Get Ready To Do A Lot More Endoscopies For A Lot Less!

The National Colorectal Cancer Roundtable set a goal to screen 80% of eligible patients by 2018.  To accomplish this goal, the Centers for Medicare & Medicaid Services (CMS) decided to waive copayments and deductibles for screening colonoscopies.  Section 4104 of the “Patient Protection and Affordable Care Act” waives the beneficiary coinsurance for covered preventative service that have a grade of “A” or “B” from the U.S. Preventative Services Task Force (USPSTF). Colorectal screening has an A grading.colonoscope

While this may be good to increase access to colorectal cancer screening, CMS followed this change with endoscopy related payment cuts in 2016.  Those cuts effectively decrease payment to gastroenterologists by 9%, facilities by 9.5% and offices by 2.3%.  So drastic were those cuts, that a recent survey of 327 gastroenterologists conducted by Dr. Matthew McNeill, MD found that the surveyed gastroenterologists may cut procedure volume by about half.  

If this survey result comes to fruition, a collision course is on its way that spells trouble for most gastroenterologists and anesthesia providers. More patients seeking screening colonoscopies but dwindling payments for those procedures.  If this reality wasn’t bad enough, private insurers have paired specialists against each other in an effort to further reduce payments.

Are Ambulatory Care Centers Really the Future of Anesthesia?

The past 10 years have seen an increase in surgical volumes as health reform has brought more people into the health system.  Dr. Thomas Miller, in a recent ASA Monitor post (link),  notes that Medicare beneficiaries increased 10% and the Anesthesia claims count increased 136%!  Underlying this trend is something less reported– there is a big shift in case volume away from Hospital inpatient settings into freestanding Ambulatory Care Centers and Hospital owned outpatient centers

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This trend is likely true among all payers as well.  AnesthesiaStat is performing an analysis of data in an HCUP database to look at these trends.  There appears to be a shift of of both acuity and volume across the board.

What does this mean for Anesthesia groups?  How should you position yourself for the future?

Mark Weiss, JD, in a stimulating and provocative article called,” Impending Death of Hospitals: Will Your Anesthesia Practice Survive?“, argues that hospital consolidation and employment of physicians will be a failure.  He believes the shift of volume in to more efficient ASC’s will lead to the failure of hospitals. He concludes with the following, “Freestanding facilities, even mobile ones, will be the future of the huge bulk of surgical care. If your practice isn’t already heavily focused on freestanding facility care, begin pivoting in that direction. ”

So, what does that mean?  A simple answer is to start acquiring ASC’s. However, surgeons are getting wise to that solution.  In fact, many are utilizing “company model” type solutions to employ Anesthesiologists at below market rates (or replace physicians with CRNA’s to profit) .  In Maryland, a coalition of surgeons is attempting to roll back the state self referral law to allow for the company model.  In many areas, surgeons are working to create accountable care or bundled payment models that allow them to control the money.  Of course, they cannot entirely be to blame.  Surgeons are facing decreasing reimbursement and facility fees.  Insurers are rejecting out of network models of care, reducing their options.  A future article will develop this concept futher and specifically, look at the pressures in GI Anesthesia.

Anesthesiologists must be ready to fight for their independence.  Part of this is data driven.  Don’t know how?  Click here to get in touch.  We are happy to help you develop the data driven message your practice needs to show its worth and the value you provide.

 

 

Ketamine Infusion Clinics- Is this Off Label Practice Right for You?

From time to time, we like to offer information about new services that you should consider. This article from AnesthesiaNews about Ketamine Infusions gives some useful background.  Contact us for more information or help:

“A growing number of anesthesiologists are opening private clinics that provide off-label infusions of ketamine to patients suffering from treatment-resistant unipolar and bipolar depression, post-traumatic stress disorder (PTSD), anxiety, suicidality and other disorders. Psychiatrists and other physicians have also recently opened clinics.

The cost per infusion ranges from $400 to $1700, with most clinics charging about $500. Patients pay out-of-pocket since most health insurance plans do not cover the off-label procedure.

