Anesthesia reimbursement has become one of the most pressing financial threats facing ASCs today.
What was once a variable cost tied to case volume has increasingly shifted into a fixed operational expense that payers, particularly government programs like Medicare and Medicaid, have failed to adequately account for. As workforce pressures mount and coverage expectations grow, the gap between what insurers pay and what anesthesia actually costs is widening, leaving ASCs and anesthesia groups to absorb the difference.
Five ASC and anesthesia leaders say the situation is reaching a breaking point. From the rise of stipends to the near-impossibility of sustaining an anesthesiologist, here’s what five ASC leaders have told Becker’s recently about anesthesia reimbursements.
When asked about the payer tactic that’s quietly hurting ASCs’ bottom lines, Megan Friedman, DO, chair and medical director at Los Angeles-based Pacific Coast Anesthesia Consultants said: One challenge that is becoming more apparent is the quiet compression of anesthesia reimbursement while still expecting guaranteed coverage. Historically, anesthesia in ASCs functioned more like a variable cost tied to case volume. Today, because of workforce constraints and coverage expectations, anesthesia has become much closer to a fixed cost. When reimbursement does not reflect that operational reality, it creates a gap that ASCs and anesthesia groups have to absorb.
When asked whether anesthesia stipends are likely to stick around, Thomas Durick, MD, an associate professor of anesthesiology at The Ohio State University Wexner Medical Center in Columbus, said: Unfortunately, I do. When you look at reimbursements versus cost, those two trends are going in opposite directions. Our reimbursements are dropping, our costs are going up, and the margins are shrinking. Will we hit a critical point where some surgery centers go, “We just can’t afford to pay this anymore. We just can’t.” That’s where some of these private equity companies jump in and say, “We can do it for less.” They don’t always look at job satisfaction or the quality metrics of those surgery centers. You read about this in Becker’s all the time: A hospital system fires its anesthesia group, bringing in private equity. They hope that the anesthesia team will stay on, but they’re going to take a 20% pay cut to work 20% more. That also is not sustainable, but unfortunately, it’s becoming the norm. Private equity comes in. They take their profit one year, and then things go south. Now you’re looking at renegotiating again. So I unfortunately don’t see that trend changing. I would love to see anesthesiologists and nurse anesthetists, and both their parent organizations, unite to use their combined strengths to battle this trend of decreasing reimbursements from the government, private equity and insurance companies—rather than fighting each other over turf wars. There are plenty of jobs out there. We just have to stop stabbing each other to try and fend off the insurance companies, which are the ones that are really strangling us.
When asked about the expense most out-of-sync for ASCs, Vijay Bachani, president and chief growth officer of New York Bariatric Group in Roslyn Heights, N.Y., said: Anesthesia reimbursement as it relates to government payers (especially Medicaid) is most out of sync. Anesthesiologists are in high demand and unless your center has a healthy amount of commercial cases, you will either end up losing money if you hire your own anesthesiologists or you may have to provide a subsidy if you outsource it.When asked the same question, Jeffrey Flynn, administrator and COO of Gramercy Surgery Center in New York City, said: Without a doubt, the most out-of-sync expense to reimbursement is anesthesia. Specifically, the government programs of Medicare and Medicaid. It is nearly impossible to support an anesthesiologist on these payments and has forced us through the past three years to supplement with the facility fee. This stands as the number one danger to ASCs that we face today.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.