ASCs Subsidizing Anesthesiologists: Q&A With Dr. Thomas Wherry of Health Inventures

Thomas Wherry, MD, an anesthesiologist, medical director of Health Inventures and principal for Total Anesthesia Solutions, a company dedicated to finding strategic solutions for issues relating to anesthesia care, discusses the emerging trend of ASCs subsidizing or employing anesthesiologists.


Q: Will ASCs begin employing anesthesiologists?

Dr. Thomas Wherry: It's already happening. Many hospitals have started employing anesthesiologists and a lot of surgery centers are considering it. I know of two ASCs in the Midwest that have begun employing anesthesiologists. In both cases, they were backed into a corner and had no choice. I think there will be more employment of anesthesiologists in ASCs in the next 5-10 years.


Q: What is causing this to happen?


TW: Anesthesiologists are seeing a dispersion of cases. When an ASC opens, the anesthesiologist sees just as many cases but now they are dispersed among several locations. Each OR at each location needs an anesthesiologist and there are more locations. For example, when you open a three-OR surgery center in a community, anesthesiologists go from taking care of eight ORs at the hospitals to taking care of 11. Since the total number of cases in the community stays the same, the average number of cases at each OR drops. That means each anesthesiologist has fewer cases and is making less money than before.


In addition, the Medicare population is growing and Medicare reimbursement of anesthesiologists is about one-third that of private payors. So it is not hard to see that when Medicare rates approach 40 percent of private insurance, the anesthesiology group's income begins to suffer.


Q: Why are anesthesiologists more likely to be subsidized at hospitals?


TW: Anesthesiologists tend to lose more money at hospitals than at ASCs because hospitals have a higher proportion of lower-paying Medicare and Medicaid cases. Additionally, the groups are covering under-utilized rooms. Many hospital ORs can run at 25-30 percent utilization. With the cost of providers, it is no longer feasible for groups to cover these empty rooms. At some hospitals, as much as 60 percent of the anesthesiologist's income is a subsidy. Instead of paying this huge subsidy, often the hospital just decides to hire the anesthesiologists.


Q: Is hiring anesthesiologists a good idea for ASCs?

TW: ASCs typically don't have the money that hospitals have. When a surgery center subsidizes anesthesiologists, it is taking money out of the surgeons' pockets. But the surgery center may not have a choice.

If you're not backed into a corner, there are things you can do. For example, the ASC can close down one or two days a week so as to consolidate the schedule. This will give the anesthesiologist more volume per room per day and will free up the anesthesiologist to work somewhere else on those days. ASCs can also provide support to the group during payor negotiations.


Q: Is providing a subsidy a good solution?


TW: A subsidy or income guarantee can be used but it shouldn't be permanent. They should be for a short term. For example, if the ASC is opening a new OR, it is going to take time for volume to build as surgeons bring more cases over. Initially, the volume of the new OR will be too low to sustain the anesthesiologist and a subsidy makes sense. But the plan is to get to full volume over a period of time. The ASC wants to be careful that any subsidy or case guarantee does not become a disincentive. The arrangement can be complicated, which is why I always suggest third-party input.

Q: How should ASCs negotiate a subsidy to salary?


TW: There needs to be a dialog — a back-and-forth process — that may last for several weeks. When negotiating how much money their anesthesiologists need, ASCs need to be careful not to go in blind. When anesthesiologists say they are losing money, ask for their revenue data on all the rooms at the ASC. They should not be asking you to cover their losses at the hospital. Also, they might be losing money on a particular room in the ASC, but what is their income when averaged for all three rooms?

Remember, there are several powerful incentives driving anesthesiologists to surgery centers. There are no evening or weekend hours and no call in an ASC as there are in a hospital. Also, the ASC traditionally has a better payor mix than the hospital.


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