Important Private Practice Updates on the Future of Anesthesia w/ Drs. Mo Azam and Joshua Miller

0:05 Hey, it’s Justin Harvey. Thanks for tuning in to the Anesthesia and Pain Management Success podcast. With APM

0:11 Success, we take a close look at important topics pertaining to business, practice management, personal finance,

0:16 and careers for anesthesiologists, and pain management physicians. We work hard to take your critical questions straight

0:23 to the experts. Thanks for listening. [Music]

0:31 Hello and welcome to another episode of Anesthesia and Pain Management Success. Today is a very exciting day because I’m

0:37 talking with two of the foremost experts who are going to explain to us what’s going on with the specialty of

0:43 anesthesiology. There’s uh it’s a a complex multifactorial landscape with

0:49 regards to staffing, reimbursement, operational considerations, new sites opening up, demographic shifts,

0:55 retiring, burnout of current clinicians, etc. And we’re going to try to tackle as much of this as possible. I have with us

1:02 today Dr. Joshua Miller, who has over 30 years of clinical, operational, and executive expertise in anesthesiology

1:09 and pain medicine. He’s currently the chair of the board and physician managing director at surgical directions. And Dr. Mo Azam is the head

1:17 of innovation at US anesthesia partners where he is uh one of those people sort

1:23 of at the the top of the mass looking at the horizon trying to see what are the questions that we should be aware of in

1:28 addressing today. So gentlemen, welcome to the show. Thank you. Thanks for having us. This is great. Uh

1:36 for starters, I know that both of you put in some time to prepare for this conversation. So, I’m curious as you’re

1:41 looking at the data, as you’re reviewing the uh sort of the key sources of

1:48 like industry publications and numbers that are indicating what what is the health and the state of the specialty

1:53 and where are things headed with all these different facets that I just mentioned. What numbers pop out to you?

2:00 Well, I’ll kick off. Uh I think overall I describe it as a hellscape. I

2:06 think when many of our peers would uh likewise uh consider that um there’s

2:11 been a tremendous turmoil and upheaval right in the postcoid environment and the numbers that pop out to me are the

2:18 dramatic uh shifts in uh demographics uh turnovers from hospitals in terms of uh

2:24 RFPs and wanting to look at options for different anesthesia coverage.

2:29 workforce numbers um in terms of uh salaries and shortages or perceived

2:35 shortages. Um and we’ll get into I think some of those uh nuances in the

2:40 conversation here. What about you Josh? Yeah, I think um you know I’m

2:46 fortunate to be able to sit with a lot of hospital CEOs at a variety of meetings that as sort of nonpartisan

2:52 physician um I hear their their pain points. they’re concerned in

2:59 about anesthesiology but it’s becoming more of a global problem. Uh they have a lot of payer pressures which is also

3:05 specific obviously to anesthesiology in a very unique way but radiology is a step behind it. Um so this is not um as

3:13 we look at the landscape and we talk about anesthesiology there’s a really larger question about how how

3:21 payment and reimbursement is going to move forward. It does come back to as Mo said there was really a dramatic shift

3:26 if you look at all the the data um around 2019 2020 um you know the average

3:32 age of an anesthesiologist is 53 a lot of people in the both CRNAs and

3:38 anesthesiologists around COVID said you know I’m done I’m out the the baby boomer bubble the final baby boomers

3:45 are turning 65 in the next couple of years uh the impact on Medicare Medicare reimbursements versus uh private

3:52 insurance Those are the the big pain points. You know, it’s interesting. I’m also talking a lot more the COOs are

3:58 worried about some of the operational stuff. The CFOs are very much more involved in the conversations we’re

4:03 having. I’m curious as you’re having those seuite conversations um do you think uh

4:12 you know what are the things on the seauite’s minds and how well do you feel obviously you’re like boots on the

4:18 ground in the trenches you understand the specialty intimately. How well do you feel like uh hospital administration

4:24 sort of apprehends these forces and what are the things where you feel like they’ve got it on lockdown and where is there does there tend to be a gap where

4:30 you’re having to help them uh you know get up to speed on how to address these challenges

4:36 you know one of the first things I will say and it’s it’s just to open their eyes about the cost associated with the

4:42 operating room is you know if you want to fly from JFK to Heathrow first class round trip it’s about $ five dollar a

4:49 minute if you just look look on one of the airline websites. $5 a minute and

4:55 you say, “Gosh, that’s expensive.” Well, as we continue to look at at both labor and non- labor costs in the operating

5:02 room, it’s now hovering around 75 and moving even more towards $80 a minute. Um, so I reinforce to them that they

5:10 have to get the the costs. It’s going to be hard for them to manage costs because labor costs are rising, inflation rate

5:17 is rising, so uh, you know, hardware, etc. the costs are rising, but how do we

5:22 how do we improve efficiencies in the operating room and beyond the operating room when it when we’re talking about um

5:29 anesthesiology services? How are we integrating all of our sites so that we’re maximizing the utilization of our

5:35 anesthesiology personnel? What a great analogy, right? And the funny thing is they want to buy the

5:40 first hour of that flight and then somewhere in the middle and then the add-on case at the end and they don’t

5:46 want to buy the whole flight. And so that’s not going to work in this in this model going forward, right?

5:53 Well, and particularly again with the downward pressure and we’ve seen it uh over the last several weeks um you know

5:59 where several the large insurance companies are saying well we’re no longer going to recognize ASA

6:04 classifications and for the physicians and others on this uh call um you recognize that preparing for an ASA3 or

6:12 four bleeding cranottomy is different than preparing for an ASA1 carpal tunnel release. Um so that that’s as far as uh

6:20 intensity, manpower, usage, etc. Um and that that’s a that’s going to be a huge

6:26 problem trying to limit total number of minutes for surgery. Anesthesiologists have no control over that, right? And

6:32 often the surgeons don’t have control over that. So these are the kind of pressures that we’re seeing as a

6:38 specialty, but our hospital partners are seeing that as well.

6:43 I know another stakeholder here is the private groups to the extent that the

6:48 the model is a private group contracting with the site. So Dr. Azam for your conversations that you’ve had I know

6:54 with many industry leaders and and group leaders nationally what have you seen in

6:59 terms of the from the practice side of things the coordination of uh you know

7:05 providing sort of the peroperative help in the hospitals building relationships with the seauite how what are the groups

7:11 that are succeeding doing to help address these challenges?

