Preparing the Financial Case For Hospital Support ASA Practice Management Conference 2008

1. Preparing the Financial Case For Hospital Support ASA Practice Management Conference 2008 Joe Laden & Michael J. Monea

2. Michael J. Monea, President Central Anesthesia Management Services, Inc. Past Director, KOAMA Joe Laden Business Manager Anesthesia Associates of Louisville, PSC Director, KOAMA Member MGMA/AAA joeladen@aalouisville.com

3. KOAMA Kentucky / Ohio Anesthesia Managers Association Mission Statement: “Define and Implement Best Practices for the Financial Management of Anesthesiology Groups”

4. The OR Utilization Spreadsheets ASA Newsletter Practice Management Department June 2004 September 2004 June 2007 Spreadsheets can be downloaded from these articles on ASA Web Site

5. Phases of Hospital Support Friendly Support Request Detailed Justification Required Hospital Pushback

6. When To Consider Hospital Support • The cost of providing the service exceeds the revenue of delivery that service, and • The group is providing that service as cost-effectively as is reasonable, and • When the failure to secure that support would imminently jeopardize the ability of the group to provide that service.

7. Metrics that may indicate a subsidy is needed Payer Mix Payments per unit < $36/unit Medicare/Medicaid/Indigent > 40% Hospital Efficiency OR Utilization < 75% Revenue per OR < $450,000 MD Compensation below regional median

8. Gather your 3 - 5 Year History of the Following Critical Practice Data • O.R. Utilization Percentage • # O.R.’s covered • # Cases • Revenue per Operating Room • Revenue Per Unit • Payer Mix (% Major Payers) • MD Salaries • CRNA Salaries • Number of MD’s, CRNA’s Employed: Ratio • Overhead Costs (malpractice, health ins.)

9. When is the Subsidy Needed?Support Crossover Point -- Example

10. Verify Your Data Against Benchmark Data

12. MGMA Physician Compensation (W-2Wages)2006 Data - 3,505 Anesthesiologists

13. Anesthesiologist Total Compensation

14. CRNA Total Compensation

17. MGMA/ASA Cost Survey for Anesthesia and Pain Management Practices 2006 Data - 117 Practices

18. MGMA Physician Production Survey 2006 Data - 3,505 Anesthesiologists

19. Your Practice vs. MGMA – Explain Difference

20. What happens when the CRNA:MD ratio changes?

22. Subsidy Types O.R revenue guarantee vs. collections Payer mix subsidy (guarantee / unit) MD salary guarantee Negotiated amount with escalator/descelator Fixed amount for call, OB, Medical Director Guarantee for new anesthetizing locations

23. Hospital / Consultant Analysis of Your Proposal and Verification of Your Data O.R. Utilization including Turnover Time MD / CRNA W-2’s & Benefits – Individual and Average MD / CRNA weeks worked per year MD hours in hospital per week MD call frequency / days off after call MD : CRNA Ratio Billing and collection statistics & audit Negotiated payer rates O.R Staffing Model Locum use Governance

24. Your Practice Parameters That May Be Challenged • Number of MD/CRNA’s needed to staff facility utilization a reasonable efficiency model • MD:CRNA Ratio • Anesthesiologist FTE Comp (50th , 75th, 90th %ile) • MD weeks of vacation • Days off after call / late call • Anesthesiologists hours worked per week • Production per physician (cases & units)

25. KOAMA OR Utilization Spreadsheet