Anesthesia 101: Business Models

By Robert Stiefel, M.D.

The healthcare environment has dramatically changed in recent years – and will continue to do so for the foreseeable future.   Amidst these changes, anesthesia business models are evolving as well.

If current trends hold, three types of business models will emerge as the industry standard. Below is an outline of those three models, highlighting the benefits of each.

Large Regional Groups

Large Regional Groups offer a variety of benefits and oftentimes fit well culturally with the hospital since they are based within the same geographic area. What’s more, many of the physicians will have received training at nearby universities and hospitals, further contributing to a better cultural fit.

These groups can also successfully attract top talent since it is easier to recruit anesthesiologists and CRNAs to a region rather than to a specific facility. Large Regional Groups also allow greater flexibility to shift MD/CRNA labor to meet staffing changes at multiple facilities.  The fact that they typically have a critical mass of providers and contracts allows these groups to offer more robust data tracking and quality oversight than is typically seen with small, single hospital groups.

Plus, because of their size, these groups have the power to negotiate better payor rates, which can reduce the need for large subsidies.

Anesthesia Practice Management Groups (APMC)

A key benefit of APMCs are their economies of scale.  For example, the costs of health insurance per employee are decreased since rates are spread across many beneficiaries. Professional liability insurance costs are also lower due to the groups’ size and/or self-insurance trusts. What’s more, many APMCs have national contracts, which feature higher reimbursement per anesthesia unit from commercial payors.

APMCs also provide professional management and infrastructure plus robust and efficient revenue management. Many providers also enjoy the compliance and education programs these groups provide as part of their service.

The geographic variability is also attractive to many providers – especially health systems with far-flung facilities.  In addition, APMCs offer excellent opportunities for anesthesiologists and CRNAs who want to advance their careers within the organization, a selling point when recruiting talent.

Hospital Employed

An employed model gives hospitals much more control of the anesthesia department. This is beneficial on numerous levels.  For example, in this era of bundled payments employed models give greater financial control, as well as the ability to develop synergies between anesthesia and surgery schedules.

But perhaps the most important benefit is the alignment of incentives. In other words, there are no conflicting goals. An employed model ensures the anesthesia department is working completely in concert with the hospital to improve OR efficiency and reduce costs.

Healthcare has changed. And so has anesthesia. The three models above seem to be the wave of the future and each offers meaningful value-added attributes for their client hospitals.  The key to a successful anesthesia department is to make sure you choose the model that best fits with your facility from an operational, strategic, financial and cultural standpoint.