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. 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. When To Consider Hospital Support

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. 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.) Gather your 3 - 5 Year History of the Following Critical Practice Data

9. Year Revenue Per OR Revenue per Unit Hours Billed Per OR Average Case Length OR Utilization OR's Personnel Cost Per OR 2007$465,000$38.741,7251.764.5%21$525,000 2006$472,000$39.651,7751.668.3%20$500,000 2005$481,600$40.101,7601.569.8%20$475,000 2004$484,300$40.951,8401.472.7%19$450,000 2003$487,000$41.201,8201.473.0%19$425,000 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 Median Compensation$365,409 Eastern$375,000 Midwest$393,931 Southern$386,238 Western$326,346 Median Gross Charges per MD$1,016,993 Median Collections per MD$468,410 Median Cases Per MD961

13. W-2 Wages350,000 Retirement Plan Contribution45,000 Professional Liability Insurance18,500 Health Insurance14,000 Disability Insurance12,000 Other Insurance (dental, life, etc)1,000 Professional Meeting and Expense3,500 Employer FICA & Medicare Tax10,655 Total Benefits, Malpractice and Tax104,655 Total MD Compensation454,655 Anesthesiologist Total Compensation

14. Base Salary120,000 Overtime & Call Pay15,000 Retirement Plan Contribution20,250 Professional Liability Insurance2,500 Health Insurance14,000 Disability Insurance3,500 Other Insurance (dental, life, etc)1,500 Professional Meeting and Expense2,000 Employer FICA & Medicare Tax7,320 Total Benefits, Malpractice and Tax51,070 Total CRNA Compensation171,070 CRNA Total Compensation

15. Year W-2 Compensation 2002$306,964 2003$323,491 2004$325,999 2005$359,699 2006$365,409 MGMA Compensation and Production Survey 2007

17. Total Stipend Per Anesthetizing Location Median54,184 25th %ile23,092 75th %ile92,908 90th %ile150,042 Total Stipends/Trauma Center Median1,040,336 MGMA/ASA Cost Survey for Anesthesia and Pain Management Practices 2006 Data - 117 Practices

18. Units Per MDMedian10,206 75th %ile13,858 95th %ile18,977 Collections Per Unit Median$38.88 25th %ile$34.05 75th %ile$51.77 Weeks Worked/YearMedian44 Hours Worked/WeekMedian46 MGMA Physician Production SurveyMGMA Physician Production Survey 2006 Data - 3,505 Anesthesiologists2006 Data - 3,505 Anesthesiologists

19. Your Practice vs. MGMA – Explain Difference

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

21. IMPACT ON MD COMPENSATION BY CHANGING THE PHYSICIAN : CRNA RATIO OR's to Cover24 MD Total Comp.$450,000$460,000$470,000$475,000$500,000$525,000 CRNA Total Comp.$172,000$174,000$177,000$180,000$185,000 MD's302622181410 CRNA's0612182430 MD Cost$13,500,000$11,960,000$10,340,000$8,550,000$7,000,000$5,250,000 CRNA Cost$0$1,032,000$2,088,000$3,186,000$4,320,000$5,550,000 Total Cost$13,500,000$12,992,000$12,428,000$11,736,000$11,320,000$10,800,000 Personnel Cost / OR$562,500$541,333$517,833$489,000$471,667$450,000

22. Subsidy Types O.R revenue guarantee vs. collections O.R revenue guarantee vs. collections Payer mix subsidy (guarantee / unit) Payer mix subsidy (guarantee / unit) MD salary guarantee MD salary guarantee Negotiated amount with escalator/descelator Negotiated amount with escalator/descelator Fixed amount for call, OB, Medical Director Fixed amount for call, OB, Medical Director Guarantee for new anesthetizing locations 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 (50 th, 75 th, 90 th %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