7:16 Um, a great question and um, you know, I think the way uh, Josh and I were thinking

7:23 about this is there’s four or five big headwinds happening all at the same time creating this perfect storm. So, the

7:30 labor uh, issues, the cost inflation, um, uh, salaries for CRNAs are $100,000

7:39 higher today than they were when I started. Um and then uh yeah certainly

7:45 the demand for work life balance you don’t

7:50 to work 60 70 hours a week anymore. Um so you need more more folks. That is

7:56 completely related to the diminished anesthesia utilization that’s occurred over the last 5 years or so. And these

8:03 hospitals in a desperate attempt to maintain financial viability, which is

8:09 largely driven off of the operating room, will do anything to open a room to attract a surgeon to bring a case. Um,

8:16 and if that means uh putting out the red carpet for a spine surgeon or a high

8:23 contribution margin service line like that or opening up entirely new service lines in sometimes difficult uh to cover

8:31 locations like cardiology suite, TPS um radiology and so forth and when they

8:38 open those in their financial ledger there’s profit there.

8:46 They’re not accounting in the the labor cost, the physician costs, the anesthesia coverage costs uh on the

8:52 outside group. They’re only accounting in their employed nurses and so forth. than that. So, labor crisis, diminished

8:59 utilization, declining reimbursement, like Josh mentioned, payer behavior, CMS

9:05 cuts, um, uh, these little, uh, nicks and paper cuts that death by a thousand

9:13 paper cuts, uh, is occurring, right? The QZ issue, um, of not wanting to

9:19 reimburse fully for, uh, for that model. um time issues, ASA classification

9:26 issues and then to your point then how does the independent group uh try to uh

9:34 stay solvent in that in that uh environment ultimately they go to the hospital for a

9:40 subsidy and a support and um oftentimes they wait too long to have those

9:46 difficult conversations and I think there’s a leadership gap um I think

9:51 folks like Josh and myself have a fortunate opportunity to as you said

9:56 stand on the mast and look out but a lot of times the the local practices aren’t always connecting with what’s happening

10:03 in their environment they need to honestly be engaged much further in ASA ASA advanced practice management um to

10:11 understand what’s happening to their peers and to be able to respond accordingly uh what do you think Josh

10:16 yeah I would agree and um you know a lot of places we go where the groups are in

10:22 trouble. They come back and they’re quadrupling their ask. The hospital, as Mo just said, well, we just need to open

10:29 another room. So, let’s look at the contract. And nobody’s looking at prime time utilization. Nobody’s really

10:35 looking effectively at block utilization. Are we are we integrating block for all of our anesthesia

10:42 anesthesiology sites? Um, and I would also echo many places we go, um, there’s

10:48 a lack of leadership. Uh, on the on the group side, it’s difficult. You know, you’re working full-time, you’re you’re

10:54 managing all that. Um, and then on the side, it’s almost the side business with maybe a manager. Uh, trying to trying to

11:01 look at how we manage the group effectively. The other thing I would add is if it’s a depending on the group

11:06 size, it’s often difficult for the group to negotiate satisfactory rates with

11:12 insurers. So it helps if with the size and scope of the practice you have pediatric cardiac anesthesiologists

11:19 makes it easier to negotiate that that also uh sort of flows into what you know

11:26 the large complex hospitals versus uh rural hospitals what’s going on there it’s a comp completely different

11:33 landscape uh and that’s the reason we’re having a lot of trouble in in smaller

11:38 safety net hospitals frankly I pulled a few slides to prepare for

11:44 for some of this conversation. if I might show exactly on that topic, I

11:49 think it illustrates Josh’s point uh very well. Um is that shown? Okay. Yes.

11:55 Great. So um this is from the ECG management consultants um also brought

12:00 in by a lot of hospitals and it shows that uh shortfall um in anesthesia

12:06 collections the labor costs and then uh the delta and what’s happened I think

12:12 is in that red as that’s grown and grown and grown uh a lot of groups were really reticent to go to their hospitals for

12:18 fear that they might be RFPD or offered to be employed um and they kind of held

12:25 back uh or didn’t have the right clauses in their current contracts uh to provide

12:31 for the right escalators as these deltas group. So they held back and held back

12:37 and held back and then when they went to the hospital their shortfall was so substantial as Josh says their uh their

12:44 ask is is shocking to some of these administrators and it’s really interesting many of these administrators

12:50 are certainly not looking standing on the mast and looking at the anesthesia landscape. They’re standing on the mast

12:57 looking at their hospital landscape. So then when they’re faced with a massive increase in a

13:04 subsidy request by a practice on anesthesia, their instinct is to say this can’t be right.

13:11 Let’s go check the market. Yeah. And I think that that you know we

13:17 are just inundated with calls from both groups and hospitals. It’s it’s you know

13:22 doubling easily year-over-year. And the big question we get from the

13:28 hospital is, “We went from a million dollar subsidy to now they’re saying $10 million. How can that possibly be?” Um,

13:36 and we and and the the knee-jerk is, well, we need to RFP. We need to employ.

13:43 Um, and we remind the hospitals those we have to look at the pros and cons of

13:48 what that will look like. you know, employing as an example. Um, recently we

13:53 were uh with a large system out on the west coast and we built a a

14:01 what it would take and it’s, you know, 125 steps and they don’t have the expertise. It’s been my experience as

14:06 well. Um, the hospitals don’t have that leadership on the business side because anesthesiology is a completely different

14:13 beast than say employing your internists. Um and so those are the questions that we’re asked a lot is okay

14:20 we understand that the the demographic change the the payer pressures the uh

14:25 the decreasing supply of both CRNAs and anesthesiologists um we’re we’re trying to understand what

14:33 the best model is and often it’s going to be more expensive or equally expensive. I certainly say when I’m

14:40 meeting with these hospital leaders and they’re dead set on making a change that they can expect a increase in costs of

14:46 25% at least uh for the first year. This is really interesting stuff, right?

