3 Ways to Optimize Your Independent Anesthesia Practice for Success in a Changing Market

Written by Jason Greenberg, MD
Chief Client Officer

The business environment surrounding independent anesthesia practices couldn’t be more volatile: Medicare reimbursement rates continue to fall, the anesthesiologist shortage is expected to get worse, CRNAs and Anesthesia Assistant resources continue to be scarce, and nearly 70% of us are at high risk for burnout.

In this complex environment, what are independent anesthesia groups doing to withstand these external forces, strengthen their longevity, and ensure the survival of this model of practice? In many cases, not enough.

Busy with the challenges of patient care, independent practices often adopt a “set-it-and-forget-it” mindset with respect to practice structure. However, continual maintenance and optimization of the practice itself are essential to survival in this market, and this includes a periodic review of the basics.

We have learned to expect hospitals, health systems, and payers to continually revise and optimize their business models. Consolidation and efficiency gains are core to their viability and growth. As their models change, practices should be following suit by reviewing and optimizing their own sources of revenue and expense to ensure long-term sustainability. These three critical areas are good places to start.
 

1. Review and Renegotiate Your Contracts.

What was true of the past is not necessarily true of the future. The moment your contracts go into effect, you should consider them outdated and begin the process of re-evaluation against current market dynamics. There is a high likelihood the data a practice has used to evaluate their contracts is several months or even years old. It’s never too early to begin thinking about next steps.

Payer contracts are on the radar for most practices. According to a recent Medical Group Management Association Stat poll, 58% of medical groups review their payer contracts annually, and 8% review them even more often. Interestingly, 17% say they never review their payer contracts, which is not surprising since negotiating good anesthesia contracts can be a challenge. There is much more at play than just the conversion factor and the first year of the contract—lines, blocks, epidural rates, and yearly escalators are all critical parts of the equation.

Facility compensation for undercompensated services deserves the same level of scrutiny, but in our experience, practices tend to review them much less frequently. Designed to make up the difference between the payer reimbursement and true cost of care, these payments should be monitored to ensure they keep pace with current reimbursement and cost-of-care projections. Too often, they aren’t, which means many independent groups are receiving inadequate subsidies based on out-of-date payment assumptions.

2. Manage your workforce smartly.

Labor is an independent anesthesia practice’s biggest expense and another of its unique challenges.

In the last few years, demand for anesthesiologists and CRNAs has increased 96% and 80% respectively, which is putting additional stress on a workforce already experiencing a critical shortage. According to panelists at the American Society of Anesthesiologists’ ADVANCE 2024, we currently need an additional 430 anesthesiology residents each year just to replace anesthesiologists who are retiring. Unfortunately, our residency spots are not growing at a rate fast enough to achieve parity.

All this merely hints at the dance independent practices engage in to ensure they can adequately cover their contractual service obligations. Top-performing practices continually monitor their coverage levels and employ smart strategies for filling in gaps.

The options for covering shortfalls are often less than ideal: hiring untested and expensive locum providers or distributing overtime shifts amongst an already overworked team. This is often accomplished by taking back vacation time, post call days, or other protected clinical time. Although there is often no perfect short-term solution, the key is to deploy options strategically, and to use data to inform decisions.

Locum fees may be 30% higher than employed physicians, for example, but too many extra shifts may lead to burnout and employee turnover.

Using a data driven approach with predictive analytics can help preemptively identify coverage shortages and make informed decisions about the most cost-effective strategies to use in each circumstance.

Additionally, there’s a low-tech long-term management strategy that cannot be overlooked: creating a practice culture that decreases attrition. The most productive independent practices maintain a culture that is supportive, fulfilling, and encourages everyone to feel invested in the group’s success. The practices that make this a priority tend to have less turnover and are able to recruit more effectively.

Case in point, in 2022 as the healthcare system was emerging from the pandemic, MGMA and Jackson Physician Search published results from a physician burnout, engagement, and retention survey. The physicians surveyed said they value two-way communication with management/administration even more than additional compensation. Other factors that contribute to professional satisfaction include equity in workload, retention programs, reduced call, and formal recognition.

3. Right-size your administrative team.

Administrative staffing is particularly susceptible to the set-it-and-forget it mindset. As contracts and clinical staffing needs change, administrative structures may become outdated, or even obsolete. As a result, we frequently see independent practices employ an inappropriate level of administrative support—whether too much or too little.

The imbalance happens gradually for many reasons:

  • A practice reduces its clinical staff over the years but maintains the same level of administrative support.
  • Administrative staff who exit the organization are not replaced and their tasks shift to clinicians who are already overburdened.
  • Administrative staff were hired to perform particular tasks that have now been outsourced or eliminated.

Ultimately, if you are dedicating too many resources, your overhead expense could put you at a competitive disadvantage. On the other end of the spectrum, if you are understaffed, you risk burning out clinical staff, forgoing clinical revenue generation on tasks not best aligned to clinicians, and most importantly not properly stewarding your practice through the challenges mentioned above.

If your practice is in either of these non-optimized positions, it’s time to reevaluate your level of administrative support. Staffing should be viewed not as an immutable fixed cost but as a strategic decision to be reassessed regularly.

Conclusion

Just over 20% of physicians remain in private practice now, according to new data from the Physicians Advocacy Institute, a statistic that reflects the considerable market challenges facing independent practices. To ensure longevity and sustain an independent business model, practices must periodically go back to the basics, reviewing contracts, staffing, and administrative support to ensure they stay optimized for future success.  

How Ventra Health Can Help

Even the smallest detail can make a big impact when negotiating new contracts. Ventra has a robust Payer Strategy and Contracting team with deep industry experience to help you navigate negotiations and secure contracts that will place you ahead of the curve. This process starts with a baseline analysis of your current contracts, identifies opportunities, and ultimately works with your team to execute the right strategy to put your practice in the driver’s seat.

From the facility support perspective, we have a dedicated Advisory Services team specializes in developing data-backed benchmarks and supporting clients through the facility subsidy process. Our data will give practices a clear picture of their needs as well as options and opportunities to hit critical revenue benchmarks. There are many ways to approach facility subsidies, and practices that craft a solution that brings value to all stakeholders are often the most successful. Ventra Advisory Services aims to find our clients “their” right solution.

Lastly, the main goal of our Data & Analytics team is to give our clients full visibility into how their practice is performing in an easy to understand, actionable format. Our Data & Analytics dashboards allow you the luxury of accessing your data in a convenient self-service model while knowing there is a team of experts available to assist you as needed.  

You’ll have access to all these resources and more through our white-glove service model, which provides you with a dedicated Client Success team who will partner with you to understand your business needs and help build and execute a joint strategy to achieve your goals.

Learn More

The Ventra Health team has decades of experience partnering with anesthesia practices to solve complex business challenges. Meet with an expert to learn how we can help with payer contracting, facility subsidy support, administrative optimization, and more.

About the Author

Jason Greenberg, MD, is Chief Client Officer for Ventra Health and a practicing cardiothoracic anesthesiologist. Prior to his role at Ventra, he was President and CEO of Anesthesia Care Associates Medical Group, a large independent medical practice in San Francisco. He has also served as President/CEO of Northern California Anesthesia Physicians and in several clinical leadership roles in the Sutter Health System. Dr. Greenberg serves on multiple committees at the American Society of Anesthesiology, including the Committee for Practice Management, and is a member of the Perioperative Advisory Board of GE HealthCare.