ANESTHESIA PRACTICE MANAGEMENT
| TRENDS IN ANESTHESIA DEPARTMENT ECONOMICS —William J. Mazzei, MD, Clinical Professor, Department
of Anesthesiology, University of California, San Diego, School of Medicine
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 | Anesthesiologists: residencies full throughout United States, but fewer residency slots than in 1992 (peak); greater
percentage of trainees unable to stay in United States; at present, not enough anesthesiologists graduating each
year to replace number dying or retiring; job availability high; “minimum” salary $300,000 yearly; lifestyle (eg,
working part-time, working hard to make large amount of money, or being able to take time off and make less
money) of great importance
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| Certified Registered Nurse Anesthetists (CRNAs): rapid growth in training programs; growth in independent practice
in United States (but not true in California or most of costal states); large increase in salaries (until recently);
large increase in per diem positions (especially in interior of United States); nights, weekends, and on-call
viewed negatively (many groups had to make schedule favorable in order to maintain CRNAs; only physicians
worked nights, weekends, and on-call) and often requires higher hourly rates
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| Outcomes: throughout United States many operating room (OR) closures in major medical centers (at same time,
outpatient centers opening); in 1997, Massachusetts Medical Society reported ≈72% of hospitals in Massachusetts
had closed ORs because of unavailability of anesthesiologists; because salaries of anesthesiologists greater
than can be achieved with typical hospital-based practice, stipends to support anesthesia common; at most centers,
perioperative care being reexamined (efficiency or convenience for surgeons vs ability to attract anesthesiologists
and CRNAs); competitive vs noncompetitive markets
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| Length of case: multiple short cases per day ultimately pay more than one long case (payment for start-up units
greater than for time units); incentive now for anesthesiologists to work at outpatient surgery centers (multiple
short cases; no night call, trauma, or obstetrics [OB]; higher compensation)
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| Medicare problem: 1987 study determined cost of given medical, diagnostic, or therapeutic procedure; focused on
time required to perform procedure, degree of difficulty, amount of training required, and awkwardness in performing
procedure; listed tasks of all physicians and extrapolated how much physician should be paid; Medicare
used study as basis for financing structure; however, study did not include anesthesiologists; Medicare gives leftover
money to anesthesia (payments reduced by two-thirds); most insurers negotiate contracts based on some
percentage of Medicare; impossible, even with private insurance, to compensate for differences caused by Medicare
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| Department organization: because salaries of CRNAs increased more rapidly than those of physicians, net profit
of having 3 physicians equivalent to having 1 physician plus 3 CRNAs; many groups have looked at proportion of
CRNAs and physicians and only use CRNAs in 1:3 ratio; many organizations have also been able to eliminate
nights and weekends for CRNAs; political advantages—bias of those who work in academic medicine that anesthesia-care-team
model provides high quality care, modest cost, greatest OR management capability, and is irreplaceable
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| CRNA: $120,000 to $175,000, including benefits for 40-hr work week (overtime adds to compensation); for most
onerous shifts, overtime compensation $60 to $150 per hour; new graduates accepting lower salaries in coastal
areas of United States; current salaries probably will not be maintained
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| Physician: large variation across United States; guidelines based on Medical Group Management Association
(MGMA) physician compensation and production survey, recruitment contracts, negotiated settlements, and personal
disclosure
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| Stipends and negotiations
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| General terms: offer to cover all services surgeons request that can be medically delivered; take positive stance and
avoid appearance of unwillingness to provide care (as long as compensation appropriate); request payment for
inefficiencies not under one’s own control (eg, trauma call); demand support for new services or when revenue
cannot support required personnel
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| Stipend terms
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| Salary support: salary guarantee “sounds really poor to hospital administrators” (better to accept some risk; earning
proportional to amount of work performed); calculate manpower needs based on 80% OR utilization; request
average full-time equivalent (FTE) salary when coverage <80%
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| Obstetrics: standard of care requires coverage 24 hr per day, 7 days per week; depending on insurance and incentive
to perform labor epidural analgesia, necessary to have 300 to 500 deliveries per month to obtain sufficient
revenue to support this amount of coverage (majority have only ≤250 deliveries per month); stipends vary
from $0 to $1200 per 12 hr of coverage (groups that have tradition of covering OB continue to get no stipend;
groups being asked to start new OB service or that do not have tradition of covering OB “typically get a fairly
good stipend”); stipend in addition to collections; if sharing financial data with hospital acceptable, aim for
deficit guarantee (hospital has incentive to grow OB practice); may be easier to take acceptable stipend and allow
hospital to take collections; encourage 100% epidural rate if group keeps collections
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| Trauma: generally institutional (rather than individually driven) decision; emergency trauma rarely provides sufficient
income to support in-house coverage (depends on type of trauma; alternatively, follow-up orthopedics