Despite the cost, patients seek the treatments after their antidepressants and other therapies prove ineffective. Proponents claim that, when administered as an IV infusion in a subanesthetic dose (typically 0.5 mg/kg body weight) over 40 to 45 minutes, ketamine begins reversing symptoms of depression for two of three patients in less than 24 hours, with effects persisting for a week or more. Nearly three of four patients suffering from suicidality experience an almost immediate reversal in thinking.”

Contact us to help evaluate this practice for you.  Here is a link to the article.

Medical Practice Buyouts- Are We In A Bubble?

Physicians have been slow to catch on, but we are finally learning about the new marketplace. Wall Street and private equity financed companies; hospitals and large physician groups are competing for physician practices. Our past articles have explained why the market has changed. There is still a lot of confusion, however. The number one question I continue to get asked is, “Are we in a bubble?”. The number two question is, “What happens to me when it pops?”.   In this short article, I’ll give my opinion on the excitement in the market and what may happen if/when sentiment changes.

 

Despite growing financial pressures on practices, many colleagues are cashing in by selling.   Many of us are accustomed to the periodic irrational exuberance of the stock market and worry about something similar happening in medical practice valuations. The answer, as always, is a very personal assessment of risk and benefit.

 

Confused? Start with the concept of the bubble itself. Many economists have attempted to answer this question. There is never a straightforward answer. The basic idea is that when excitement leads to an increase in asset prices or valuations beyond traditional metrics, you may be in a bubble. Notice I used the word “may”. There is no accepted straightforward definition of a bubble. More important: on an individual basis, as a famous investor once said, “the market can be irrational much longer than we can stay solvent“.

 

Getting beyond the “bubble” really changes things around. The question becomes an individual one rather than a macroeconomic one.   Is the price someone is willing to pay for my practice high enough now that I am willing to accept future risk to my practice? What are the opportunity costs of not selling now?

 

What are the future practice risks? This is somewhat nebulous. Let’s look at one scenario. The large entity you sell to may be better at managing expenses and risk in an era of health reform. For some time, you may benefit from practice efficiency, technology and income stability/repair that the new entity provides (see previous articles for more details). Is there a point at which they maximize efficiency? What point will growth cease to impress the capital markets and multiples (price above earnings the market will pay) start to come down? What affect will that have on operations? When companies leave the rapid growth cycle, it creates pressure to decrease costs. Salaries and staff are reduced.

 

In our past articles, we argued that corporations are buying practices at earnings multiples of 3-9 and “reselling” them to the capital markets at multiples of 15-30. They use the money raised to purchase more practices. As corporate valuations go up, they can easily fund more practice acquisitions (of note, they also use the free cash flow of the practices to fund acquisitions as well). This means that practice valuations can be subject to the whims of Wall Street. Here is the 52-week chart of Envision Healthcare (EVHC), Team Health Holdings (TMH) and Mednax (MD). Notice the volatility. If their access to capital is decreased due to a declining valuation, that could mean decreased prices for practice acquisitions in the future.

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The recent buyout offer by Amsurg for TeamHealth underscores that this is a dynamic marketplace. Consolidation will reduce the number of potential acquirers.

 

We must also consider macroeconomic pressures. Eventually, rising interest rates will make acquisitions more costly and reduce prices. The lending market is still tight because of the financial crisis of 2008.

 

The uncertainty raised in the previous paragraphs explains the dilemma but also points to the solution for those worried about a bubble. Our best guess is that most providers/owners are better off now with the investment and efficiency of a large entity. If the underlying business of anesthesia deteriorates, the smaller groups will be hurt more than the bigger ones. Even if the business falls apart, you will likely have fared better in a large company than on your own during a downturn (“popped bubble”).

 

In the end, I cannot say with certainty that we are in a practice valuation bubble. Bubbles tend to be impossible to predict. Are we saying you should sell now? Not necessarily. Just that you should think about it systematically and not run away because of fear. Start with a practice and risk assessment. Then you can choose among several options, which may or may not involve a sale of your practice.