14:52 Because uh when when we started in clinical practice, Josh and I, um I

14:58 think you were probably in the era where coming out of residency, uh there was supposed to be a glut of

15:05 anesthesiologists, right? And um I remember some of my partners a little bit older than me were offered a

15:11 five-year track, $100,000 salary. Mhm. No guarantee to being partner in that

15:18 era in the 90s, right? So, yeah. So, my first year uh was 1990, $125,000,

15:26 no guarantee. um and and everybody was predicting and uh the ACGME um actually

15:32 decreased residency uh slots through the 90s which uh precipitated a lot of where

15:38 we are now because if you look at the generational shift and now you know that that larger group is now in their 60s

15:45 and retiring uh and there was a downward pressure on on slots um so yeah so

15:51 that’s a big part of it but Mo also I grew up in the era of um you know and

15:57 sucks in the colon. So, we’re gonna we’re going to take this back, Justin,

16:02 to a little bit of talk about back in my day. That’s right. So, that occurred, right? And actually,

16:09 there was a lot of hospitals that it had independent contractors as anesthesiologists back then. As a matter

16:15 of fact, my practice in Orlando when I joined had previously been a group of uh

16:20 independent uh practice, independent contractors. The hospital had asked them to come under one umbrella and so then

16:28 they started to bill under one umbrella and provide call coverage in a consistent fashion under one umbrella.

16:34 At that time it was all a reaction against HMOs and payers that wanted to have a unified contract. So they didn’t

16:41 want to contract with 30 anesthesiologists independently at one hospital. They wanted to have a unified

16:47 contract as well. It’s it’s really crazy. Uh, one of my partners uh, said he had a 3×5 index card and he wrote his

16:55 hourly or his unit rate on there, stapled it to the face sheet in the anesthesia record, carbon copy and sent

17:03 it to the office and each anesthesiologist had their own unit rate. So, the health systems wanted better

17:10 coverage, the payers wanted unified contract negotiations, and these guys

17:16 all come together under one umbrella. As they do this um they’re providing better

17:21 coverage. They grow a 10 15 person group grows to a 30 40 50 60 person group

17:28 starts to have CRNAs starts to cover call uh increasingly for more

17:35 complicated cases. They bring on cardiac and and uh expand OB and so forth. And

17:41 this is a story for all these groups out there, right? Some of them have to pick up trauma and pedes and so forth. Now

17:48 they’re hiring specialty folks. And now they’re negotiating with payers on

17:54 something called a usual and customary rate. So they say to the payer, what’s the

17:59 rate that we all should get paid? And the payer says, okay. And they’ll pay you. The payers then come up with this

18:05 system of networks. And the network is to say you’re in our network, you get

18:10 this rate or you’re not in our network and then you get your usual and customary rate. Well, networks

18:17 eventually turn into this crazy beast of out of network and the no surprises act.

18:23 So the no surprises act says there’s no such thing as an out of network. There’s no such thing as a usual and customary

18:30 rate anymore. You have to be pretty much in their network or take what they’re going to give you. And that upends

18:38 contract negotiations between the groups and the the insurers. As those

18:44 shortfalls continue to occur, no surprises act nickeling and dimming folks as all this reimbursement pressure

18:51 starts to occur, we see an escalation of holding our hands out to the hospital

18:56 to make up for the delta. And the hospital says, “Well, if I’m going to pay you that much, I’m going to

19:02 want to control something.” And I think that’s what’s happened in this interesting um pendulum swing from

19:09 independent guys to groups to contracting with payers

19:15 to that falling apart. And I’d love to hear Josh’s comments on back to the

19:22 independent guys world because it’s occurring out there with locoms and what’s happening here with this

19:28 employment world because the hospitals didn’t want to really do this in the beginning otherwise they would have

19:34 offered that right and I I think so an important part of the discussion when we’re looking at

19:40 all this is transparency so often and traditionally the groups have said no we

19:45 don’t want the hospital to really know our our unit rate, our blended rate, um

19:51 you know, what what our rates are for BlueC Cross or whatever. And so the hospital doesn’t really know and they’re

19:57 trying to reverse engineer based on what they’re doing in the operating room, what what is the group actually bringing

20:04 in. And so there was there’s traditionally or at least in the last 1015 years, there’s been this on the uh

20:11 physician side, we’re uncomfortable giving the hospital that information because we think somehow it’s going to

20:16 be used against us. the hospital saying we don’t believe the group’s data and we think they’re making X and they’re

20:23 telling us they’re bringing in Y. So, um I’m seeing more uh financial

20:28 transparency because that’s the only way these contracts can get done. Um but again to answer Mo’s question, the costs

20:35 are going up because physicians are saying, you know, given the current

20:41 manpower shortage, both CRNAs and anesthesiologists are saying we can

20:46 go work at an ASC 3 days a week and make as much money independently as a 1099 than we will make working as a

20:54 partner in a group taking calls. So there is a move towards that. I would

21:00 say at least on the nursing side, not the CRNA but nursing side, we’re seeing less travelers in the last two years

21:07 or so. The difference is we can’t produce enough CRNAs and doctors.

21:13 probably for at least 10 years based on the utilization procedures are

21:18 increasing the complexity of procedures the types of procedures things that we’re doing now in the Kath lab we

21:24 didn’t do 20 years ago based on the utilization right and I just had a blurb I think it was in

21:30 published in Beckers this week gosh I think even our in my practice a

21:37 large relatively large group in central Florida uh cover eight plus hospitals

21:43 quattinary care um even at our best

21:48 divisions 65% utilization um so that

21:53 that New York to Heathrow pilot right isn’t working a third of the time but

21:59 you need to buy him for the whole flight and so there’s not revenue generation there um and I think that’s an

22:06 interesting one the other one that I think Josh mentioned and just to flip back to the the slide that we had

22:12 TKED talked about is the ASA publishes this right um it’s their conversion factor survey and uh in across every

22:19 geography every state in the metropolitan area there’s a huge spread so some groups are getting $45 a unit

22:26 and somebody’s out there getting $150 a unit and the they’ve all got their hands

22:31 out to the hospital for a variety of reasons efficiency labor costs etc and

22:37 the hospitals wants transparency around that uh if they’re going to be writing getting a big check, right?

