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Cutting Anesthesia Costs Starts with a Battle

 |  By Philip Betbeze  
   March 21, 2013

This article appears in the March 2013 issue of HealthLeaders magazine.

If your hospital or health system is currently using an all-physician anesthesia group, this might be a ripe opportunity to cut costs without compromising patient safety, say many advocates.

The issue of whether hospitals can be reimbursed by CMS for using unsupervised certified registered nurse anesthetists is a contentious one, but it has been decided since 2001, when a Medicare and Medicaid regulation change allowed states to opt out of a requirement that nurse anesthetists be supervised by an anesthesiologist. Some 17 states have done so, but even in states that haven't, many chief executives could achieve significant savings by creating anesthesia care teams with anesthesiologists in a central, supervising role. But it's tough and fraught with potential discord, not least because of surgeon resistance, but also because of the persistence of legacy all-physician anesthesiology groups.

Yet the conversion to CRNAs can, and in many cases, must be done, says Preston Simmons, chief operating officer and interim CEO with Providence Regional Medical Center in Everett, Wash. Providence Regional, a 491-bed, acute-care hospital that is part of the Providence Health & Services' 37 acute care ministries in West Coast states, changed to a "care team" approach in 2011.

"It really boiled down to alignment with where we needed to go as a hospital and a community," he says. "Our model was very costly, and the existing group was not aligned around creating a value equation for us. What I mean by that is that it was us having to push them along as opposed to them pushing efficiency and effectiveness."

That it's expensive for many hospitals to offer an all-physician anesthesia team to its surgeons is unquestionable. Anesthesiologists on the whole say that all-physician anesthesia means better-quality care, and it's still a dominant model. But as in most contentious subjects, the truth can depend on the particular circumstance or situation.

Simmons says Providence leadership had tried for years to align the legacy anesthesiology group with quality and service goals, to little avail.

"This group had a multimillion-dollar subsidy and not as comprehensive coverage as we would like. We asked them to look at different models that could create more value while reducing cost, but they struggled to do that," says Simmons.

Among the models that Simmons asked the legacy group to consider was a model that included CRNAs as a way to provide more locations and more coverage outside the OR at a lower cost per encounter. Other ideas included monitoring of quality and safety data and standardization of processes.

"It got to a point where they chose not to change models, despite a lot of the hospitals in the state and around the country using a CRNA model," he says.

Hardball tactics followed.

"We mutually talked and said, 'Okay, what we want to do is an RFP,' " Simmons says. "We did that and the day after we sent that out, they gave us a 90-day termination notice because they were trying to force us to sign a contract."

Essentially, within 90 days, Providence Regional had three bad choices: Incorporate an entirely new anesthesia group into practice, sign a new contract with the legacy group at unfavorable terms, or be left without anesthesiologists. None of the options was attractive, but the leaders chose to switch. They're glad they did.

"At a higher level, we left a relationship that was antagonistic, without aligned incentives, and based on a historical clinical and operational model," says Dave Brooks, the CEO of Providence Regional until he moved to St. John Hospital & Medical Center in Detroit in February.

"We did our darnedest to try to evolve that with the existing group, but it got to a breaking point, unfortunately, so we moved to a new partner," he says. "Now we're very aligned, paying less, providing more coverage and at better quality, we think—we had troubles measuring it in the past—and we believe we have a model built around the future, not the past."

In Providence Regional's case, says Simmons, he's confident his current arrangement with a national anesthesia group, Somnia Anesthesia of New Rochelle, N.Y., is better not only for surgeons and the hospital, but also for patients.

By the time the legacy group issued its contract termination notice, the surgeons, who at first were not universally supportive of the idea, were on board with the change, but prior to that ultimatum, they had to be convinced over a long period of time, during which the hospital formed a panel—with broad physician participation—aimed at improving the relationship with the legacy group.

The surgeons' eventual alignment with administration "probably required a two- to three-year period of clarity around the hospital escalating its communication that this relationship wasn't adding value to us," Simmons says. As the physicians on the panel sought solutions over two to three years, he says, they realized the depth of the divide.

"Some surgical leadership who were very much against this, as they became more involved, it became clearer to them that we had irreconcilable differences," he says. "Doing something like this is very high risk, so you can't do this without consensus and a strong partnership with key physician leaders."