may provide substantial income for hospital); stipends of $1200 to $1500 per night for in-house coverage (may
or may not include collections); support orthopedic trauma room (used <80% of capacity; requires additional
support)
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| Pediatrics: pediatric surgeons partial to pediatric anesthesia; little evidence to support medical need (ability to
care for pediatric patient more familiarity issue than actual training issue); revenue generated by pediatric anesthesia
insufficient to permit stipend; reasonable to designate small group of anesthetists that covers pediatric
anesthesia (even if half of group)
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| Cardiac: typically has its own designated group, especially if transesophageal echocardiography required; strong
financial incentives of past now gone, but no stipends at most places; increasing debate on simultaneous cases
(allow other cases in gaps)
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| Transplantation: can be significant burden (awkward work schedule; unpredictable revenue stream); demand stipend
(significant reimbursement for surgery; eg, hospital liver transplantation program lucrative)
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| OR director: physician; increases productivity 12% to 20%; common in academics, becoming more common in private
practice; director’s lost revenue (unable to give anesthesia while performing director duties) commonly
funded by both group and hospital; more difficult to get stipend support in anesthesia-care-team mode
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| Cost control: review costs of anesthesia drugs, supplies, and equipment; offer to split savings on reduction of
costs (although some hospitals believe laws prevent splitting savings, “legally you can do this”)
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| Conclusion: important for hospital to know why sufficient revenue not being earned, but do not mention salary; disclosure
of billing information important; average stipend $112,000 per FTE
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| INCENTIVES —David B. Glick, MD, MBA, Assistant Professor of Anesthesia and Critical Care, University of Chicago
Pritzker School of Medicine, Chicago, IL
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| Introduction: first law of business, “you get what you ‘incent’”; each individual will pursue his or her own best interest;
by being optimally productive, economy becomes optimally productive; incentives work against this basic
tenet; trying to create new individual interests that separate and change one person’s activities in way that will “forward
a certain, given end” (ie, giving specific directions and encouragement to someone)
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| Definition of incentives: something that incites or tends to incite to action or greater effort (eg, reward offered for
increased productivity); “it is all about getting people to do things that they wouldn’t choose to do on their own”
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| Prevalence of incentives: Abouleish looked at characteristics of academic anesthesia programs and found ≈71%
of programs surveyed had incentive program in 2003; number likely rising as pressures (governmental and institutional)
on departments increase
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| Inherent risks of incentives: diminish or remove intrinsic motivation; discourage creativity by providing incentives
only for conformity; short-term compliance may not be lasting (no culture change may occur); may encourage
individual pursuits at cost of team (ie, departmental) goals; can damage relationships among employees
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| Errant incentives: rewarding one behavior (may be deleterious) while actually hoping for another behavior; “gaming
the system” (delaying sales); wrong actions (eg, Vietnam mutineers)
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| Identify goals: examples include increasing clinical productivity, increasing academic productivity, and becoming
more involved in institution or departmental administration
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| Ability to achieve goals: make sure employees control necessary productive process to move towards goal, have
necessary skills to achieve goal, and that incentives adequate to get employees to move toward goal
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| Determine starting point: eg, frequency of cases canceled at end of day because of delays earlier in day
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| Identify goal: have fewer canceled cases due to OR delays; essential that final end point or goal be identified, otherwise
may lead to successful achievement of intermediate goals, while missing real goal
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| Steps to achieving goal: first, determine if goal can be achieved by anesthesia provider (ie, problem exists because
of anesthesia provider and can be overcome); if it can, then give individual broad goal of solving problem; reward
favored behavior (incentivize end point, not intermediate accomplishment)
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| Structuring incentives to obtain goals: essential components of successful incentive project include achievability,
effectiveness, significance of incentive, transparency, flexibility, reliability, and measurable outcome
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| Achievability: employees must have it in their power to reach desired goal; must believe they can achieve desired goal
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| Effectiveness: payout must be linear and related to ongoing good behavior (ie, as favorable behavior increases, reward
increases proportionally); capped incentives are disincentives (“nothing more to achieve”)
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| Significance of incentive: value of bonus payout must have sufficient significance (either absolute terms or percentage
of total income) to affect behavior; incentives cannot begin at point zero, but at reasonable level of expected
production
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| Transparency: clarify specific behavior being rewarded; necessary for perception of fairness