22:47 If we could go back to the No Surprises Act for a minute, which Dr. Asami mentioned, um I’m curious to understand,

22:53 you know, there was some I think promises made or at least

22:58 ideas about here’s what we’re trying to accomplish. here’s what we think is going to happen when we roll out this NSA program to be able to protect

23:06 patients, which is sort of the the billing, protect patients from the surprise medical bill, and uh remove

23:14 them from sort of the hostage situation between um payers and hospitals and

23:20 doctors. How have you observed this unfold over the last few years? Has it been working the way that it was

23:26 originally designed? And what’s the functional impact for the specialty? Oh, a great question. And so, look,

23:33 there was abusive practices, no doubt, right? There was um there was groups out there uh anesthesia, radiology, ED,

23:40 others, hospitals, surgery centers at uh deliberately uh intentionally ran an out

23:48 of network business. Uh why contract with payers when we know they’re not going to pay us? And and it’s really

23:54 painful to do those negotiations. and I go back to my usual and customary. But then they even jack that up, right? They

24:00 asked for exorbitant amounts and they did it regularly. Now, the the stories out there are are pretty sub significant

24:07 if you’re a patient, right? You go to have a surgery, the surgeon’s got a PA

24:12 or an assistant that they’ve built separately out of network and you’re layered on with this huge bill. You go

24:18 to the ED and you have a a a CT done, but the radiologist is out of network.

24:24 you don’t have a choice in that and you have an enormous bill in that process.

24:30 And so taking the patients out of the middle was the right thing to do. Disempowering clinicians in their

24:36 negotiations with the payers was the wrong thing to do. And so they set up this uh mechanism uh saying that if that

24:43 were to happen and there’s uh disagreement, you’ve got this mechanism to arbitrate.

24:48 You file what you think should your your your appropriate rate is and the payer will put theirs in and an arbiter will

24:54 decide and they’ll look at prior contracted rates and make sure no one’s asking for something abusive or

24:59 egregious. They’ll look at the quality um being furnished by that clinician. They’ll look at um the case complexity

25:08 is that the carpal tunnel like Josh mentioned or is it that aneurysm in the middle of the night? And

25:14 overwhelmingly the arbiters are saying the providers are providing the right um

25:21 and appropriate justification and awarding them more than 80% of the wins

25:26 in some of the larger practices that have set up infrastructure to fight this fairly by providing all the evidence to

25:34 support their claims in each filing and even automate those filings. They’re

25:39 winning at a higher than 90% rate. Uh, and what are the payers doing? Not

25:44 paying. There’s no mechanism in the law that says they have to pay. That’s a huge

25:51 miss when they crafted that law. And there’s no mechanism

25:57 uh to have transparency on the payer side to show evidence of why

26:04 what they’re offering is legitimate. So they have uh opaque databases uh and they’ve designed this terminology called

26:11 a QPA or qualifying payment amount and they said this is actually what our average is in this geography. It’s

26:17 really interesting for certain payers in certain geographies. There’s been lawsuits and litigation on this that

26:24 offer from them is very curiously close to Medicare. And what does Medicare pay us uh Josh on

26:30 the dollar for anesthesia? what 13 cents something like that at this point about

26:36 maybe a little bit more at this point. But uh yeah, and you know it’s so interesting again to see the the

26:42 cyclical change because uh a lot of this uh years ago was state-by-state

26:48 legislation. So, um there were states that said if you’re out of network, uh

26:54 then the insurer has to pay the uh the group’s flat rate, whatever their rate,

27:01 whatever that number is, which would bring the insurers to the table because they didn’t want to pay that full board.

27:07 There was no uh there was no uh language about out of network, whatever the

27:14 patient would have to make up. Uh there were states that said and the goal again was to bring the insurer to the table.

27:20 Um which is effective but um you know that there were practices that

27:25 intentionally as as Mo was saying would intentionally you know just not negotiate in good faith. So there had to

27:31 be a middle ground but I think Mo articulated extremely well uh the big myths in the no surprises act.

27:40 What impact on practices have you observed? And I understand that even to enter arbitration, one of the challenges

27:45 is there’s like a a per arbitration fee that is incumbent upon the I think the

27:51 provider, the the physician’s practice is like if if the insurance company doesn’t want to pay us what we’re telling them this is worth and we got to

27:57 pay 200 bucks to go in front of that arbitrator on a per claim basis and you multiply that times all the surgeries,

28:02 that’s that can quickly become a huge expense. Yeah. So, uh look, let’s be honest.

28:07 There was um uh a publication ASA supported it um in the North Carolina

28:14 market for example with Blue Cross and Blue Cross had it officially on their documents that they shared internally

28:20 and externally to practices that says we are basically taking advantage of the law and we’re going to pay you the QPA

28:27 and if you don’t like it um we’re going to terminate you um and you can resort to the uh NSAID R process um and we’re

28:35 going to take a contract hit on y’all Right. And those uh contract cuts that they were proposing uh to these

28:42 practices were 20 30% cuts um effective immediately basically not

28:48 waiting till the next contract renewal but in the middle of their contracts. And this has been used as an evidence in

28:53 some of these uh cases. So what are these practices forced to do? Um

28:59 scramble. Uh they have to go through a mechanism and they’re not ready for it.

29:05 um they have to collect all this data. They have to file uh in a certain uh format. Uh there’s a 30-day window for

29:12 an open negotiation period. There’s a filing period that’s like 4 days. Um they have to submit all their evidence

29:19 and claims. Um then they have to wait to get awarded anything and the insurance

29:24 insurer still might not pay. 180 days have gone by from start to finish. Your AR has been tied up for 180 days. Your

29:31 CRAS have to get paid. Your office staff has to get paid. your billing company has to get paid, you’re not getting

29:37 paid. And so we’ve seen a lot of practices fold, take substantial

29:43 haircuts, go to the hospitals for substantial subsidies.

