Why Do Some Facilities Pay a Stipend for Anesthesia?

by | Sep 21, 2016

Here’s the easy answer:  The cash collected from anesthesia is less than the cost of the anesthesia providers staffing the facility.  But why?  Keep reading and you’ll understand why anesthesia-related costs may outweigh the revenue generated.

When it comes to the volume of surgical cases performed, the type and complexities of those procedures, and the payer mix, every facility is different.  A certain case volume increase should decrease the subsidy or stipend payments. Another important piece of the revenue puzzle is the payer mix at your facility. The payer mix is driven by the demographics of the region your facility serves. Commercial cases generally provide twice as much revenue as Medicare cases, and about two and a half to three times more than Medicaid cases.  Self-pay or charity cases can be difficult, and often impossible to collect upon, unless payment is requested before surgery—which is usually not an option in emergency situations. Understanding the facility case and payer mix is a critical component of the subsidy equation, as this is a significant driver of anesthesia revenue.

A third piece of the puzzle directly related to revenue is the technology your anesthesia team uses to collect the revenue it generates.  Inefficient revenue cycle management should not be a significant factor in the stipend your facility pays.  Outsourced anesthesia services should have a revenue cycle management solution in place with the goal of maximizing the cash received from the case volume and payer mix your facility generates.

Keeping in mind that both sides of the revenue equation can be used to lower a given stipend scenario, let’s turn our focus away from the revenue side of the equation and toward the cost side.  A large part of a facility’s global expense usually supports staffing the anesthesia department.  As a result of ongoing downward pressure to cut costs and reduce operating overhead, many facilities are transitioning their anesthesia staffing model as a cost-savings measure. Rather than the traditional medical direction model where a department is staffed with one anesthesiologist for every four CRNAs, a supervision model is implemented where one anesthesiologist may supervise as many as seven CRNAs. This is compliant with Medicare guidelines for medical supervision, as well as other regulatory bodies. Since the cost of a CRNA is often less than half the cost of an anesthesiologist, and given the rising cost of healthcare, many hospitals are opting for staffing models that incorporate more CRNA autonomy. As such, the choice and mix of anesthesia providers can lower and possibly eliminate a stipend due to the significant reduction in operating expenses.

Many hospitals make a commitment to the communities they serve to be prepared at all times to provide care for emergency surgeries and/or obstetrical deliveries.  This level of commitment comes at a cost.  If your facility has an emergency team available 24/7, the cost will likely outpace the volume of surgery and any collections associated with the delivery of services. It will be necessary, in most situations, for the cost of these emergency services to be supported, in part, or completely, by hospital subsidy.

In evaluating financial models for healthcare facilities, it is important to pay attention to both revenue and expense. In order to lower the facility subsidy, you must either increase revenue, lower cost, or present a plan that does both. Consequently, a declining revenue or an increasing cost will increase the subsidy and potentially require renegotiation of the agreement. DPI monitors these trends on a regular basis and apprises hospital administration of changes, whether positive or negative, to maintain trust and a positive relationship.