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Independence vs. Assimilation of Anesthesiology Groups KOAMA Santa Fe 2008 Joe Laden

Independence vs. Assimilation of Anesthesiology Groups KOAMA Santa Fe 2008 Joe Laden. Why this presentation ?.

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Independence vs. Assimilation of Anesthesiology Groups KOAMA Santa Fe 2008 Joe Laden

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  1. Independence vs. Assimilation of Anesthesiology Groups KOAMA Santa Fe 2008 Joe Laden

  2. Why this presentation?

  3. ASA InvolvementAn Endangered Species: Small to Medium-Sized Independent Anesthesiology GroupsASA Newsletter, May 2008 Preparing the Case for Hospital Financial Support ASA Practice Management Conference 2008

  4. Independence

  5. Assimilation

  6. “Resistance is Futile”

  7. “I am part of the Collective”

  8. Not all assimilation is bad

  9. AssimilationAll or most members of an existing anesthesiology professional services corporation become employees or shareholders of another organization.

  10. Assimilation into: Hospital Practice Management Company Local Megagroup Regional Megagroup

  11. Assimilation Method Lucrative Sellout Pediatrix Sheridan Anesthetix Rescue from implosion Hospital employment Hospital procures PMC or Megagroup Improvement of Situation (group initiated) Join megagroup, PMC or hospital voluntarily

  12. How are practices purchased? • Group – 20 MD’.s, 60 CRNA’s • Great payer mix, expanding market • W-2 = $550k • Reduce W-2 to $350K = $4m “profit/earnings” • Times earnings = 8 = $32m • 16 shareholders • $2,000,000 per shareholder paid as cap gain

  13. Assimilation Drivers • Capitalize Lucrative Practices MD’s over $500k Few Owners • Hospitals refuse higher anesthesia stipends Greater than $100k stipend per OR • Anesthesia practices seeking greater efficiency and negotiating power

  14. How does this affectME?

  15. Stakeholders affected by I vs A MD’s Hospital Practice Manager Billing Company Management company Accountant / Lawyer Practice Non-clinical employees Vendors (insurance) Patients ?? CRNA’s ??

  16. Will I be theAssimilator or Assimilated?

  17. Sometimes the best defense is a good offense. Initiate merger with equal groups or Assimilate smaller groups

  18. Work Work Pay Control Anesthesiologist Paradigm

  19. Work

  20. Work Time • Hours Per Day • Weeks Per Year • Late Hours • In-House Call • Beeper Call • Weekends Intensity • Sick Patients • Rapid Turnover • Understaffed • Residents • SRNA’s • Trauma Training/Skill • Cardio/TEE • Pediatric • Post-op Blocks • Pain Mgmt. • Critical Care

  21. Pay • Salary , Bonus & Benefits • Income Division Formula • Source • Patient Fees • Hospital Stipend • Hospital Salary

  22. Pay • Length of Employment Contract • Variability of Pay • Stability of Source • Availability of Extra Pay

  23. Control • Ownership • Shareholder / Partner • Voting Rights • Election of Directors / Managers • Determine Staffing • Set Work Schedules • Control Contracts With Facilities

  24. Analyze How These Factors Change In Both Scenarios W W Assimilated Independent $ $ C C

  25. Benefits of Assimilation to MD • Income fixed for guarantee period • Increase in income • Income guaranteed by large entity • On “same page” with hospital • Few worries about personnel shortage • Elimination of dysfunctional doctors • Expectations are contractually delineated • Less dependence on others in group • Don’t have to deal with CRNA problems

  26. Benefits of Assimilation to MD • Quality management program implemented and funded by employer or megagroup • Less or no time spend on managerial and business matters • No need to negotiate with managed care companies

  27. Benefits of Independence to MD • Choose and hire own doctors • CRNA’s – Use or not • CRNA:MD Ratio • Negotiate Coverage With Hospital • Negotiate Clinical Standards With Hospital

  28. Disadvantages of Independence to MD’s • Must devote time and talent to run business • Difficult to discipline partners / terminate partners • Variable income • Recruiting Issues • CRNA business issues • Small groups may be at competitive disadvantage with managed care, vendors

  29. Disadvantages of Assimilation to MD’s • Income may be less • Little or no input in choosing clinicians • Cannot control MD:CRNA ratio to one’s benefit • Employer may have a take or leave it attitude • Employer controls staffing, scheduling and call • May be difficult accept employer-appointed leader • Future will depend on future of employer/group • What will happen at end of contract period?

  30. The Future • Increased government involvement in healthcare • CRNA’s outnumber anesthesiologists • Increased hospital employment of all specialties • Package pricing via hospitals • Extinction of small anesthesiology groups • Vertical Integration of hospital-based MD’s • CRNA controlled anesthesia departments

  31. Anesthesiologist’s Strategic Planning • Can my current practice organization prevail? • How can I best react to unknown future changes? • Which changes will affect me most? • Which path should I choose for the future?

  32. Thank you! • Questions • Observations • Comments

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