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| Flexibility: must be able to modify and adapt as departmental goals change; changes in incentive arrangement must be
public and clear to those who could receive incentive (otherwise there may be problems with transparency)
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| Reliability: payout must occur as promised, otherwise incentive has no value in coming years; “volatility in the payment
of incentives makes them no longer an incentive”
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| Measurable outcome: must quantify success to fairly distribute incentive payouts; different metrics give vastly different
results, even if they seem similar; incentives for clinical behavior—if number of clinical days used to determine
incentive payout, faculty show up more often but may not be productive (incentives for availability; no
accounting for difficulty of work performed or quality of care provided); if time units per day used to determine
incentive payout, unfair to OB anesthesia providers and ambulatory surgery centers; if American Society of
Anesthesiologists (ASA) units per OR day used to determine incentive payout, also punishes OB anesthesia and
ambulatory surgery center anesthesia providers; this criteria disproportionately rewards subspecialties who have
high base-unit inputs (outside of anesthesia provider’s control)
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| Commonly used metrics: clinical incentives—collectibles (total ASA units); academic incentives—point systems
or chairperson’s discretion
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| Clinical incentives: using billable hours (beyond predefined baseline) to reward faculty; variability of total compensation
(especially junior faculty) increased; difference between senior and junior faculty decreased; might
improve retention of junior faculty; impact on academic mission unknown
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| Academic incentives: 19 of 31 orthopedic departments had incentives for academic work; incentives most often determined
by point system or by chairperson
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| Multidimensional: more than one desired end point in anesthesia; challenge to balance competing concerns; danger
that providing incentives for everything equals providing incentives for nothing (no specific goal advanced)
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| Conclusion: incentive programs popular and potentially powerful, but not without risks; any new program or attempt
to modify existing program requires careful determination of departmental goals and clear understanding of
which behavior requires incentives
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Suggested Reading
Abouleish AE et al: The prevalence and characteristics of incentive plans for clinical productivity among academic
anesthesiology programs. Anesth Analg 100:493, 2005; Dexter F et al: Calculating institutional support that
benefits both the anesthesia group and hospital. Anesth Analg 106:544, 2008; Egger Halbeis CB et al: Anaesthesia
workforce in Europe. Eur J Anaesthesiol 24:991, 2007; Emery SE et al: Physician incentives for academic productivity.
An analysis of orthopaedic department compensation strategies. J Bone Joint Surg Am 88:2049, 2006;
Kapur PA: The impact of new-generation physicians on the function of academic anesthesiology departments.
Curr Opin Anaesthesiol 20:564, 2007; Mazzei WJ: Maximizing operating room utilization: a landmark study.
Anesth Analg 89:1, 1999; Miller RD et al: The impact of productivity-based incentives on faculty salary-based
compensation. Anesth Analg 101:195, 2005; Miller RD: Academic anesthesia faculty salaries: incentives, availability,
and productivity. Anesth Analg 100:487, 2005; Ramsay M: The new generation of graduating anesthesia residents:
what is the impact on a major tertiary referral private practice medical center? Curr Opin Anaesthesiol 20:568,
2007; Tremper KK et al: A demographic, service, and financial survey of anesthesia training programs in the
United States. Anesth Analg 96:1432, 2003; Tremper KK et al: Five-year follow-up on the work force and finances
of United States anesthesiology training programs: 2000 to 2005. Anesth Analg 104:863, 2007.
Educational Objectives
| The goal of this program is to examine economic trends in anesthesia departments and consider advantages
and disadvantages of an incentive program in anesthesia practice. After hearing and assimilating this program,
the clinician will be better able to:
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| 1. Review manpower issues and anesthesia revenue in the current marketplace.
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| 2. List current salary trends for certified registered nurse anesthetists and anesthesiologists.
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| 3. Summarize the role of stipends in compensating for inefficiencies in anesthesia care.
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| 4. Discuss the definition, prevalence, and inherent risks of incentives.
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| 5. Describe the parts of a successful incentive program and list commonly used metrics.
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Faculty Disclosure
In adherence to ACCME Standards for Commercial Support, Audio-Digest requires all faculty and planning committee members
to disclose relevant financial relationships within the past 12 months that might create any personal conflicts of interest.
Any identified conflicts were resolved to ensure that this educational activity promotes quality in health care and not a proprietary
business or commercial interest. For this program, the faculty and planning committee reported nothing to disclose.
Acknowledgements
Dr. Mazzei spoke in San Diego, CA, at Anesthesia Update 2008, held January 9-12, 2008, and sponsored by the University
of California, San Diego, School of Medicine, Department of Anesthesiology; Dr. Glick spoke in Chicago, IL, at the
21st Annual Conference, Challenges for Clinicians, held November 30 to December 2, 2007, and sponsored by the University
of Chicago Pritzker School of Medicine, Department of Anesthesia and Critical Care. The Audio-Digest Foundation
thanks the speakers and the sponsors for their cooperation in the production of this program.
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