case with empirical data to support its stipend request to their facility leadership.

1 Becker’s ASC Review, November 15, 2023

“What Healthcare CFOs Should Know About the CRNA Shortage,” Ringo Blog (last visited November 18, 2022)

Business Wire, A Berkshire Hathaway Company, November 15, 2023

David J. Platt, MPA serves as Senior Vice President for the Coronis Health anesthesia division, responsible for revenue cycle management of Coronis anesthesia clients. He has worked exclusively in the anesthesia industry assisting group practices of all employment structures in providing RCM and practice management services for the last 20+ years, also facilitating beneficial relationships between facilities and anesthesia groups. Dave holds a Master of Public Administration (MPA) degree, with certification in Health Care Administration, from West Virginia University. He can be reached at David.Platt@CoronisHealth.com.

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