No Outcome, No Income: The View from the ASA Practice Management Conference

  • Sibert, Karen, MD, FASA
| Jan 27, 2014

You couldn't leave the ASA Practice Management Conference, held in Dallas this past weekend, without getting the message that the physician anesthesiologist who works exclusively in the OR, in a fee-for-service, physician-only practice, is a member of an endangered species.

Over the next several years, healthcare delivery will move steadily away from a philosophy of "No volume, no income" to "No outcome, no income", speakers told the audience of more than 900. Hospitals and physicians are competing for healthcare dollars that aren't going to increase, and the way to survive is to figure out how to give high-quality care at lower cost.  There is a limit to how much physicians can continue to maintain income by increased productivity alone as payments decline.

"Focus on the work, not on who does it," advised Michael Hicks MD MBA, the CEO of EmCare Anesthesia Services, since market forces are increasing competition and driving down prices.  He recommended that anesthesiologists abandon "anchors to our past", focus on high-level clinical and management work that requires unique education and skills, and let non-physician practitioners handle predictable, routine, or standardized activities.  "Change is occurring, and faster than most appreciate," he said.

"You won't be rewarded for better quality, but you'll be penalized for less quality," Stan Stead MD MBA, the ASA's Vice President for Professional Affairs, told the audience.  By October 2016, he explained, hospitals will be at risk for losing up to 6% of Medicare payments under a new system called "value-based purchasing".  The government tracks patient satisfaction scores, 30-day mortality rates, and a host of core measures and in-hospital complication rates.  Those numbers are used to calculate how much of a penalty each hospital will face.  As hospitals face more cost pressure, they turn intense scrutiny on complications, "never events", core measures, and the anesthesiology group's contribution—or lack of contribution—to success.

But there is hope for the profession of anesthesiology, the speakers agreed, in the concept of the Perioperative Surgical Home (PSH). Arthur Boudreaux MD, Chief of Staff of the University of Alabama at Birmingham Health System, defined the PSH as a "disruptive innovation" in healthcare:  "a physician-led, team-based system of coordinated care that will shepherd a patient throughout the entire surgical continuum, from the decision for the need for surgery to discharge and beyond."  The goal is to make surgical care more cost-effective, provide better outcomes for the patient, and add value to the highest-cost segment of healthcare, he said. 

Not every practice will be able to implement the PSH easily or quickly, but Angela Bader MD MPH gave the audience practical tips on how to begin.  She directs preoperative evaluation at the Brigham and Women's Hospital in Boston, and said that operating room delays and cancellations can definitely decrease with better coordination in the preoperative period. 

Even more important, Dr. Bader said, is complete assessment of risk in the setting of all of the patient's clinical and social issues.  If the patient is at extremely high risk for postoperative complications or readmission to the hospital, this is important information for the surgeon and the hospital in the new era of value-based and bundled payments.  It could trigger reconsideration of the timing of elective surgery in order to optimize the patient's preoperative condition, or reconsideration of the decision to do surgery at all.  A reduction in complications, 30-day mortality, and 30-day readmission rates, she said, easily saves the hospital enough money to pay for physician anesthesiologist direction of the preoperative process.

Michael Schweitzer MD MBA, Chair of the ASA Committee on Future Models of Anesthesia, seconded Dr. Stead's warning that many hospitals have a poor financial outlook.  He emphasized the need for anesthesiologists to become more involved in postoperative care as well.  "It's not just whether you get your patient out of the OR without PONV or pain," he said. Hospitals want patients discharged earlier from the hospital, and employers want to see them back at work.  Through the PSH model, anesthesiologists can play a larger role in coordinating the entire continuum of perioperative care and prove that higher-quality care can cost less, Dr. Schweitzer said.

The old definition of anesthesia quality as "ability, availability, and affability" is history, said Howard Greenfield MD, the Principal of Enhance Healthcare.  He defined the "new anesthesia normal" as a world of integrated surgical delivery, bundled payments, and outcomes measurement.  "You have to get out of the OR," he told the audience.  High-quality intraoperative care isn't enough to save a group from losing its contract to a lower-cost competitor.  Anesthesiologists need to step up to leadership, collect data, and demonstrate their value to the hospital CEO, he said.

But small hospitals and many services will not move quickly into bundled payments, said Marc Lieb MD JD, Chair of the ASA Committee on Economics.  He said that fee-for-service arrangements will continue to dominate payment systems for years to come, but payers will expect steep discounts and many services will not be paid for at all.  He outlined different types of shared-savings arrangements and bonus systems for meeting quality and performance metrics. The biggest risk to successful negotiation of the anesthesiology share of a bundled payment, he said, is the perception that anesthesiologists are not an integral part of the team.  If the anesthesiologist is only perceived as taking care of the patient for an hour and a half, Dr. Lieb emphasized, the hospital and other physicians won't see a reason to give anesthesiology much of a share.

"Anesthesiologists are natural leaders of the PSH,” Dr. Lieb said. "Anesthesiologists should benefit from the portion of payment attributed to surgical savings, resulting from PSH activities."

The ASA is in the process of setting up a learning collaborative where the PSH model can be objectively demonstrated. Healthcare organizations (HCOs) can apply to join the learning collaborative and set up pilot PSH projects.  The goal is for HCOs to collaborate in the design and execution of clinical pathways, and learn from each other in developing innovative service delivery and new payment models.  More information about the PSH is available on the ASA's website:

To receive more information about the ASA's PSH Learning Collaborative, contact Celeste Kirschner, the project coordinator:

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