As a general rule, the top 20 percent of surgeons generate 80 percent of the cases. While this 80/20 rule is typical, it bears careful analysis. A surgeon who performs 10 percent of all cases may or may not produce 10 percent of the practice’s collections. In other words, to evaluate the value of a particular surgeon, one must assess at least five key factors.
- Case volume and consistency of production
- Acuity of care as in average units per case
- Payer mix and average yield per billed anesthesia unit
- Net yield per hour of care and anesthesia profitability
- Value to administration
Surgeon Production Patterns
While many surgeons perform cases at a given facility, it is usually the top 20 or 25 that perform the majority of cases. These are the ones on whom the administration relies for its revenue. The rest help fill the schedule and, hopefully, enhance the overall profitability of the facility. Anesthesia practices are well advised to review the list of these key surgeons on a periodic basis to track those ramping up, those maintaining their volume and those winding down. The most useful report monitors average cases or ASA units attributed to each by month over time. While there may be some seasonal fluctuations, the key is the overall trend. It can be particularly helpful to flag each surgeon based on the overall pattern. Any surgeon whose overall production pattern is declining should be clearly assessed. The worst thing that can happen is a surgeon who has started taking cases to a competitive facility.
The chart below is an example of case volumes by month and by surgeon for calendar 2023. It is evident that there is considerable variability by month, which is typical of seasonal variations. In looking at data for just one year, 14 of the surgeons have seen their average case volume increase over the twelve months while 11 have seen a decline in average monthly production. What is particularly significant is that three surgeons have seen their monthly volume drop significantly from the first four months to the last four months by more than 15 percent.
Acuity of Care
Anesthesia gets paid based on billable units. No two cases are the same. A CABG cannot be compared to a D&C. Inpatient cases generally generate more billable units than outpatient cases. On average outpatient cases are worth at least 2 units less than inpatient cases. So, as the number of billable units declines, so too does the revenue potential. As the volume of endoscopies grows (as it has been doing for many practices), the number of billable units per case declines.
The Impact of Payer Mix
The second factor determining the revenue potential of a practice is payer mix. Ultimately, the primary factor that determines the need for financial support from the facility is net yield per billed unit. Obviously, the impact of Medicare and Medicaid is particularly significant given how discounted their rates are. Most practices have been experiencing a one percent increase in their Medicare population per year. Unless the practice has been able to increase its commercial rates the net impact has been a decrease in yield per unit. While this may have affected all surgeons equally, there may be notable exceptions. This explains why some surgeons produce considerably more revenue than others. It also explains why the loss of one surgeon’s cases can have a dramatic impact on practice revenue.
A particularly useful tool is to track net yield per ASA unit by surgeon over time.
Net Yield Per Hour of Anesthesia Time
Ultimately, every practice is looking to enhance its profitability. The question is whether the revenue generated per hour of care covers the cost of providing the care. While many practices track their net yield per billed unit, the data allows for a variety of calculations that may prove quite useful. Key among these is the calculation of the net yield per hour of clinical care. This may help identify the most valuable surgeons and those who might merit a higher level of service or special consideration, such as split rooms.
The table below provides an example of useful metrics for evaluating the significance of the top 25 surgeons for calendar 2023. It is important to note that yield calculation is best performed based on date of service with at least a six-month lag. Overall practice metrics are somewhat lower than these.
Value to Administration
While it is true that the ultimate objective of every facility is profitability, strategic plans vary considerably; and it is particularly important that the anesthesia department align its clinical and financial objectives with those of the institution. As administrators seek to distinguish themselves in the market, they may strive to offer services that other facilities do not. Some of these, such as stroke care and neonatal care, may not be very profitable for anesthesia. They are just part of the package. As business partners, however, anesthesia should use its data to help frame the issues. As is true of any good marriage, the opportunity lies in accentuating the positive and finding ways to minimize the challenges.
Relevance
Why does this matter? In the past, many anesthesia practices prided themselves on their independence. They refused to share any information about collections and provider compensation with administration, but those days are over. As most practices now have to negotiate contracts with subsidy payments from the facility, we have moved to a focus on partnership and collaboration. Anesthesia departments now have more and better data about what actually happens in the operating rooms than any other source. And, thanks to the database that Coronis maintains, it is more accessible and easier to mine. This is now one of every department’s greatest assets as they strive to demonstrate their value as a business partner.
As is true of the management of an anesthetic case, the key to managing a practice is to monitor trends over time and to identify opportunities for process improvement. Understanding the true value of surgeon production patterns can prove especially relevant to the enhancement of profitability for both the anesthesia department and the facility. Of particular relevance are issues related to call coverage and the need for split rooms for key surgeons.
Anesthesia practices may often feel helpless and captive to the demands of the O.R. team and administration, but this need not be the case. As Jeff Bezos is often quoted as saying, data is king. The person with the most and the best data ultimately wins.