29:48 Um, and what have you seen, Josh? Yeah. No, I would say the same, and I also would go back to a leadership uh

29:55 issue. When you see the smaller to medium-sized groups, um, they’re not prepare prepared, as most said. Um you

30:02 think about the infrastructure that one of the large insurance companies have um with analytics and information that you

30:10 know my group is 20 groups or 20 members let’s say and I just don’t have that ability to have that data in the market

30:17 or in the state. Um and I don’t have the infrastructure to now uh you know I

30:22 don’t have a team of lawyers uh sitting in my office. Um I don’t have a a a team

30:28 of analytics people in my office. Um and so those costs go up as well. Um a and

30:34 that’s part of the the the issue of how do we have effective leadership and

30:39 scale um in in some of these smaller groups. And you know there’s empath

30:45 empathetic leaders in hospitals that are going out to the groups and saying look we don’t want you to fold. We would

30:52 maybe not want to employ you but what are what are your pain points? Tell us about it. there’s only certain amount

30:59 that the groups can you know discuss. Um there there can be some NDAs etc. Um but

31:06 um it’s really a a David and Goliath situation. um where the the small to

31:12 medium-sized groups are just they just don’t have the firepower and never will to you know if a company’s u profits are

31:20 $3 billion a quarter um and you know my little group is chugging along um

31:26 there’s just there’s just such a dis uh power um sort of it just doesn’t match

31:34 it you just can’t get uh to that point. There was another one that we were uh

31:40 chatting about here. Um it was the uh the slide on the anesthesia death spiral which was also put in the ASA’s

31:47 workforce uh document. Um and uh this was back from 2023.

31:54 So I think this sums it up brilliantly and I’ve seen this happen to friends and colleagues out there. uh you’ve got a

32:01 services agreement, they want additional coverage, the reimbursement’s falling,

32:07 um higher labor costs, and then sometimes the provider start to leave

32:13 the group because of that increasing workload and poorer reimbursement. And once that happens, the rest of the

32:20 folks are left behind working even harder, covering more call and um and

32:26 getting paid less. And then the group is forced to re-engage with this health system on a huge different ask

32:36 and the health system already in a precarious financial state um scrambles here. Um so I’d love to ask Josh uh the

32:44 last part of that of how that kind of falls apart because I think that’s when a lot of times they’re called in.

32:51 Um and also make a comment around the health systems precarious financial states here. Um because a lot of times

32:57 the groups think that well those guys have fancy offices they should bail us out and maybe they don’t.

33:05 You know I I think you’re you’re hitting on all the spots and we’ll get called like I said we’ll get called in generally often by the hospital saying

33:13 we don’t understand the problem. We don’t have the expertise to understand the problem. We’re just getting an ask

33:19 from our anesthesiology group or radiology group like I said. Um and um

33:25 the the death spiral is almost irreversible when it gets to the point where you start losing your docs or your

33:32 CRNAs because now you’re bringing locoms in. Say your your doc locum is say 450

33:37 an hour. Um your CRNA locom can easily be 300 an hour. Those are huge numbers versus an employed model. Um, a and so

33:45 it gets worse and worse and worse until the the group basically collapses under the weight of the the costs and you know

33:52 the employed docs and nurses that want to make a go of it at some point just burn out because they’re working so

33:57 much and that’s when it be and it becomes critical often. So to Moe’s point, a lot of times these groups

34:03 think, okay, we’re going to hold on. We’re going to make this work and then all of a sudden we can’t do it anymore

34:08 and now we don’t have the staff. We have uh you know 40% locoms. Um and and we’re

34:14 going to the hospital saying we can’t afford this. Um it also again goes back to how are we staffing and scheduling

34:22 aside from you know whites space prime time utilization. What does the staffing model look like? Are we using the right

34:29 staff in the right location? And this is maybe a bigger question, but how are we using anesthesiology resources? Um, do

34:36 we need an anesthesiologist or a CRNA doing cataracts? I mean, we still see

34:41 that in places, right? So, so there are a lot of big broader questions. There’s there’s all the financial analysis and

34:48 metrics, but then there’s also the clinical utilization analysis that that

34:53 again the hospitals don’t begin to understand how to do that. There’s a lot of sort of layers to these

35:00 challenges. Some of them are sort of the secular trends. Some of them are specific to states or different sites

35:06 types of sites of service. A lot of the listeners for this program are doctors

35:12 just trying to just trying to do their jobs. So, as we think about um

35:18 physicians, vetting opportunities, vetting groups, understanding these factors and how it may influence a

35:26 specific role, how it may influence a career trajectory, what types of questions would you encourage physicians

35:31 to ask to understand how a lot of these trends are manifest in their market,

35:36 with the hospital, with the group that they may be interviewing, and and to be at least going in, maybe you can’t do

35:42 anything about it, but at least going in with eyes wide open and building your life accordingly.

35:48 Um, I’ll later then I’ll let Josh uh chime in. I think you know when I was a resident I created a little handbook for

35:55 my peers at the time and uh about you know what to look for in private practice and and and other opportunities

36:01 and um I would certainly uh look at the financial solveny of that practice.

36:08 Um and now I would probably rank number one or number two the relationship with the

36:16 hospitals. Um do you have a deeply embedded group? Um when I joined my

36:23 practice uh I looked at that and I saw that u the partners there were surgical

36:30 service line uh co-chairs or directors. They were med staff leaders. They were

36:37 uh previously on the board of the hospital. Um they had incredibly deep ties to the hospital leadership,

36:45 collaborative relationship with surgical services, directors, and of course surgeons. Um and that’s more and more

36:52 key because the hospital is going to be in in many respects a significant funding source and a payer uh for your

36:59 practice. now um until this potentially turns around in the next number of years

37:05 and that’s not unreasonable to expect that there could be a change in the

37:10 winds here, right? The no surprises act could get fixed. Um the uh uh

37:17 enforcement mechanisms could be changed favorably. the payers could potentially

37:23 perceive um this is not worth it anymore and go find some other low-hanging fruit

37:30 to uh to take advantage of. They’re getting tremendous backlash

37:35 um and reputational damage. Um I think uh

37:42 governance, leadership, the hospital relations, financial solveny um and then

37:47 amongst your peers in that in that practice obviously equality

37:53 um opportunities uh to to lead there. Um do folks get overwhelmingly made partner

38:01 or have some uh opportunity to to lead that practice? That was a huge tenant of

38:07 of my practice when I joined. Um the year you were made partner, theoretically you could be voted even

38:13 onto the board. There was no restrictions on that and nobody could be president for more than two terms. Um so

38:19 that was very very attractive. Uh what do you think Josh? Yeah, you know, you hit on on virtually

38:24 everything. I And Justin, you probably don’t know, but I have an early career son who’s an anesthesiologist. So, I’ve

38:30 had these exact conversations about what what to look like uh for in uh in

38:35 practice settings. And I think I think Mo hit really important point about uh the culture and the fit of the group

38:42 with the hospital. I go a lot of places where the hospital CMO says, you know, my anesthesiology group are just a bunch

38:49 of locker slammers. Meaning, they come in, they they do their anesthetics, and when it’s their turn to go, they they

38:56 slam their lockers and they’re out the door, and they don’t think about it anymore. you know, be on the bylaws

39:02 committee, you know, be embedded, be on important committees for the hospital, uh, be the director of the school of

39:08 nurse anesthesia. You really make sure that the hospital understands that your

39:13 value is beyond beyond the operating room, beyond the perioperative space,

39:19 the procedural space, that you’re a true valued partner. Um and and then the

39:24 discussions around financial get a little easier because there’s there’s comfort and confidence from the hospital

39:31 that you really are a partner and you really are struggling. Um I think that that to me is the most important part as

39:37 a young person comes in uh looking at the culture. I I think part of the culture again as Mo said is what does it

39:43 look like for me to move up to partnership? What does partner mean? Do we have quote junior partners and senior

39:49 partners where really the senior partners continue to have all the power? The junior partners are partner in name.

