Bonus or Cut-Rate Reimbursement? Anesthesiologists, Hospitals Joust

Physician Compensation Report, Feb, 2002

An unusual payment from a health system to the anesthesiologists working in its three hospitals is called a "performance bonus" by the system, but the physicians view it as inadequate reimbursement for uncompensated services.

What's agreed upon is that on Dec. 19, Charleston (W. Va.) Area Medical Center (CAMC) paid its exclusive anesthesia provider, 26 physician General Anesthesia Services (GAS), $350,000 without being billed.

Also agreed upon are these points:

* In the past year, GAS has lost six physicians and been able to recruit only one. The practice has difficulty attracting physicians to West Virginia -- a problem shared by so many medical groups in the state, particularly because of high malpractice rates, that it is starting to threaten health care there. (PCR has heard of recruiters around the country and groups in Ohio trying to "raid" the state's physicians.)

* GAS' workload at CAMC has risen in the past year and, with fewer physicians, that means individual work time is way up, to about 65 hours a week. The group's 50 full time equivalent certified registered nurse anesthetists (CRNAs) are also working longer hours.

* The physicians have performed exemplary service and, in the added light of the recruiting problem, should receive some more money.

But that's where the agreement ends.

CAMC: It's a 'Bonus'

The CAMC board of trustees declared that "as an expression of gratitude for the quality services by GAS throughout 2001 ... [the board] resolves to pay GAS a well earned performance bonus."

The health system maintains an extremely busy surgery schedule and obviously needs the anesthesiologists, spokesman Andy Wessels explains. For instance, last year CAMC performed 2,400 open heart surgeries, the fifth highest number in the country for a hospital or local health system, he says.

The system recognizes the "difficult and stressful circumstances" under which GAS' remaining physicians work, and hopes the money is used to ease the recruiting problem by paying signing bonuses or raising salaries, he adds.

As for the potential problem of groups in other specialties also wanting bonuses, Wessels calls the payment a "one time only deal."

GAS: It's (Inadequate) Payment for Services

Many of the reasons for GAS' recruiting problems and inability to offer top dollar to new recruits -- in a specialty with a verified national shortage and double digit pay inflation, especially for new recruits (PCR 12/01, p. 5) -- affect many West Virginia medical groups, says Administrator/Chief Financial Officer Michael Tassos. Commercial reimbursements are lower than in many regions because it's a relatively small market (Charleston's population is about 60,000) that is not very important to national payer firms. Locally based payers are not willing to bid up prices. The 5.4% Medicare RVU dollar cut is "pouring oil on the fire," he says.

On the cost side, West Virginia has among the nation's highest malpractice premiums, which rose this year by about 40% to about $24,000 per anesthesiologist. Health insurance premiums also have jumped dramatically. Despite much higher workloads per physician, Tassos says 2001 incomes were "not significantly higher" than in 2000 because of higher costs. He declines to disclose income figures.

But, he says, another key reason for the recruiting problem is a CAMC policy: assigning nearly all "airway management" cases in the three hospitals to the anesthesiologists. Airway management is essentially helping people breathe who couldn't otherwise, often by using inhalers or inserting tubes into their lungs, and then managing the eventual restoration of the breathing function. This essential hospital task arises not only in the emergency room but also among inpatients. In many hospitals it is done by ER physicians, pulmonologists, hospitalists and other specialists, or by nurses and emergency techs. But CAMC wants anesthesiologists and CRNAs to handle or supervise all these cases.

Tassos says this responsibility cuts GAS' bottom line and physician pay in several ways. On the cost side airway management forces the group to have much more call coverage in all three hospitals than otherwise would be necessary. The extra coverage time when handled by CRNAs costs the group $60 per hour or more. The group's physician pay system for owners is about 60% equal shares and 40% based on time at work. Thus, the extra call duty incurs added physician charges.

Airway management brings in very little revenue, Tassos says. Many of the patients have no coverage. Medicare and Medicaid pay very little unless surgery is needed because the time involved in each procedure is limited. And quite often, there are no patients who need the service during a call shift.

GAS has been negotiating with CAMC for more than a year to try to get payment beyond the limited reimbursement available. At one point, he claims, CAMC offered more than $350,000, "but then backed off a final settlement."

Tassos says a significant reason for the departures of physicians was the health system's refusal to be tied down on the matter. And, he adds, "It makes recruiting almost impossible because you can't tell people what they're going to make" once they become owners.