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Anesthesia Financial Models KOAMA San Juan January 2007 Joe Laden joeladen@aalouisville

Anesthesia Financial Models KOAMA San Juan January 2007 Joe Laden joeladen@aalouisville.com. ABC Anesthesia - 2006. Anesthesia Metrics You Should Know. Revenue per Unit ($20-$50) Revenue per Hour ($200-$450) Unit Reimbursement Rate of Major Payers Revenue Per OR ($300k-$700k)

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Anesthesia Financial Models KOAMA San Juan January 2007 Joe Laden joeladen@aalouisville

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  1. Anesthesia Financial Models KOAMA San Juan January 2007 Joe Laden joeladen@aalouisville.com

  2. ABC Anesthesia - 2006

  3. Anesthesia Metrics You Should Know • Revenue per Unit ($20-$50) • Revenue per Hour ($200-$450) • Unit Reimbursement Rate of Major Payers • Revenue Per OR ($300k-$700k) • Average Shareholder MD W-2 ($250k-$400) • Total non-W-2 Costs per MD ($60K-$110k) • O.R. Utilization (40%-80%) Ye • Units Billed per MD per Year

  4. Anesthesia Metrics You Should Know • % Work After Hours (0-30%) • CRNA Cost Per Hour Billed ($120-150) • CRNA Cost Per Unit Billed ($14-$18) • MD Hours In Hospital Per Week (40-55) • % Corporate Overhead & Administration (2%?) • % Billing Cost (3%-8%) • % Medicare Units (10%-60%) • Units Per Hour (7-10)

  5. Key Metrics • Revenue Per O.R. • Revenue Per Unit Billed • O.R. Utilization Rate • % Hours Billed/Worked After Normal OR Shift • CRNA Cost per Hour/Unit Billed • MD:CRNA Ratios (Concurrency) • Weeks Worked per Year • MD non-Salary Costs • Units per Hour • Units Billed per MD FTE

  6. CRNA Cost Per Hour/Unit Billed • Hourly Rate = $60 • Hourly Rate with Benefits & Taxes at 33.3%  $80 • Hourly Rate for Hours Worked (40 days PTO)  $95 • Hourly Rate for Hours billed @ 70% Utilization $135 • Overtime, Shift Differential & Call May Increase • Converts to about $16-$17/unit • Can This Metric Be Controlled?

  7. MD:CRNA Ratios (concurrency) • Nominal Ratio May Be 1:4, 1:3, 1:2 , However: • Some MD-only O.R.’s • Different Ratios: (some O.R. 1:2, some 1:3) • Ratios Change As Cases Start and Stop • Floaters Should Be Counted

  8. MD:CRNA Ratios (concurrency) • Practice RatioAverage Number of MD’s Scheduled to Work Divided by Average Number of CRNA’s Scheduled to Work

  9. MD:CRNA Ratios (concurrency) Practice Ratio Example: 10 OR’s Normally Scheduled as Follows: 8 CRNA’s in 8 O.R.’s 2 M.D.-Only O.R.’s 6 O.R.’s @ 1:3 2 O.R.’s @ 1:2 Total M.D.’s  5 Practice Ratio  5:8 or 1:1.6

  10. MD:CRNA Ratios (concurrency) Cost Ratio • Divide Total Revenue by Total CRNA CostExample: Total Revenue $12,000,000 CRNA Cost $ 4,000,000 Cost Ratio 33% • Result – One Third of Revenue is Consumed by CRNA Costs.

  11. MD:CRNA Ratios (concurrency) Cost Ratio • Therefore, 33.3% of Units Billed Per MD or Hours Billed Per MD or Revenue Per MD would need to be subtracted to compare to another practice with no CRNA’s or a differentratio of CRNA’s.

  12. MD:CRNA Ratios (concurrency) Summary • The Effect of Concurrency is Difficult to Calculate • It Makes Comparison to Surveys Problematic • However, the MD:CRNA is Controllable by the Anesthesia Practice and Can Have a Significant Influence on MD Income.

  13. Weeks Worked Per Year • Eight Weeks Time Off is the Average • Significant Differences Will Be Reflected in MD W-2 Wages. • Value of a Vacation Week Calculation:Total MD Compensation/Cost Divided by Number of Weeks Worked$440,000/44  $10,000/week

  14. Anesthesia Financial Models

  15. Diagram Model

  16. Spreadsheet Model

  17. Graphical Model

  18. Click Above to Activate Slide: Click Here to Advance to Next Slide

  19. Click Above to Activate Slide: Click Here to Advance to Next Slide

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  21. Situations Were Models Are Useful • Evaluating Additional O.R. Coverage • Advocating for Improved O.R. Utilization • Analyzing Proposed Change in MD:CRNA Ratio • Additional Facility to Cover • Additional Personnel to Improve Lifestyle • Changes in Vacation for Some or All MD’s • Changes in Payer Mix • Changes in Payer Reimbursement • Stipend Requests (New and Changed) • Probable MD Income in Future

  22. Steps to Develop & Use a Model • Objective • Inputs and Outputs • Determine Form • Gather Data • Validate • Compare to Surveys and Benchmarks • Project, Manipulate in Real time

  23. Model Software References • http://www.modeladvisor.com • http://www.xcelsius.com

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