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The healthcare industry is no stranger to change. With the aging and retirement of the U.S.’s largest generation comes a slew of unprecedented challenges to the healthcare industry as a whole, and anesthesiologists specifically. The significant shift in payers is challenging not only the income of providers but even the culture and staffing models used by anesthesia practices.

The last few years have seen a steady shift in payer mix from commercial payers to Medicare, as the Baby Boomers, the US population’s largest generation, reaches the age of Medicare eligibility.  While the Millennial generation is expected to surpass Boomers as the most populous generation in 20191, the Boomers are more likely to be consumers of surgery than younger generations; more than 40% of surgeries are performed on someone 65 or older2.  And Medicare recipients are expected to increase to more than 80 million by 20303.

While growth in the Medicare eligibility and enrollment trend-line is commonly expected to increase as it has for many years now, demographic data indicate that this growth curve became more pronounced in 20183.  A review of historic census records indicates that this trend of growth in the percentage of Medicare rates will steepen considerably for several years ahead before plateauing.  Such data is beneficial for anesthesia practices as they pursue contracts with hospitals, develop their managed care strategy, and face the challenge of developing clinically-sound staffing models that are consistent with the economic realities of changing payer mix.

As case volumes rise, manpower overhead expenses for practices are rising in a parallel fashion while the added cases are often less profitable as patient insurance coverage shifts from commercial to Medicare, resulting in declining  anesthesia reimbursement rates.  And the heavier caseloads are having a detrimental effect on the providers themselves: MGMA notes that provider burnout is up, and groups are taking steps to reduce signs of burnout among providers4.

What can a practice do to mitigate the impact of these shifting payer mix realities?

While there isn’t much that a practice can control with the aging population, there are some steps that can offset some of the worst impacts of the payer shift.

  • Take a close look at payer contracting:
    • Consider how managed care contracting can be adjusted to provide better case reimbursement.
  • Improving operating room efficiency and work with facility administration:
    • Track and review operating room efficiency.
    • Work with Hospital Administration to use locations efficiently or subsidize underutilized staff or diminishing payer mix.
  • Evaluate the staffing model:
    • While this can create a major cultural shift for a physician-only practice, bringing CRNAs into the mix can help deal with a higher caseload while not increasing expenses at a commensurate rate.
  • Expand to key locations where the group can efficiently improve payer mix:
    • Targeted expansion on service lines and specific locations can lead to growth while also improving payer mix.

While the change in payer mix isn’t expected to be permanent, it is on-trend to last long enough that providers need to take a hard look at their practice and identify ways to lower expenses and increase or keep revenue flat.

This is a nation-wide shift affecting a majority of specialties, but anesthesiologists can weather this change with careful planning and strategic tactics. abeo is here to advise, provide anesthesia practice management, and help implement any necessary changes to keep your practice well-equipped in the face of these shifting payer mix realities.

 

1 https://www.pewresearch.org/fact-tank/2018/03/01/millennials-overtake-baby-boomers/
2 https://www.facs.org/quality-programs/geriatric-surgery
3 https://www.kff.org/medicare/state-indicator/total-medicare-beneficiaries/?activeTab=graph&currentTimeframe=0&startTimeframe=8&selectedDistributions=total&selectedRows=%7B%22wrapups%22:%7B%22united-states%22:%7B%7D%7D%7D&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
4 https://www.mgma.com/resources/human-resources/creating-an-environment-to-reduce-or-eliminate
abeo

abeo Management Corporation (abeo) serves as a leading source of revenue cycle management and practice management with a specialization in anesthesia. The company leverages its people, processes, and software to serve independent practices, surgery centers, hospitals and healthcare systems with a scope of services that include billing, coding, transcription, practice management, and business consulting.

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