Opportunities for Operational Efficiency in Anesthesia Services
January 12, 2023
Despite Anesthesia Services’ importance in managing patients (safety, outcomes) and the operating room, a suboptimal and non-collaborative relationship often exists between anesthesia group and hospital administration. Collaborative problem solving, decision-making and communications do not occur on a regular basis. A shortage of anesthesia providers further magnifies the complex operational challenges.
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In this article, anesthesia staff-shortages are quantified, operational challenges identified and solutions provided. The latter includes an evaluation of contracts, service and clinical quality, resource utilization and operational efficiency. Despite the changing landscape, opportunities exist to improve quality of care while reducing cost.
Aging Population and Increased Demand for Surgery and Alteration of Payer Mix
The U.S. population aged 65 and older is forecast to increase from 56.1 million in 2020 to 73.1 million in 2030, reflecting a compound annual growth rate of 2.8%.1 The demand for surgery increases with age.2 The need for anesthesia services parallels that of surgical procedure growth.3
Between 2020 and 2030, the government share of insured lives, Medicare and Medicaid increases from 40.7% to 43.4% (270 basis points).4 Although the enrollment change is incremental, its significance on operating margins is more pronounced, given the disparity in reimbursement.
Consolidation of Practices and Staff Shortages
Independent physician practices are disappearing as hospitals and health systems, payers and private equity firms purchase them. As of January 2021, 36.3% (296,500) of physicians engaged in patient care were employed by hospitals.5,6 Another 15.2% (124,200) were employees of corporate entities, including private equity.7,8
More specifically, 42,267 anesthesiologists operate in the United States, with 39,377 involved in patient care and the remainder in teaching, research, and other capacities.9 More than half of anesthesiologists (23,059: 54.6%) are older than 55, and 17.9% (7,572) are older than 65, the latter at risk for near-term retirement.10 Shortages of anesthesiologists have been reported, especially for non-OR ambulatory (“NORA”) procedures. The American Academy of Medical Colleges (“AAMC”) projects a shortage of 12,500 anesthesiologists — nearly 30% of current staffing levels — by 2033.11
Staff shortages have also been reported for certified registered nurse anesthetists (“CRNAs”). According to the National Board of Certification & Recertification for Nurse Anesthetists (“NBCRNA”), there are 56,000 CRNAs in the United States.12 With approximately 2,400 CRNAs graduating each year, current shortages are likely to abate by the end of the decade (despite attrition and retirements).13
Lagging Value-Based Care
Value-based care (“VBC”) models are designed to offer incentives to providers for controlling medical spend while improving outcomes and health equity. These models target significant variation among hospitals and providers in the rate of complications and mortality.14 VBC implementation is lagging, though leading academic medical centers have established Centers for Perioperative Care.15 Anesthesia has a critical and growing role in procedural bundled payments and can be measured via time-driven activity-based costing.16
The Anesthesiology Performance Improvement and Reporting Exchange (“ASPIRE”) consists of 23 process and outcome measures.17 Implementation can reduce variation and results in measurably improved outcomes.18 Other quality-oriented interventions by anesthesiologists include preoperative optimization, procedural standardization, segmentation by risk and complexity, the adoption of best practices and perioperative pain management.19
Evident Operational Challenges
As a key clinical function led by and comprising highly skilled clinicians, Anesthesia Service often presents challenges to senior hospital executives for a variety of reasons:
- The anesthesia team provides services to multiple specialty-procedure areas within a hospital, including Operating Rooms, Labor and Delivery (“L&D”), Gastrointestinal Laboratory (“GI-Lab”), Cardiac Catheterization Laboratory (“Cath-lab”), Electrophysiology Laboratory (“EP-Lab”), Interventional Radiology (“IR”) and certain Diagnostic Radiology procedures as needed, as well as Ambulatory Surgical Centers. Each area has its unique workflow, care-demand pattern and coverage requirement. The corresponding managerial complexity can be overwhelming.
- The lack of data transparency impedes the thorough understanding of the anesthesia group’s performance. Systematic evaluation of the quality and efficiency of anesthesia services compels the hospital administration to compile and be able to construe multiple sets of clinical, operational, and financial data. The collection of data itself is sometimes a daunting task, not to mention the analysis and accurate interpretation. Quite often, the rationale of a request-to-expand subsidy can be very difficult to evaluate and justify.
- The management of Anesthesia Services tends to be heavily political and involves years, if not decades, of evolving partnership between the hospital and the service providers. The ever-changing regulatory, reimbursement and market environments further intensify the difficulty in exploring improvement opportunities.
FTI Consulting Health Solutions has developed a unique approach to thorough assessment of service, value and quality to assist hospital executives in addressing improvement opportunities in Anesthesia Service’s operational efficiency, managerial effectiveness and financial performance. The Health Solutions project team comprises an anesthesiologist, procedural service Subject Matter Experts (“SME”), a business analyst and revenue-cycle specialist. The scope of the services includes but is not limited to:
- Contract evaluation and negotiation support | Subsidy review, compensation, coverage, performance targeting
- Service quality to perioperative service | Pre-admission testing, operating rooms, post-anesthesia care unit
- Service quality to non-operating-room areas | L&D, GI-Lab, Cath-Lab, EP-Lab, IR
- Resource utilization | Staffing models, staffing ratios, non-primetime coverage
- Operational efficiency | Patient throughput, response time
- Leadership and collaboration | Partnership with hospital administration and clinical operation management team
- Clinical quality | Reintubation, prolonged stay in the recovery room
FTI Consulting’s nimble, highly specialized team can meet your imminent needs for budgeting, contract renewal and performance improvement with innovative strategies that have helped many organizations attain their operational and financial goals and objectives.
