Maximizing the Value of Your Payments to Hospital-Based Service - PowerPoint PPT Presentation

1 Maximizing the Value of Your Payments to Hospital-Based Service Providers LUIS A. ARGUESO, PARTNER, HEALTHCARE APPRAISERS ROBERT STIEFEL, MD, PRINCIPAL, ENHANCE HEALTHCARE CONSULTING

Speaker Backgrounds 2 Robert Stiefel, MD Luis A. Argueso  Board-Certified Anesthesiologist  Partner at HealthCare Appraisers  Co-founder of a large anesthesia management  Over 10 years of experience in company sold to Team Health healthcare valuation  Co-founder of Enhance  Head of Hospital-Based Services Healthcare Consulting with and Telemedicine Valuation extensive experience in service lines at firm Anesthesia services and OR Improvement

Learning Objectives 3  Outline the challenge associated with hospital-based service arrangements (HBSAs)  Understand the key components of HBSAs  Explore recent industry trends  Learn strategies for maximizing the value of your HBSAs  Synthesize concepts with a deep dive into anesthesiology HSBAs

Outlining the Challenge 4  Hospitals are required to maintain professional provider coverage of key service lines; examples include:  Anesthesiology  Emergency Medicine  Hospitalist Medicine  Costs have increased over time, with stagnant reimbursement  Increasing requests for financial support  Value-based payment requires closely-aligned providers

Understanding HBSAs: Services 5  Professional services involving MDs and advanced practice professionals (APPs)  Coverage secured through onsite & on-call availability  Sometimes accompanied with medical directorships  Traditional specialties: anesthesiology, emergency medicine, hospitalist medicine, and intensive care  Emerging specialties: neurology, orthopedic surgery, psychiatry, and trauma surgery

Understanding HBSAs: Payment 6 Options Fixed Subsidy Collections Guarantee  Fixed, regular payment  Payment amount fluctuates: based on the difference  Amount based on between cost and actual anticipated financial collections shortfall  Regular reconciliation  Can vary depending on service level (e.g., number  Often accompanied with of full-time providers, payment caps number of covered locations, volume of patient encounters)

Developing Industry Trends 7  Consolidation of physician provider groups  Decreased hospital volumes (especially inpatient services)  Changes is medical professional workforce:  Increased utilization of APPs  Shortage of physicians (and CRNAs)  Unwillingness among providers to cover hospitals  Emergence of telemedicine  Greater share of reimbursement tied to outcomes and quality measures

Strategies for Maximizing Value: 8 Payment Structure  Each payment option comes with pros and cons  Subsidies: ease of administration, incentives to collect, overpayment risk  Collections guarantees: reconciliation required, limited incentive to collect, limited overpayment risk  Contract terms can address shortcomings of each  Example: Hospital payment caps in collections guarantee arrangements  Example: Avoiding automatic escalators in subsidies

Strategies for Maximizing Value: 9 Coverage Levels  Detailed vs. Vague coverage requirements  Example: 24/7 availability with sufficient providers vs. specific coverage schedules with locations/hours of coverage  Balancing flexibility with a contract that can be efficiently administered  Evaluating the utilization of APPs  Comparing staffing to industry benchmarks

Strategies for Maximizing Value: 10 Provider Compensation  Delving into compensation benchmarks  Understand the differences between surveys  Matching compensation to the level of service:  Hours of coverage  Volume of patient encounters  wRVUs  Understanding the local marketplace

ANESTHESIOLOGIST COMPENSATION SURVEYS 11 Compensation Data Anesthesiologists as of September 2017 All annual compensation data rounded to the nearest $1,000 National Base Compensation (all data) Survey n Mean 25th Percentile Median 75th Percentile 90th Percentile AMGA 1,667 $ 423,000 $ 357,000 $ 416,000 $ 472,000 $ 543,000 Hospital and Healthcare Comp Service 1,020 $ 382,000 $ 349,000 $ 386,000 $ 405,000 $ 448,000 MGMA 2,626 $ 449,000 $ 363,000 $ 441,000 $ 533,000 $ 661,000 Sulluvan Cotter 2,482 $ 401,000 $ 344,000 $ 396,000 $ 450,000 $ 510,000 Towers Watson 1,219 $ 354,000 $ 335,000 $ 377,000 $ 414,000 $ 453,000 Average $ 401,800 $ 349,600 $ 403,200 $ 454,800 $ 523,000 Low $ 354,000 $ 335,000 $ 377,000 $ 405,000 $ 448,000 Median $ 401,000 $ 349,000 $ 396,000 $ 450,000 $ 510,000 High $ 449,000 $ 363,000 $ 441,000 $ 533,000 $ 661,000

