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MDSG Case Comp Final (Slides)
- 1. Moving Forward: Optionsfor Akron-Canton Cardiac Anesthesiologists Gabe Gan Suzanne Kirkendall Derek Fine Steven Hefter Michael Novello Columbia University Mailman School of Public Health October 29, 2016
- 2. 2 Agenda • Objectives • Trendsin the anesthesiology space • Evaluation of growth options • Recommendations
- 3. 3 Objectives To address: • Internalorganization & 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’
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- 5. 5 Acquisition by NationalAnesthesia 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 aVenture 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 bySt. 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 - Allowsprofit 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 CantonAnesthesiology 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
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- 12. 12 Payment Model forACCA-CAA Merger
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- 14. Potential for FutureExpansion 14
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Editor's Notes
- #4 Issues: largely related to payment/work disparities, so this needs to be addressed
- #5 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
- #10 Retains profit-sharing system and clinical responsibilities (at both SFH and Holy Name)
- #11 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
- #14 -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
- #15 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