39:56 There’s a lot of that you have to look at and not all of it is completely transparent when residents are coming

40:01 out and and as Mo said, I mean he wrote the book residents have no idea. I mean,

40:08 there are there are people that have been doing this for decades that that I

40:13 don’t want to say take advantage necessarily, but they they do in a in a sense. They they know um what they can

40:20 get away with. I would say that dynamic also though is changing because the residents are at a premium. You know,

40:26 every group needs residents to come out to be, you know, doctors joining their group. But I would say culture and

40:32 looking at the financial and the internal culture and the culture with the hospital. And by the way, not just

40:38 with the hospital, but be involved in the community. You know, be uh the chairman of the board of the American

40:44 Heart Association chapter for for your hospital, your region. You know, do these things that that you’re then

40:49 recognized as a valuable asset to the hospital. Another item I’ve observed related to

40:55 both culture and the financials is what does turnover look like? And is this a

41:00 place where the last three years have been a revolving door and or we have like a growing percentage of our staff

41:06 that are locums coverage that may indicate that there’s some challenges that need to be addressed timely before

41:15 the you know you get beyond the point of no return. The locom thing is interesting, isn’t it? Because um gosh

41:22 uh when we all came out of training and and tried to join groups, we looked for all of those things in a in a in a great

41:29 private practice and and a partner in a partnership track. And increasingly, I see a lot of folks uh even coming right

41:35 out of training saying, “I’ll take a locum option. It’s lucrative. There’s no doubt. It’s

41:41 transient. Um it’s going to be highly fluid.” I worry a few things about the

41:48 future of our specialty there and I worry that those folks won’t get the

41:54 mentorship in all of the things that Josh mentioned how to actually be involved in hospital

42:01 leadership and the mentorship of governance um and running a practice and the business side of that practice um

42:08 and once you don’t have that skill if you do locoms for five or seven years

42:14 how are you ever going get that skill and then I worry about are is a good

42:20 chunk of the profession just going to become clock punchers. Mhm.

42:26 It’s lucrative now, but at some point, if that’s what all of your your work

42:34 life has been, um how do you have uh how how do you how do

42:41 you take control back in practices in a department and a governance because the

42:47 pendulum will swing, right? We just talked about this. We talked about that career trajectory and our peers going

42:54 from independent pra uh practitioners to a group to potentially hospital

42:59 employment. It’s going to swing back. Who are going to be the leaders to take back and reorganize practices here?

43:07 And you know, not piling on, but you know, you think about who’s going to see the preop for the

43:13 inpatient for the next morning. Well, if I’m a locums and I’ve got a eight hour shift, I’m done at three o’clock or four

43:20 o’clock, whatever. That’s going to be somebody else’s problem. It the financial models are um hurting the in

43:28 my opinion some of the clinical practices that traditionally, you know, we would see a sick patient on the floor

43:34 the night before. We don’t see that all the time. Um, I saw a contract where the group said for, you know, every

43:41 inpatient preop, we expect a $25 payment to the doctor internally. Um,

43:48 and these are the kind of things that, you know, we’re we’re becoming a transaction specialty and I I to Mo’s

43:56 point, I really worry what that’s going to look like in 10 or 15 years. I think we’re letting go of our

44:02 professionalism in some ways. That may be a little dramatic but I think we have to step back and say we as the

44:09 physicians have to control some of this environment including in the hospital leadership right

44:14 so to that example right Josh mentioned earlier in the conversation that um he’s

44:19 advised some of these hospitals that their costs are going to go up 25% if they employ because of that because of

44:26 that clock puncturing mentality. Now look as a private practice group um you

44:31 know our group eats what it kills right and so when you uh go to work um you

44:37 know and your first case is not there you’re calling the surgeon what happened

44:42 or calling the preop nurse or can we get the next patient down here if you’re employed and you’re going to get paid

44:48 for your shift go grab a coffee right the next patient when they get here they

44:53 get here um if there’s a gap or a hole in the middle of the day surgeon satisfaction starts to fall apart part

44:58 um and there starts to become more and more churn at some point, right? And that also speaks to what’s the

45:04 stipend model? Is it a true-up model? Is it, you know, a cost plus model, there’s

45:10 a lot of different stipend models that will affect behavior. But, you know, when again when we’re looking at

45:15 efficiencies and we see a cancellation same day cancellation rate of say 4% 5%. Which is huge. That’s a large

45:24 cancellation rate. you look at the un-utilized resources that are sitting around and the cost associated with

45:31 that. Some of these are just killers and and they can be addressed through

45:38 more cohesive groups making sure that the preop the peroperative space the

45:43 preop clinic all that is managed and run well um you know with uh really tight

45:49 algorithms around some of this. A lot of group or a lot of doctors that are, you know, employed are they’re not that

45:55 interested in doing that extra work. Um they’re not that interested in say building out a surgical home or an ERAS

46:02 program. Uh there’s no quote upside in it for them.