1: Jonathan Vespa, Lauren Medina, and David M. Armstrong, “Demographic Turning Points for the United States: Population Projections for 2020 to 2060,” U.S. Census Bureau (revised February 2020), https://www.census.gov/content/dam/Census/library/publications/2020/demo/p25-1144.pdf.
2: David Etzioni, Jerome Liu, Melinda Maggard, Clifford Ko. “The Aging Population and its Impact on the Surgery Workforce.” Annals of Surgery (August 2003). https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1422682/#:~:text=In%20the%20near%20future%2C%20the,without%20sacrificing%20quality%20of%20care.
3: “Anesthesiology: Supply, Demand and Recruiting Trends.” Merritt Hawkins. (2021). https://www.merritthawkins.com/uploadedFiles/anesthesiology-white-paper-merritt-hawkins-2021.pdf.
4: National Healthcare Expenditures, Health Insurance Enrollment and Enrollment Growth Rates, Table 17. Center for Medicare and Medicaid Services (last visited December 13, 2022) https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.
5: “PAI-Avalere Health Report on Trends in Physician Employment and Acquisitions of Medical Practices: 2019-2021,” Physicians Advocacy Institute (last updated August 10, 2021), http://www.physiciansadvocacyinstitute.org/PAI-Research/Physician-Employment-and-Practice-Acquisitions-Trends-2019-21.
6: ”Physician Specialty Data Report: Active Physicians in the Largest Specialties, 2019,” Association of American Medical Colleges (AAMC) (last visited November 18, 2022), https://www.aamc.org/data-reports/workforce/interactive-data/active-physicians-largest-specialties-2019.
7: “PAI-Avalere Health Report on Trends in Physician Employment and Acquisitions of Medical Practices: 2019-2021,” Physicians Advocacy Institute (last updated August 10, 2021), http://www.physiciansadvocacyinstitute.org/PAI-Research/Physician-Employment-and-Practice-Acquisitions-Trends-2019-21.
8: ”Physician Specialty Data Report: Active Physicians in the Largest Specialties, 2019,” Association of American Medical Colleges (AAMC) (last visited November 18, 2022), https://www.aamc.org/data-reports/workforce/interactive-data/active-physicians-largest-specialties-2019.
10: ”Physician Specialty Data Report: Active Physicians by Age and Specialty, 2019,” Association of American Medical Colleges (AAMC) (last visited November 18, 2022), https://www.aamc.org/data-reports/workforce/interactive-data/active-physicians-largest-specialties-2019.
11: “The Future of Anesthesiology: How Anesthesiologist and CRNA Shortages Are Making an Impact,” Medical Business Management (February 4, 2021), https://mbmps.com/the-future-of-anesthesiology-how-anesthesiologist-and-crna-shortages-are-making-an-impact/.
12: “History. About the NBCRNA.” National Board of Certification & Recertification for Nurse Anesthetists,” (last visited October 21, 2022), https://www.nbcrna.com/about-us/history.
13: “What Healthcare CFOs Should Know About the CRNA Shortage,” Ringo Blog (last visited November 18, 2022), https://www.goringo.com/blog/what-healthcare-cfos-should-know-about-the-crna-shortage.
14: Sylvain Boet, et al. “Anesthesia interventions that alter perioperative mortality: a scoping review.” Systematic Reviews. (November 30, 2018). https://systematicreviewsjournal.biomedcentral.com/articles/10.1186/s13643-018-0863-x.
15: Aman Mahajan, Stephen A. Esper, Daniel J. Cole, and Lee A. Fleisher, “Anesthesiologists’ Role in Value-based Perioperative Care and Healthcare Transformation,” Anesthesiology, Vol. 134, 526–540 (April 2021), https://pubs.asahq.org/anesthesiology/article/134/4/526/115421/Anesthesiologists-Role-in-Value-based.
16: Katy E. French, Alexis B. Guzman, Augustin C. Rubio, John C. Frenzel, and Thomas W. Feeley, “Value based care and bundled payments: Anesthesia care costs for outpatient oncology surgery using time-driven activity-based costing,” Healthc (Amst)., 4(3), 173–180 (September 2016), https://pubmed.ncbi.nlm.nih.gov/27637823/.
17: Patrick J. McCormick, Cindy Yeoh, et al., “Improved Compliance with Anesthesia Quality Measures After Implementation of Automated Monthly Feedback,” Table A1. Journal of Oncology Practice, 15(6), e583–e592, (June 2019), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6565385/.
19: Aman Mahajan, Stephen A. Esper, Daniel J. Cole, and Lee A. Fleisher, “Anesthesiologists’ Role in Value-based Perioperative Care and Healthcare Transformation,” Anesthesiology, Vol. 134, 526–540 (April 2021), https://pubs.asahq.org/anesthesiology/article/134/4/526/115421/Anesthesiologists-Role-in-Value-based.
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