EHC’s QA Series Question 4

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June 24, 2020

Our anesthesia group received funds from the Paycheck Protection Program and due to reduced case volume and collections, we are still well below our typical cash flow required for payroll.  At the same time, our hospital says they want to reduce our fixed subsidy which will only make the situation worse.  Suggestions? Thoughts?

As most of you know, the Paycheck Protection Program (PPP) will only cover up to $100,000 annualized compensation per FTE.  This is helpful but is only about 40-50% of typical anesthetist and 20-25% of physician overall cost.  Given the dramatic revenue reduction many groups have suffered, these funds (even if forgivable – which must be discussed with your accountant/attorney) are often inadequate to cover your costs.  At the same time hospitals are suffering financially in the crisis, and many are taking the stance you describe, with attempts to dramatically reduce subsidy spend.  We see some variation of this scenario playing out in many hospitals/health systems around the country.  While infusion of cash from the PPP is helpful, given anesthesia coverage costs and the magnitude of revenue reduction, it often is not enough to “solve the problem”.  Our approach at EHC has been to assist the parties in seeking a viable middle ground taking into account all sources of revenue (including reduced collections and “one-time funds” such as PPP).  Our goal is reasonable compensation for providers during the current pandemic, designed for retention, so that the department is intact for stability and growth as we emerge from this crisis.

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Response provided by: Robert Stiefel, MD