46:09 Yeah, this is one of those complex I wonder, you know, I talked to a lot of these like 35 to 45 year old docs who I

46:16 based on my limited anecdotal experience, but I’ve had a lot of these conversations like they are not going to

46:22 work until they’re 68 years old. They are looking for an off-ramp. And it’s either because the kids just don’t know

46:29 how to work anymore like they used to or it’s because the economic trade has

46:35 gotten less favorable over time or because the job description has evolved

46:40 or expanded in ways that they feel like this isn’t what I signed up for. And I’ve heard all of those in different permutations. But I I I mean I’m I I

46:48 share all these concerns from the conversations that I have because the the young docs who like we hope are

46:55 going to carry that baton, they don’t seem like they want to carry it that long. Many of them and a lot of the work

47:01 I try to do obviously is to equip them like financially to be uh robust and

47:07 have that moat so that they can not be economically stressed. But there is the the realities of like I can’t

47:13 save you from the clinical and operational demands of your job and it still seems to be pretty corrosive in

47:20 many settings. Yeah. And I I would I would say that um most physicians truly don’t go into it

47:28 for the money. There’s there’s a there’s a compassion component. There’s a caring component. Um, but a lot of the younger

47:35 doctors want to be in a situation where they do this work because they want to on their own terms, not because they

47:41 have to at 60 years old. And so all of these things we’re talking about that I mean Mo brought up really a lot

47:48 of important points, all the financial points uh affect how physicians are

47:53 looking at their world. Most of them want to do it because they’re it’s they’re mission-driven, but the financial

47:59 uh hurdles are changing how they’re looking at the profession and it’s it’s really disruptive. By the way, it’s not

48:05 just anesthesiologists. We can talk we could have this hour conversation about radiologists, about emergency uh room

48:12 physicians, uh hospitalists, uh ICU doc. It’s it’s really pervasive uh throughout

48:17 medicine, which is really worrying to your point. The kids that don’t want to do it anymore. That’s an interesting one

48:23 because I’ve I’ve fallen into that sometimes. I guess it’s like our old curmudgins here. But why? We signed up

48:30 for that junk. You heard Josh signed up for it at 125

48:36 grand and he worked his tail off 60 hours a week, 70 hours a week. How come these guys don’t want to sign up for 50

48:43 hours a week at 500 grand? Um, I think more than anything else, I was I was

48:48 sitting next to a a hospital executive

48:53  at a meeting and and he just was also scratching his head and I said, “It’s a loss of agency,

49:00 loss of control and agency and employment ain’t going to make that better.” Yeah, totally. it’s not going to solve

49:05 that issue and um I’m going to stay till the end of

49:11 you know till the night if it’s my practice and when it’s not my practice

49:17 whether I’m a locum or I’m employed or I’ve been so disincentivized where even

49:23 if it is my practice it’s not my practice because I do what you tell me I show up when you tell me I cover the

49:29 rooms you tell me um and uh and that

49:34 loss of agency, loss of respect, and then and then I’m not going to want to show up. Um, it’s interesting. I had one

49:40 more thing to touch on. Um, and I think just we talk about landscape here. This was a slide I’d put together um for

49:47 another talk. And you know, massive impacts across certain geographies and

49:52 health systems, right? Big health systems across um uh multiple hospitals,

49:57 across states. Um uh and they’ve all had significant uh challenges. is all of

50:03 these have been in the news in anesthesiology news and others. um and Beckers and their turnover for

50:10 anesthesia, systems imploding, a sudden employment,

50:15 um a conversion from uh an independent group or several independent groups to

50:21 some other model. And then the groups um in in that that were impacted. And many

50:28 of these don’t exist anymore as independent groups um or have been significantly hit or or carved up or or

50:36 broken apart. And um Josh knows a lot of these folks. I know a lot of these

50:41 folks. I did want a quick a quick comment there um around that and and see

50:46 what Josh’s thoughts are there. Yeah. I know I it’s again I think we’re

50:51 we’re we’re saying a lot of of these financial metrics that we’ve been talking about and and demographics. Um

50:59 it’s very disruptive to the individual physicians because when a lot of these things happen, we can go down and have

51:05 the whole conversation around what non-competes look like within groups. U you know do if if this group is holding

51:12 on to one little piece, can they enforce the non-compete for the bigger practice? um it’s very disrupted because

51:17 physicians oftentimes because of the all the turmoil that occurs um may have to

51:24 leave the city or they may have a a large buyout from from their group to

51:29 stay. Um and you know I’m an individual physician and my buyout’s $15 or $200,000. I have to u evaluate the the

51:38 the value of paying that to stay in town. Um but physicians generally tend

51:44 to be you know based in their community and and so this is very disruptive on a personal level and we see and well I

51:50 know you see it all over too but we see physicians having to pick up their family and move completely to different

51:56 areas to practice the medicine that they want to practice. Yeah. Non-competes is another hour long

52:01talk we could have alone. Right. But the quick summary there is that it’s protective of an individual

52:08uh to a degree. Right. If I I’m sorry, it’s protective of the group. If the group has a non-compete and the hospital

52:15decides to employ, right, you have have to buy that out. There’s some monetary value or there’s leverage by that those

52:22clinicians. Um individual physicians would rather not have non-competes and be flexible and go where they want. In

52:28many of those um circumstances, the trend has been if a takeover occurs and

52:34is imminent and is not on favorable terms to the clinicians, well, I get to leave or they’ve turned themselves into

52:41 locums divisions and locum themselves back in that geography. And I know that’s

52:48happened in Portland, um, in Chicago, uh, to a great degree, um, in and, um,

52:55several other significant geographies where it’s happened widely in that in that metropolitan area because of a big

53:01 shakeup with one or two big health systems. Um, what are your thoughts there, Josh?

53:06 No, I think I think that’s exactly right. And I also think that a little

53:11 bit tangentially, but we go back to what is what does staffing look like? Um, are we what are we going to break medical

53:18 direction and go 8 to one or 10 to one in an ASC? What are the things that that we are going to be able to do as a group

53:26 to survive? And and what is what are the clinical implications? Where does that make sense? Where does it not make

53:32 sense? We have a CRNA taking OB call all night long. I mean, these are this also

53:37 goes into the entire financial picture part of the modeling. So when this uh occurs and one of these hospital systems

53:45 and the group relationship completely collapses, we’ve literally seen this a

53:50 6, 7, 8 million subsidy turns into a $20 million turnover cost for just one year

53:57 as that hospital takes that over. Their kneejerk response is you’ve got to do

54:02 8:1 or 6:1 or something like that to make this solvent. The funny thing is

54:08 I’ve seen this Oregon I think is a good example Chicago and others have been good examples where that group

54:13 originally didn’t even want to do care team at all. Right. Exactly. And had they only thought a little bit