CRNA COMPENSATION SURVEYS 12 Compensation Data CRNA's as of October 2017 All annual compensation data rounded to the nearest $1,000 National Base Compensation (all data) Survey n Mean 25th Percentile Median 75th Percentile 90th Percentile AMGA 1,790 $ 182,000 $ 158,000 $ 180,000 $ 197,000 $ 222,000 Hospital and Healthcare Comp Service 529 $ 166,000 $ 159,000 $ 166,000 $ 172,000 $ 182,000 MGMA 1,964 $ 173,000 $ 150,000 $ 175,000 $ 197,000 $ 209,000 Sulluvan Cotter 2,337 $ 175,000 $ 165,000 $ 175,000 $ 184,000 $ 199,000 Towers Watson 8,234 $ 138,000 $ 155,000 $ 166,000 $ 179,000 $ 195,000 Average $ 166,800 $ 157,400 $ 172,400 $ 185,800 $ 201,400 Low $ 138,000 $ 150,000 $ 166,000 $ 172,000 $ 182,000 Median $ 173,000 $ 158,000 $ 175,000 $ 184,000 $ 199,000 High $ 182,000 $ 165,000 $ 180,000 $ 197,000 $ 222,000

Strategies for Maximizing Value: 13 Professional Collections  Evaluating collections benchmarks  Understand the drivers of revenue cycles for the various specialties  In-network vs. Out-of-network pros and cons  Impact of APP utilization  Payor consolidation and provider leverage

Strategies for Maximizing Value: 14 Miscellaneous  Meaningful and targeted quality metrics  Effective medical director/administrative service terms  Practice overhead benchmarking: management fees and profit margins  Termination provisions (e.g., without cause notice periods)  Rights to audit financials

ANESTHESIA SUBSIDY DRIVERS 15 THE “FOUR LEGS” CONTROL FAIR MARKET VALUE COMPENSATION SUPPLY AND DEMAND REQUIRED ANESTHETIZING LOCATIONS HOSPITAL STAFFING MODEL GROUP BILLING/CONTRACTING GROUP PERFORMANCE

Anesthesiology Deep Dive: Provider 16 Compensation  Survey differences related to anesthesiologist and CRNA compensation benchmarks  What percentile should I select?  Comp surveys must be trued up to local market reality, workload, responsibility  California, Alaska or Wisconsin? All physician, care team or all CRNA?  CRNA compensation rising rapidly, recent trend to a “mercenary” model – work for the highest bidder of the day  Compensation models often include portions allocated to:  Base salary  Productivity – structured as a fixed pool - Beware of production data shortcomings  Incentive metrics  Part of the overall group compensation is “overhead” – increasing rapidly with large national groups

ANESTHESIA PERFORMANCE METRICS FRAMEWORK 17 1. Prime time OR Utilization 1. PQRS Overall Compliance 2. Anesthesia related first 2. Total outcome indicators case delays (GHA report) 3. DOS Cancellations 3. Short term pain management 4. Close to out of OR 4. Actual post op temperature Clinical OR Quality Efficiency Customer Expense Satis- Manage- faction ment 1. Average IP LOS total 1. Surgeon Satisfaction joints and CV 2. Patient Satisfaction 2. Anesthesia supply 3. Peri-operative Staff cost/case Satisfaction 3. Anesthesia med cost 4. TJC/DNV anesthesia issues per GA on last survey

Anesthesiology Deep Dive: 18 Required Locations Hospitals have control  Coverage and service creep – each adds expense, how much incremental pro-fee revenue?  Out of OR – endo, IR, neuro-interventional, EP etc.   Trauma Centers of excellence  Free providers for blocks, pre-ops etc.  Utilization  Coverage provisions in agreements:  Define locations and call  Additional coverage   OT Allocation in expense calculation  Hourly  “Accordion” for +/ - fixed locations

OR UTILIZATION 19 July 2017 - June 2018 7A-3:30P 3:30P-5P 5P-7P 7P-Midnight Midnight-7A Minutes 562,804 32,580 22,722 16,077 8,297 Surgery Hours 9,380 543 379 268 138 Anes Staffed Locations 11 5 5 2 1 Business Days 253 253 253 253 253 Total Shift Hours 23,656 1,898 2,530 2,530 1,771 Hrs/Staffed OR/day 3.4 0.4 0.3 0.5 0.5 Shift Utilization (%) 39.7 20.4 10.69 10.6 7.8 July 2018 - Aug 2018 7A-3:30P 3:30P-5P 5P-7P 7P-Midnight Midnight-7A Minutes 113,496 6,268 5,457 4,122 1,327 Surgery Hours 1,892 104 91 69 22 Anes Staffed Locations 11 5 5 2 1 Business Days 44 44 44 44 44 Total Shift Hours 4,114 330 440 440 308 Hrs/Staffed OR/day 3.9 0.5 0.4 0.8 0.5 Shift Utilization (%) 46 22.6 14.8 15.6 7.2 *All Mon-Fri Business Days (Holidays and Weekends Excluded) – OR only, includes all cases