With cost control such an administrative imperative, groups that provide an anesthesia care team that includes CRNAs under physician supervision can represent a big improvement in cost and access. Mary Ouimet, senior vice president and chief nursing officer with Wheaton Franciscan Healthcare–All Saints, was part of the team making the decision on a legacy all-physician anesthesia group two years ago. Like Providence Regional, the old model became cumbersome and outdated largely because of growth of the Racine, Wis.–based 368-bed facility.

"We were growing from more of a community hospital to a medical center operation. We were expanding service lines, growing new segments of business in different specialties, and that was creating new demand," Ouimet says. "I could see a difference between what we needed and what we had, and we had a mismatch. The old model wasn't necessarily a fit."

Ouimet looked to high performers demonstrating all best practices in the industry and ultimately decided to go with the group now known as Team Health of Knoxville, Tenn., which uses a CRNA-supervision model.

 "Outside the main OR, locations where we needed anesthesia were growing and we needed a way to better meet the needs of all," Ouimet says.

The ability to match the care team model to her needs was important in a new partner, she says, as well as its ability to work with some of the providers the hospital had used under the previous model. But also important was cost savings per encounter, she says.

"Under the old anesthesiologist model, for the same price you have less coverage. But it's not just a dollar thing; it's about skill sets. We were doing procedures in remote locations at odd hours because of anesthesia availability."

Ouimet found she could leverage a much broader team that included an advanced practice nurse provider with a physician supervisor. "We could cover more physical ground, with more eyes on the patient and more flexibility," she says. "Plus, there's more coordination, and handoffs aren't as abrupt."
And, unlike the Providence Regional transition, Wheaton Franciscan Healthcare–All Saints had the added benefit of cooperation from the prior anesthesiology group.

There was need to convince surgeons as well as patients who might expect an anesthesiologist to be present throughout the surgery. But a 30%–40% holdover in anesthesiologists on the team from the previous regime helped, as did a public information campaign.

"We took that as an opportunity to really educate on this," she says. "The anesthesia group, Team Health, was good at understanding the problem, because they wanted to work in partnership with our surgeons and wanted to be credible."

Eventually, Ouimet says, as the new group accommodated requests from some surgeons that anesthesiologists be present throughout surgery, surgeons largely became comfortable with the new group and demands for that type of accommodation fell sharply.

"Now we don't have people not doing cases here because we can't meet the need," she says.

Cindy Lilley, RN, BSN, MSHA, is director of surgical and perioperative services at Legacy Good Samaritan Medical Center in Portland, Ore., part of Legacy Health, which has 1,100 beds and net operating revenue of $1.3 billion in fiscal 2012. She speaks to the improvement in flexibility the hospital's new model of anesthesia—also using Team Health—has provided since it switched to the medically supervised anesthesia model using CRNA in September 2010.

"Part of the challenge was the inability to have flexibility in the schedule," she says. "For example, you start your day with 10 scheduled surgeries and you have 10 anesthesiologists, one per room, and then you have an urgent add-on. In a traditional model, you'd have to bump a surgeon."

In part, that flexibility has increased efficiency in the OR, and now surgeons encounter fewer delays and fewer cancellations. The move has also increased revenue and margin from additional cases that can be added. The hospital is getting higher surgeon and patient satisfaction scores, Lilley says, and volume has increased. Now, CRNAs can get cases going so there's no bump in the surgical schedule when add-ons come in.

To do so, the anesthesia team created what Lilley calls a "flip room concept," which consists of a team of nurses who can move from room to room so that "the surgeon talks to the patient, sees the family, and then goes into the next room for the next patient, reducing the amount of time between cases," she says. "What that has done is compressed the schedule so we're pretty much done in the OR around 7:30 at night."

Previously, they had to work until 11 p.m. or midnight.

Now, with more anesthesia providers available at any given time, Lilley says, "if there's a code in the house or if an anesthesia provider is needed in endoscopy or cath lab or if someone comes in emergently, we have the capability of sending anesthesia providers to those areas and not affect the OR," she says. "From a customer service point of view, surgeons don't see any bumps."

Philip Betbeze is senior leadership editor with HealthLeaders Media. He can be reached at pbetbeze@healthleadersmedia.com

Reprint HLR0313-5


This article appears in the March 2013 issue of HealthLeaders magazine.

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Philip Betbeze is the senior leadership editor at HealthLeaders.

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