Health System Executive Interview: Mark Penkhus, HCA

January 15, 2019


Mark L. Penkhus is a Vice President of the Physician Services Group for HCA overseeing several hospital-based physician services, including anesthesiology for the organization since 2007. Mark has extensive healthcare experience, previously serving as CEO for both community hospitals and academic medical centers. He was also a former managing partner with Ernst & Young where he focused on Performance Improvement. Mr. Penkhus spoke with Enhance Healthcare Consulting’s Anesthesia & OR Review in December 2018:

EHC: How do you track operating room performance throughout your organization?

MP: HCA tracks OR performance via service, quality and cost metrics which offer comparison points across our organization. Examples of metrics include first case on-time starts, turnover time, OR Utilization, case cancellations and documented surgical time-outs. There is a significant benefit to having a large number of hospitals tracked with “apples to apples” data. Trends are followed, and performance considered on a relative basis among our facilities which allows us to identify those which offer the greatest opportunities for improvement and implementation of best practices.

EHC: How do you evaluate anesthesia services at facilities in your organization?

MP: Anesthesia performance is monitored through a similar, organization-wide anesthesia dashboard. Unlike OR Metrics, there are many anesthesia specific metrics which hospitals do not track on a consistent basis. Therefore, as part of our partnership with vendors across the country, HCA has groups report some common quality metrics on a regular basis. Although group reporting capabilities vary based on size and infrastructure, many of the metrics again allow us to compare certain aspects of anesthesia performance across our hospitals on a relative basis. Certain metrics, such as surgeon and patient satisfaction, are monitored by the hospitals and identified opportunities for improvement are addressed through regular meetings and creation of corrective actions with the anesthesia group leadership.

In today’s environment most anesthesia groups require financial support from their hospitals. Physician Services Group provides internal consulting services (supported by outside subject matter experts) during contract negotiations for our hospitals which assess comparative metrics for subsidy, including subsidy per anesthetizing location, adjusted for other variables which determine anesthesia cost such as OR Utilization, payer mix and sub-specialty coverage needs. Despite the impact of anesthesia subsidies across a large organization like HCA, we always consider the net impact of growth initiatives to the entire organization, not simply the incremental cost related to anesthesia coverage.

EHC: Are the majority of your anesthesia services provided by large national firms, smaller local firms or employed?

MP: HCA currently does not employ any anesthesia providers. With 180 hospitals across the country we get a real-time, national perspective of the shifting dynamics in anesthesia practices and trends. We partner with a mix of local, national and regional groups and feel that in general we have good relationships with all these group types in various locations. Recent trends in anesthesia including increased compensation, payer pressures, and requests for additional coverage locations are putting financial pressure on both groups and hospitals. As the industry consolidates with public and private investor support, we anticipate escalating upward pressure by investors for financial return to result in further requests for financial assistance. I believe that in 2019 and 2020, due to a combination of factors already mentioned, we will see rapidly increasing subsidy requests. From my perspective, large organizations such as HCA will need to have various coverage options available to ensure access to required anesthesia capacity in the future.

EHC: What are your key strategic objectives for anesthesia services for the next two to five years?

MP: First I think it is important that we work increasingly closely with our partner groups to identify mutual opportunities for growth and improvement. As new perioperative services are added which require additional coverage and issues identified by individual facilities, they must be met proactively. In certain large markets we have developed anesthesia governance councils (composed of the anesthesia group and hospital leaders) to monitor provider capacity and resource allocation in an organized, data driven fashion. We anticipate to be able to expand this model to more markets over the next few years. We have seen and will likely continue to see significant growth in specialty lines such as trauma, neurosurgery, pediatrics, stroke and cardiac/EP. Each of these areas has unique anesthesia coverage and cost implications for which we have improved our oversight over the past few years. I expect this oversight and coordination as well as consistency of service delivery in these complex areas will continue to develop in conjunction with our anesthesia partners.

EHC: How do you expect the anesthesia services market will evolve over the next few years?

MP: I expect large for-profit and not-for-profit hospital operators will consider employment of anesthesia providers in certain situations to control cost, quality and integration. Many systems and hospitals will support, where operationally feasible, more aggressive leverage of mid-level providers and aggressive use of technology to ensure coverage at a more reasonable cost.

Request For Proposal’s (RFP’s) have been effective tools for evaluation of anesthesia coverage options in the past decade, but we have seen more inconsistent results recently. With larger groups dominating RFP responses, we see vendors who are less willing to take on risk and add significant overhead costs, all of which drive up proposed subsidy support. As these large anesthesia provider groups continue to consolidate or are resold, I expect these cost imbalances to continue to escalate.

Finally, over my 12 years in this role, we have seen requests for financial support and demand for action coming much more quickly from vendors. Anesthesia provider groups of all sizes have recently begun exercising termination notices to force the renegotiation issue with their hospital. I believe that hospitals and health systems will need to become more proactive in monitoring, managing and developing mechanisms for alignment with their anesthesia relationships. Having said that, I believe that with flexibility, alignment of incentives and application of technology, health systems and anesthesia provider groups will be able to work together to continually drive efficiency and improve the quality of patient care.

EHC: Thanks Mark, we appreciate your time today.