Escalating Anesthesia Costs at ASCs: How to Control Costs and Maximize Profitability at Your Surgery Center

Declining reimbursements coupled with a labor shortage made anesthesia one of the biggest challenges for surgery centers in 2023.

Centers are increasingly negotiating a budget line item that, until recently, existed primarily at hospitals—an anesthesia stipend.

Over the past five years, MedHQ has seen a 65% increase in the number of centers that are incurring anesthesia costs. Since 2018, the median annual anesthesia expense has been on an upward trend. In 2018, ASCs with stipends were estimated at $25,000, but today the median number is nearly 8X, closing in on $200,000.

The good news is that there are ways to protect your facility against these rising costs and get anesthesia back on track.

How to Understand Anesthesia’s Impact on 2024 Budgets

An important note: overall, 2024 is set to be another big year for ASC growth. The acceleration of value-based care, increased reimbursement schedules, and consumer demand is pushing more procedures, and notably more complex procedures to ASCs. The one key area of misalignment is anesthesia.

While most market participants have incentives to transition to ASCs, anesthesia is not in that group. It is key that ASCs develop a plan to address anesthesia costs in 2024.

“For years, ASCs didn’t need to worry about anesthesia costs, as nearly all anesthesia providers separately billed for their professional services without looking to the ASCs for revenue subsidies,” said Matt Lau, Senior Vice President of Client Accounting & Financial Services at MedHQ. “Unfortunately, decreased reimbursement rates and increased labor costs have recently forced many anesthesia groups to pass additional costs on to ASCs. Carefully tracking those additional costs is crucial in understanding how they impact the financial health of your ASC.”

In order for operational strategies to yield the desired financial outcomes, It is important to have connectivity between operations and finance.

Control Costs in the Short-Term by Reviewing Procedures and Optimizing Scheduling

In many cases, anesthesia costs can be controlled by reviewing procedures and optimizing scheduling to ensure maximum value for your center’s anesthesia spend.

“We see a lot of ASCs that are still in a reactive phase,” said Dave Becker, VP of Client Accounting Services at MedHQ. “They have yet to develop an appropriate, proactive plan for anesthesia.  That said, there are several short-term operational options that can be considered to help increase efficiency and alleviate financial pressure.

“One example includes scheduling high-reimbursement cases into just one or two days a week. Another example is eliminating low-reimbursement cases altogether, as such cases can incur an anesthesia cost that’s more than the total reimbursement for the case.”

Identify Areas of Long-Term Improvements and Implement Changes to Anesthesia Programs

With some ASCs now incurring annual anesthesia costs that well exceed six figures (the median cost for MedHQ clients in 2023 was $189,504), long-term improvements to anesthesia programs are needed to ensure the long-term viability of ASCs.

Hospital and health-system-owned ASCs are increasingly looking at building captive anesthesia programs, which brings its own set of challenges and accounting and financial consequences.

ASCs should consider all their options and investigate with accurate financial models and tracking, as building an in-house anesthesia program could end up costing much more than expected. Thus, trusting the financial data and understanding the financial impact of these operational decisions is more important than ever.

About MedHQ’s Client Accounting and Financial Services

MedHQ’s Client Accounting and Financial Services business empowers physicians, ambulatory surgery centers, and healthcare organizations to achieve optimal performance by integrating comprehensive financial reporting and key performance indicators that ensure clinical operating strategies deliver optimal financial performance.

Learn more here about how our team provides the data and reporting your center needs to plan, control costs, and run your business efficiently.