The document discusses options for the future direction of Akron-Canton Cardiac Anesthesiologists (ACCA). It analyzes the advantages and challenges of 5 options: 1) acquisition by a national anesthesia group, 2) selling to a venture capital firm, 3) being absorbed by St. Frederick Hospital, 4) remaining independent, and 5) merging with Canton Anesthesiology Association (CAA). The document recommends merging with CAA due to retaining the profit-sharing system, lowering overhead costs through economies of scale, and potential for future expansion within the hospital system. However, it notes challenges include merger costs and different payment systems between the groups.
1. Moving Forward: Options for
Akron-Canton Cardiac Anesthesiologists
Gabe Gan
Suzanne Kirkendall
Derek Fine
Steven Hefter
Michael Novello
Columbia University Mailman School of Public Health
October 29, 2016
3. 3
Objectives
To address:
• Internal organization & operation of ACCA, including resolving
issues between CAs and NCAs
• Direction of ACCA as an entity, including a full analysis and
specific recommendations regarding the potential ‘pathways to
the future’
5. 5
Acquisition by National Anesthesia Group1
Advantages
- Injection of capital
- Increased bargaining
power in negotiation of
reimbursement rates
- Financial security against
downward trends in
marketplace
Challenges
- Loss of autonomy
- Decreased pay for all
shareholders over time
- Less long-term financial
security for junior
shareholders
6. 6
Sell to a Venture Capital Firm2
Advantages
- Leadership at top of firm
remains in place
- Can hire management
consultants to resolve
internal conflicts
- Injection of capital for
reinvestment in ACCA
Challenges
- Fails to directly address
internal conflicts
- Heavy focus on profit
margin could lead to
dilution of quality of care
7. 7
Be Absorbed by St. Frederick Hospital3
Advantages
- ACCA and SFH
administration are already
linked
- Doctors maintain same
roles within hospital
- Provides stability against
changes in marketplace
Challenges
- No injection of capital
- SFH’s position within
larger CHS network may
cap earning potential
- ACO model provides
incentive for SFH to reduce
physician compensation
8. 8
Remain Independent4
Advantages
- Allows profit allocation
issues to be adequately
addressed
- Preserves ACCA’s
autonomy and doesn’t
jeopardize ties with SFH
Challenges
- Fails to follow market
trends
- Better-funded groups
could outcompete ACCA in
local market
- No injection of capital
9. 9
Merge with Canton Anesthesiology
Assoc. (CAA)5
Advantages
- Retains profit-sharing
system and clinical
responsibilities
- Lowers overhead due to
economies of scale
- Offers potential for future
expansion within CHS
hospitals
Challenges
- Merger costs, including
M&A consulting,
accounting, and legal
- Different payment
systems
Issues: largely related to payment/work disparities, so this needs to be addressed
Changes in Payor Agreements and Reimbursement
The movement from fee-for-service to quality measures is now driving payer agreements for all providers, including anesthesiology. The necessity of following Physician Quality Reporting System (PQRS), Meaningful Use, and other quality reporting data is paramount in capturing meaningful and validated patient data. Not only is this data dependent upon maximizing reimbursement for services rendered, but also on reporting the quality of the anesthesia service to hospitals, patients, the community, and the government. The challenge is for the healthcare facility, and all the physicians and providers involved with patients care, to have a common platform for data collection and retrieval. Proper understanding of the various reimbursement models (fee-for-service, quality measures, conversion factor, percentage of Medicare or combinations) are necessary to maximize reimbursement and control hospital subsidies to anesthesia groups.
Subsidies Under Intense Hospital Review
Hospitals and health systems have a history of providing subsidy support payments to private anesthesia practices. These payments were made for a number of reasons including: issues associated with poor operating room utilization, poor payor mix, provision of in-house coverage (both unrestricted and restricted), and historical agreements that haven’t been updated or reviewed.
Today, these subsidies are reviewed more stringently for their economic value, viability, and contribution to the hospital. Paying solely for “access” is quickly falling out of favor as hospitals focus their payments around numerous operational and quality initiatives such as: the establishment of guidelines for on-time starts, block assignment and utilization, perioperative readiness for surgery standards, operating room efficiency and room turnaround, PACU support, and post operative follow-up. Hospitals that are willing to continue supporting anesthesia service are implementing these measures to build strong patient utilization, tie hospital reimbursement to support payments (e.g., varying stipend based upon patient satisfaction) and successful outcomes, thereby allowing for lower subsidies to the anesthesia group.
Increased Practice Mergers and Acquisitions
In these purchases, senior board members and partners receive seven-digit checks to sell their practice, then all physicians in the practice’s future labor for a discounted wage, perhaps as low as 50% of the prior income. If this trend becomes widespread, this subset of the anesthesia workforce will become low paid practitioners, while the purchasing corporations will make significant profits for their stockholders.
Use of CRNAs and the Anesthesia Care Team
Hospital systems will have increased incentives to perform anesthetics with cheaper labor. Rather than physician anesthesiologists personally performing anesthesia, expect to see CRNAs supervised by physician anesthesiologists in an anesthesia care team, or in some states, CRNAs working alone.
EMR and Quality:
The amount of man hours it takes to design and appropriate the EMR are staggering, given the high costs. However, it helps us improve quality data and collection because we can see the information from a patient's record. It's well worth our time to create that bridge, especially in situations where we need to figure out what went wrong. Smaller groups have a harder time with this due to lack of resources, which is why we are seeing a shift in our industry towards consolidation.
More Care Management
Retains profit-sharing system and clinical responsibilities
(at both SFH and Holy Name)
Personnel: Many physicians from two groups know each other from residency and anesthesia meetings, in addition to the CAs already working at Holy Name
Management: Current working arrangements and clinical responsibilities unchanged - ACCA will cover only SFH (w/ CA also covering Holy Name), CAA will cover Holy Name
Mid-Level Protocols: Neither practice uses CRNAs. Similar midlevel staff structures
Operational Infrastructure: Same practice locations and procedures with lower overhead costs due to pooled resources and increased leverage
Relationships with Professional Service Providers: Long-standing ties and relationships with own hospitals and area resources, now with increased leverage due to new size of practice
Compensation System: “Take it away, Steven!”
Q+A
Things to know: steps if merger has to be dissolved.
Non-compete clauses
-Shared experiences: residency, anesthesia meetings, ACCA already does CA staffing at Holy Name.
-Operating philosophies: not CRNAs
-However, ACCA needs to restructure this anyway so both groups will be fairer
Shared experience facilitates an easier merger
Similar operating philosophies
President-Emeritus Dr. Barnes strongly supports this option, which reduces internal discord within ACCA
Only major difference is compensation systems
Market Trends for Hospitals: Across the country, many institutions are closing, while those remaining have serious financial concerns
Within the Akron-Canton Catholic Hospital System, only St. Frederick and St. John’s are consistently solvent
There are concerns that ACCA-CAA has too many longstanding ties and relationships with own hospitals to expand, but standing connections within the CHS only help negotiate a mutually beneficial deal with the hospital system. Increased leverage with large presence in ⅓ of the
The practice that helped St. Frederick rank among top 10 US hospitals in cardiology and heart surgery and earned SFH the ‘best reputation for quality and the highest patient satisfaction in the CHS can help hospitals like St. Mary’s, Sacred Heart, and Mercy stay profitable and provide top of the line anesthesiology care
ACCA-CAA becomes involved in the financial health of the hospital system while remaining an autonomous private practice