54:20 outside the box. Look, this is going to get, you know, challenging, I think, to

54:25 some folks, but just because you learned it one way in residency doesn’t mean that’s the way you practice today,

54:31 right? I was tapped to lead the startup of a liver transplant program in our

54:36 community hospital. Of course, our instinctive response was no blank way,

54:42 right? And guess what? Five years in, we hit number one survival statistics uh

54:48 for any hospital in the country. any hospital in the country for that that time. You can do this. It’s hard, but

54:56 you’re some of the most educated, highly trained folks in in the country. You

55:03 tell me you can’t safely supervise any CRNAs. Well, the hospital’s going to

55:08 say, “We need a change.” Yeah. and and anecdotal story like that

55:13 along those lines. We were involved in contract negotiations with a large sophisticated hospital in Washington

55:20 state. Um and the anesthesiologists were saying, “No, we’re at one of their

55:25 community hospitals. No, we’re we’re MD only. That’s the only way we’re going to do it.” And I modeled out the or we

55:30 modeled out the financial implications. And then I said, “Let’s think about this. If we’re covering it’s 12 rooms in

55:35 this community hospital. Your patients are ASA ones and twos. all the complex stuff is going to the the main, you

55:41 know, the flagship hospital. Let’s look at that. And maybe as part of the concession in the contract, you say, you

55:46 know, we’re going to change our model from MDON to medical direction with the possibility of going to medical

55:53 supervision down the road. So, you got 12 OS. You’re going to go one to four. We may go one to six in two or three

55:59 years as we see how this plays out. The groups have to be creative in finding solutions. It’s not just um we need this

56:06 amount of money, but how can we again partner with the hospital to find creative solutions

56:12 and nobody’s saying that that’s where you need to be or that that’s where it has to go. But the folks that are saying I can’t even do 1 to two, one to three,

56:18 one to four, uh it’s going to lead to disastrous consequences. As a matter of

56:23 fact, the other thing that we’ve seen out there, both of us, is independent CRNA groups without any doctors getting

56:30 more and more traction from these hospitals. So what’s the best thing for American healthcare and for our patients

56:37 in this country? You being disintermediated from that situation or are you figuring out how to provide

56:43 health care? Because I know you can do it because you go to third world countries and do mission trips and you

56:48 can do amazing things. You could start a liver transplant program in a community hospital. You can do amazing things.

56:54 Could start a residency program like my practice did in a community setting. Um, we partnered with an AA school and

57:01 provide training there and a CRNA school. So, um, you were top of your

57:06 class in elementary school, you were top of your class in high school, you were top of your class in college, you nailed

57:14 the MCAT, you got into medical school, you were probably top of the class in med school to get into an anesthesia

57:20 program. And many of you all graduated from very prestigious programs and fellowships. Um, and you’re sitting

57:26 there doing a carpal tunnel, right? Um, so you got a fighter jet pilot, you

57:32 know, doing a Bahamas air tour, like, okay

57:38 guys, uh, you know, let’s let’s start to think outside the box here and and practice to the top of our license

57:44 because I get I get triggered when they say have um other folks practice at the top of their license. How about me

57:49 practicing at the top of my license and the skill set that I bring to the table? And I think add adding to that top your

57:57 license is clinical top your license also it’s got to be business top your license. We’re all smart people. Um as

58:03 Mo said we all probably did well to get into medical school into anesthesiology.

58:08 What are we doing to expand our knowledge of the business environment and I would challenge people listening

58:14 to this um podcast to think about the business aspects and really get involved

58:21 and and dig into it. Get an understanding. get your MBA, maybe do things that will help you understand the

58:27 evolving uh landscape because it’s going to continue to change. You know, we’ve seen it change over the last 30 years,

58:33 over the last, you know, probably longer than that, but it’s not going to stop changing, but what are the tools we’re

58:39 going to have beyond the ability to do a double lumen? What are the tools we’re going to have uh on the business side to

58:46 help u mitigate risk in the changing environment? So, as we’re getting towards the end of the hour here, you

58:53 know, I think I started off this thing by saying the hellscape of anesthesia, you know, it’s out there. Um, but you

59:00 know what else is out there is some really tremendous success stories,

59:05 hospitals that are doing creative things with their anesthesia groups. Um we recently uh did a joint venture with an

59:11 academic uh institution and it’s so far gone very swimmingly well partnering with the independent anesthesia group

59:17 the academic side covering uh a pain point for them in uh what was perceived

59:23 as challenging coverage areas and having a governance model that’s uh really uh

59:29 working well for all parties. um transparency financially uh which the

59:35 mothership really needed and um and autonomy that the independent group

59:41 really needed. Um and I think there’s some uh novel opportunities in that uh

59:48 perspective. And then I see um independent groups that have uh continue

59:53 to survive and do well in this environment that have not just negotiated on dollars but come to

59:58 comprehensive good negotiations around coverage, quality outcomes. Um do you

1:00:05 have an example of that particularly? Um Josh? Yeah. Um I have multiple um where u I’m

1:00:13 obviously not going to name any of them but um yeah where the group has had the foresight to to to really demonstrate

1:00:21 you know that that quality and you know to your point about the landscape change as well though um you know there was a

1:00:29 there was a u I don’t know gold rush uh in the you know mid 2000s to 2019

1:00:38 2015 15 something like that where the thought was oh you know the bigger we get um regionally or nationally um you

1:00:47 know the more um control we will have um there was a lot

1:00:53 of senior partners and groups that made a lot of money the reality is um the the the larger groups actually offer more

1:01:01 sophistication um and you know I’m not speaking I’m I’m I’m agnostic to all the

1:01:06 different groups I you know I But there’s a lot of sophistication there. There’s a lot of leadership there. Um

1:01:12 and um but ultimately the the the business aspects are all local because

1:01:19 you know whatever group whatever the group looks like it’s dealing with one hospital or one system. So you know we

1:01:26 say all politics are local all anesthesiology is local. But there are there are there are structures out there

1:01:33 that may give some sophistication to what we do. I think that’s a perfect place to wrap

1:01:38 up. Dr. Miller, Dr. Azen, thank you very much for joining us. I learned a ton. I love these conversations because I can

1:01:45 talk to super smart people and learn about what’s going on out there. So, this has been a pleasure. Fantastic. Thank you.

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