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October 12, 2020

What Facility Administrators Need to Know About Anesthesia Revenue

October 12, 2020

by Joe Gribbin, Sr.

Facility administrators have to make countless decisions regarding employing, contracting, compensating, and managing anesthesiologists and CRNAs, and these decisions have a significant impact on the bottom line.  

I spent 12 years working as a hospital administrator before starting MBM, so I understand these challenges. By understanding the types of relationships your facility can have with anesthesia providers and the anesthesia revenue cycle, your facility can turn anesthesia into a reliable source of revenue.

Types of Anesthesia Relationships 

Hospitals and ASC's (ambulatory surgical centers) have three types of working relationships with anesthesia providers.  

  • Employer/employee
  • Contract (with individuals or groups)
  • Locum services

Employed Anesthesia Providers

Facilities that employ anesthesia providers have more control over work schedules, salaries, and expenses. This is usually the preferred option from a revenue perspective, but it can be a challenge due to existing contracts and the availability of anesthesia staff. 

Contract Anesthesia Providers

Numerous facilities contract their anesthesia services to an outside group. This is convenient and often the most practical approach. However, the facility should be ready to strategically negotiate their position, or they could be at the mercy of the anesthesia group requesting stipends, subsidies, or administrative fees.  

Check out this post to learn more about how outsourcing anesthesia could be strategic for your facility. 

Locums Tenens

Locums Tenens, or temporary providers, are typically provided by a locums staffing service. They can help cover vacations or illness, but these services are costly, often costing more than twice the industry average for services. We recommend using these locums tenens services only in emergencies and temporary situations. 

How Can You Maximize The Revenue Cycle?

Anesthesia billing is different from other professional billing. Facilities that don't utilize anesthesia-specific billing software or anesthesia CPT codes frequently bill claims incorrectly, which leaves revenue on the table.  

Unlike other medical billing, anesthesia billing:

  • Uses a different set of CPT billing codes
  • Includes bases units
  • Includes anesthesia time 
  • Includes add on modifiers that impact the billed charge amount 
  • Has concurrencies that require specific coding, such as when CRNAs and anesthesiologists work together

 If these codes and modifiers are not documented correctly, it can reduce billed charges and increase claim denials, leading to revenue loss. 

To learn more about the common challenges with anesthesia billing, read this blog post

Facilities that contract with anesthesia groups need to know that the billing is accomplished correctly. Undervalued payments may lead to increased stipends. Sometimes this can even be intentional.

It's also essential to optimize your mix of anesthesiologists and certified registered nurse anesthetists. A salary for an anesthesiologist is usually 3-4 times higher than a CRNA. Strategic staffing models allow facilities to maintain service quality with a lower salary load.  

Are you confident about the cash flow associated with your anesthesia staff? Find out how MBM can help optimize your anesthesia staff ratios here!

Get A FREE Guide On Maximizing Your Healthcare Facility's Revenue Now!

How Healthcare Facilities Can Maximize Revenue Download

Know What You Are Paying For

Many facilities incur a net loss on anesthesia, but if facility administrators know what they are paying for they can stop subsidizing these services. Anesthesia is expensive, whether a facility contracts services or employs anesthesia providers directly. Review your staffing model, revenue cycle, and staff mix to turn anesthesia into a reliable source of revenue for your facility.  

Contact us today if you'd like to have a conversation about how we can support your anesthesia revenue cycle! 


*Our white paper, How Healthcare Facilities Can Reduce Anesthesia Overhead and Maximize revenue, addresses these topics and others in a practical and in-depth way. Click here to download your free copy!

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