Joseph Rodriguez, DNAP, CRNA

Dr. Rodriguez is managing partner of Arizona Anesthesia Solutions in Phoenix, which partners with 150 providers across three markets. He has seen many competing groups in Arizona purchased by larger anesthesia management companies. “That’s what’s happening in anesthesia,” says Dr. Rodriguez, who has spent much of the past five years helping to lead Tri-City Surgery Center in Prescott. “I'm very familiar with the dynamics because it's so different than the hospital personality-wise. I speak ASC.”

Outpatient Surgery Magazine: What is the current situation and impact of the consolidation we are seeing in the anesthesia space?

Dr. Rodriguez: Part A is that everyone is seemingly short of providers. Part B is that many areas facilities are using antiquated or restrictive models of care.

What type of impact is this consolidation and tightening of anesthesia provider supply having on ASCs and anesthesia providers?

Medicare reimbursements alone, in most scenarios, will not cover compensation for anesthesia. If your facility’s case mix is 80% Medicare, it's going to be challenging to pay for anesthesia coverage. Even if you have an all-CRNA model, it probably will not be enough unless you're very efficient and doing a great deal of volume, like at an eye or GI center.

The days of doing three cases and everybody's happy are gone. That's not sustainable for any anesthesia organization or individual provider. If I make $150 a case as an individual provider under the fee-for-service payment model and earn $450 at the end of the day, why would I provide services in a surgery center when I could just go into the market and earn and two, three or four times that number? That's the reality.

With demand rising for surgeries, are there enough recent graduates to fill the anesthesia provider gap?

Around 3,000 CRNAs and 1,700 anesthesiologists enter the field each year from residencies. Based on what we’re seeing in major markets, it’s not enough, especially if we’re not utilizing them fully.

How difficult is it for anesthesia groups to remain viable when they’re faced with evaporating margins, low Medicare reimbursements and negotiating with large private payers?

It's tough to run these organizations well, so it's not surprising that we're seeing a lot of consolidation. Clinicians running small- and medium-sized anesthesia companies are getting offers from larger companies that say, ‘We've got the technology, we've got the capital and we can take over your practice. It’s not going to be as flexible, but it's going to be steadier for you, with fewer headaches.’

Financially, how are ASCs handling anesthesia staffing?

Anesthesia groups never received subsidies from ASCs before. Now it's a prerequisite in some scenarios. For small facilities, daily subsidies work best. Medium-sized facilities can break up subsidies by quarter or provide groups with some sort of revenue guarantee.

Another thing is to look at anesthesia collections versus revenue over a quarter or month. If there's a gap, the surgery center covers it, but if they’re busy enough and the payer mix is reasonable enough, they don't owe us anything. That model seems to be popular because it's a diminishing subsidy approach.

What can small anesthesia groups provide ASCs that national groups might not do as well?

Surgery centers need a tremendous amount of flexibility, especially in the early going. Many big groups don't have the flexibility to say, ‘You want to add on a case this afternoon? Oh, sure, no problem, we'll cover that.’ The local shops are a little more flexible, a little more relationship oriented. However, they won’t have professional management, and definitely won't have negotiating power with payers, which subsequently impacts recruiting and retention.

Given all of this, how should ASCs that are struggling with charting their course with anesthesia move forward?

They need the right personnel, the right compensation model and the right culture. If they evaluate those three things, they’ll come up with a good staffing model. I learned a long time ago that while all providers are licensed, they’re not all the same. ASCs need to consider those three factors in determining their ideal model.

Should surgery centers simply hire their own anesthesia providers?

They’ll face the same cost constraints, negotiation with private payers, recruiting and retention issues and other factors. Further, they bear the financial risk when volume slows down, whereas an anesthesia group can redeploy providers to minimize financial risk to the ASC. Additionally, seeing centers poorly manage revenue cycle management for anesthesia is not unusual, as anesthesia reimbursement is considerably different than other specialties. Lastly, it’s typically more successful for those closer to a business to make it work.