The Bakersfield Surgery Center used to outsource its anesthesia to an all-MD group of contractors. There was just one not-so-small problem. On top of what the providers were billing insurers and patients, the California ASC had to pay them a $15,000 subsidy every month ($180,000 per year) to secure their services. "It felt like wasted money, like a rip-off," says Christie Humphreys, the OR coordinator at Bakersfield.

anesthesia revenue — anesthesia expense = subsidy

If you pay your anesthesia group a subsidy or a stipend, then you can relate to how Ms. Humphreys feels. But for many surgical facilities, such payouts are a necessary evil, a means for anesthesia groups to make up the difference between the revenue they generate and the expenses they incur — and still provide surgical facilities with the OR coverage that they require.

Stipends are growing not only in popularity, but also in size, according to "Delivery of Anesthesia in America's Hospitals: Understanding the Subsidy," a white paper by Somnia Anesthesia, a leading anesthesia provider staffing firm. In 2000, an American Society of Anesthesiologists survey of hospitals found 70% of respondents were paying a small stipend, usually less than $250,000. In 2005, the Clinical Advisory Board reported that the annual subsidy that hospitals were paying was close to $120,000 annually per anesthesia provider.

The key to avoid paying your anesthesia outsourcing company a subsidy? Do a lot of cases and do them efficiently so that the company can maximize its billing and minimize what it pays its providers. "The goal is for the partnership to be self-sustaining — meaning that we don't have to ask for any guarantees or stipends or any additional money other than what we obtain through billing. That's the best-case scenario," says Jean Covillo, CRNA, MA, managing member of Excel Anesthesia, a 3-year-old company that contracts with 17 ASCs and hospitals across Kansas and Missouri. "We have a vested interest in your efficiency, in how many rooms you're running and in how effectively you're scheduling cases. Remem-ber, we have to pay our providers every day regardless of how busy they are."

Eat what you kill
Ms. Humphreys didn't blindly accept her subsidy, however. About a year ago, she awarded a contact for her facility's anesthesia services to an all-CRNA group that doesn't require a subsidy. A clause in the contract states that the ASC will pay the group $500 on those few-and-far-between days when there are 3 or fewer cases, says Ms. Humphries, but that sure beats a subsidy. She clearly prefers this eat-what-you-kill approach whereby the 5 credentialed CRNA-contractors essentially work cases at no charge to the surgery center, bill for themselves and have a neutral effect on the facility's bottom line.

"They're providing us a service and they get to bill for it," says Ms. Humphries. "We're not carrying the overhead and we don't have to bill it out ourselves."

The CRNA-only model Bakersfield uses, in which the CRNA functions with the same scope as an anesthesiologist, is clearly the least expensive, but it's also somewhat controversial. Besides California, 15 states have opted out of the CMS physician supervision requirement: Alaska, Colorado (critical access and some rural hospitals only), Idaho, Iowa, Kansas, Minnesota, Montana, Nebraska, New Hampshire, New Mexico, North Dakota, Oregon, South Dakota, Washington and Wisconsin.

In most cases, anesthesia revenues alone aren't enough to cover expenses and to pay for the level of coverage hospitals need, experts say. Many hospitals have experienced 30% to 40% increases in their anesthesia subsidy over the past few years, yet they may not have received any additional services for that investment, according to "Changing Anesthesia Providers: The Playbook for a Simple and Sustainable Transition," a white paper by North American Partners in Anesthesia, another anesthesia staffing firm. In some cases, coverage has actually gotten worse, and hospitals are left asking, "What have we been paying for?" says NAPA.

"If you're paying your anesthesia group a subsidy, ask where that money is going and how it's being allocated," says Clifford Gevirtz, MD, MPH, medical director at Somnia.

ASCs and office-based facilities that run Monday to Friday from 7 a.m. to 3:30 p.m. might be better positioned to avoid or decrease subsidies because they don't require 24/7 coverage. The key is to guarantee your providers enough cases to cover their costs and to earn a reasonable profit, which an industry expert put at 10% over yearly billings. Some staffing agencies might call this a "management fee" or an "offset."

Picking the right player
Subsidy or no subsidy, there are several financial and clinical benefits to outsourcing. David Kasprzak, RN, MSc, the former director of surgical services at a surgery center and a for-profit hospital, ticked off the reasons why he always preferred using anesthesia management partners who understood both the clinical and the financial aspects of anesthesia delivery. You don't have to worry about billing, credentialing, scheduling, recruitment, quality management or compliance. You don't have to pay malpractice or health insurance. Or salaries. And you never have to worry about canceling cases because a provider called out sick or went on vacation. "That's their problem, not ours," says Mr. Kasprzak. "I don't have to worry about finding fill-ins."

You simply tell the agency how many rooms you'll be running each day of the week and the providers will be there. "It's like buying an agency nurse," says Mr. Kasprzak. "They come in, do their job and they're gone. You don't have to worry about all the things that go along with hiring anesthesia providers yourself. It's a matter of convenience."

He suggests that both the director of surgery and the facility manager be involved in the contract. "They know what you need and when you need it," he says. Look for an agency that has clinical depth and insist on seasoned providers, not newbies, he adds. He also suggests, if possible, that your director of anesthesia should be an employee so that you can set and enforce rules and regulations, as well as perform yearly evaluations and test your providers' competencies. Finally, build room for growth into the contract. Let's say you're contracted to have 6 providers on a daily basis. Include a clause should you need to open a 7th room. "Make sure your contact is what you want it to be and for how many rooms you want to run," he says.

Mr. Kasprzak's hospital paid an anesthesia agency a $1.3 million annual subsidy. They used simple arithmetic to come up with this figure, applying their reimbursement schedule to the estimated annual number of cases. "They figured how much the loss was going to be and determined how much the facility had to chip in," says Mr. Kasprzak.

Don't be afraid to ask your agency for certain types of providers, says Dr. Gevirtz. For example, if you want anesthesiologists who are boarded in pediatrics or some other subspecialty, ask in your RFP. If you want providers with very few malpractice suits against them, ask for that. "You have a right to hold the anesthesia providers to a certain standard," he says. "The advantage of going with a nationwide group is that we have a larger drawer. We can make up a group of providers that meets your needs."

Make it easy on yourself
It's easy to see why anesthesia management is the fastest growing outsourced hospital service, according to a 2008 survey by law firm Waller Lansden.

"We take on all of the hassles that you would have faced if you hired your own anesthesia staff," says Ms. Covillo. "You only have to call our company and we take care of the rest."

"We relieve your headache. We literally take the management of an anesthesia group off of your plate and guarantee you a certain level of quality," says Dr. Gevirtz. "If you need somebody to push the white stuff (propofol), you don't need us. If you're treating a wide range of patients and want to offer pediatric care and regional anesthesia, that's when you need us."

Not having to worry about anesthesia billing — not only getting a contract and negotiating a rate but also collecting the money — is reason enough to partner with an outside agency, says Laurence B. Wiener, MD, CEO and founder of Professional Anesthesia Consultants. "If an outsourcing company has been doing this for 20 years and has relationships with third-party payors, why would a GI practice that knows nothing about anesthesia billing think it can do a better job?" he asks. "Billing for anesthesia is a lot more complex than billing for surgery," adds Ms. Covillo.