Are you paying a fair anesthesia subsidy?


The simple truth is more than 95% of hospitals pay a subsidy (either directly or indirectly) for their anesthesia services. The subsidy is necessary because of several reasons, but here are three contributing factors that usually play a role in the subsidy requirement:

  • Third-party reimbursement for anesthesia service is insufficient to cover the cost of the service and, in today's reimbursement climate, it's unlikely that we will see any movement from third-party payors to address this issue.

  • Most anesthesia practices have not built the necessary management infrastructure of tools and processes, nor do they have the business acumen to effectively and efficiently manage a practice that is facing so many internal and external challenges caused by healthcare reform initiatives.

  • Low provider productivity is a significant contributor to high subsidies: Anesthesia providers are some of the most highly compensated healthcare providers in the industry today. Yet, it's not uncommon for providers to be only 45 to 55 percent productive. Many factors affect provider productivity, some the practice can control, some it can't. Hospital leadership and Anesthesia practice leadership should collaborate on a routine basis to identify and address operational barriers and system obstacles that impact provider productivity. At least 70 to 75 percent of a provider's time should be productive/billable hours.

The real question hospital administrators should be asking is "Am I paying the RIGHT subsidy?" The answer is very commonly NO. Premier Anesthesia has performed a number of consulting engagements with hospitals to evaluate subsidies (learn more about our consulting services) and we've discovered the typical hospital can reduce its subsidy by 10-25% without negatively impacting patient care outcomes, while still providing surgeons with room access and availability to meet their surgical case volume on a timely and efficient basis.

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