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Financial Issues

Perspective: Hospital Support for Anesthesiology Departments Aligning Incentives and Improving Productivity

Hill, Laureen L. MD, MBA; Evers, Alex S. MD

Author Information
doi: 10.1097/ACM.0b013e318244c36e

Abstract

Anesthesiology practice groups, particularly those in academic medicine settings, are increasingly dependent on hospital support for financial viability. To illustrate, Tremper and colleagues1,2 report that the average U.S. anesthesiology training program in 2008 received $109,000 per faculty full-time equivalent (FTE) in institutional support, an approximate 300% increase over the year 2000. Now, that figure has grown to approximately $140,000 per faculty FTE excluding anesthetist support. Financial stresses on anesthesiology groups at teaching hospitals are driven by higher patient acuity, by multiple subspecialty service and call demands, by high-risk obstetric (OB) services, and by long case durations attributable to both case complexity and time for teaching.3 An unfavorable payer mix, university taxation, and other costs associated with academic education and research missions further compound the challenges that academic anesthesiology departments face.4

Increased reliance of anesthesiology departments on financial support from hospitals can result in a strained relationship between the department and the hospital and may lead to a loss in the anesthesiology department's freedom to establish goals, to set directions, and to make decisions independent of hospital administration. The hospital's financial leaders are less able to sustain and less willing to tolerate growing demands from the department for financial support without the ability, in return, to influence decisions that affect costs. Hospitals may direct how and where monies are spent, thereby exerting increasing control over anesthesiology departments, particularly regarding staffing and personnel. In contrast, anesthesiology departments typically have little leverage or control over the institutional patient capacity and scheduling decisions that affect the service demands and expenses in their department. In response to such scheduling and capacity shifts, either they require hospital dollars to offset costs associated with hospital operational choices, or they obstruct institutional objectives by reducing hours of coverage or restricting the number of concurrent anesthetizing locations to protect departmental interests. Finally, as requests for service outside of the operating room (OR; i.e., “remote” requests) grow, anesthesiology departments may also be forced to negotiate with multiple clinical groups and/or coordinate competing demands, without the benefit of the hospital's influence or support.

The OR is an environment in which service demands do not often match true surgical volume. Substantial research on the mechanics of OR productivity and on strategies to reduce inefficiencies and improve OR throughput has begun to address this mismatch,511 but, despite good evidence to support more effective approaches, institutional tradition and surgical convenience continue to play a predominant role in OR scheduling practices.5,7 When OR time allotment and case scheduling are not prioritized around the common goal of maximizing productivity, both hospitals and anesthesiology departments generally incur the excess costs associated with underused rooms as well as overtime expenses. Anesthesiology groups may respond by closing or consolidating rooms, which then leaves these groups at odds with hospital administrators and surgeons who become dissatisfied with postponed cases, lost revenue, and/or perceived inadequate OR capacity.

The current economic climate and the uncertainty surrounding new health care reform measures are increasing the already-high pressure on hospitals and anesthesiology departments to improve their productivity, regardless of their models of governance or financial relationships. Insular approaches and ad hoc decisions that do not consider or serve the greater good will not be sufficient for sustained fiscal health. Furthermore, focusing exclusively on financial support, instead of balancing financial considerations with service goals and mutual expectations, is misguided. We propose that efforts at redefining traditional relationships, coordinating decision-making processes to create a true department–hospital partnership, and crafting incentives that align individual behaviors with institutional performance goals are all essential not only for creating greater economic stability but also for resolving the discord between hospitals and anesthesiology groups. Using principles based on these three ideals, we developed a conceptual framework and contractual template that hospitals and anesthesiology departments may use to improve their financial returns as well as their interactions. In this article, we describe this contractual template and the results we obtained after implementing it at one institution.

Conceptual Framework

Costs

Anesthesia service requirements and the associated costs can be divided into productivity-based and availability-based services. This distinction is important because availability service demands (e.g., overnight call) do not respond to productivity measures or incentives and must be considered separately. For our purposes, we define availability services as either services that are not reimbursed (e.g., preoperative evaluation) or those that require a large workforce but produce inadequate volume to cover costs (e.g., trauma call, code pager call). These services provide benefit to the hospital or medical community at large and are therefore expenses that should not be borne solely by anesthesiology departments.

In contrast, service areas expected to respond to productivity measures and incentives include elective (i.e., planned or scheduled) OR and out-of-OR or “remote” anesthetizing locations. An OR run efficiently, including with appropriate scheduling practices that optimize productivity during staffed hours, will generate greater revenue to cover labor costs and thereby reduce hospital financial support requirements for elective OR anesthesiology coverage. Remote anesthesiology services (e.g., those provided at interventional radiology or radiation therapy sites), by their very nature, occur intermittently and/or in multiple locations throughout the hospital and, thus, may not be very productive. This quality often makes them less desirable and more costly for anesthesiology groups to staff; however, these remote services are often necessary and desirable from the hospital's perspective as they often support profitable or strategic clinical programs and facilitate turnover of the inpatient bed base. The disparate performance characteristics of elective OR and remote anesthesia business lines, in addition to the mismatch between the hospital's and the anesthesiology department's motivation to offer or provide these services, necessitate new tactics to align incentives and promote cooperation.

Principles

The primary principles we used in the framework and in our contract to account for the costs of availability-based services are financial responsibility shared between the hospital and the anesthesiology department, flexibility for the hospital to adjust (and therefore purchase services) on the basis of institutional requirements, and autonomy for the department in hiring staff. The principles we applied in developing the framework and our contract to account for the costs of productivity-based services include control over capacity decisions for the hospital, financial incentives to better match the work produced with the resources provided, the preservation of independent operational decision making for the department, and the provision of adequate support services to drive patient safety and quality.

Contract Development

Over the course of six months in 2007, we developed this new contract to govern how costs associated with anesthesiology services would be shared between the hospital and the anesthesiology department. The department chair (A.S.E.) and the hospital chief operating officer negotiated the principles and terms, and legal counsel for each party reviewed the contract. The contract was structured as an agreement between the dean of the Washington University School of Medicine (St. Louis, Missouri) and the president of Barnes-Jewish Hospital (St. Louis, Missouri), both of whom contributed to and were apprised of the concepts and principles of the contract. The contract comprised three primary components governing costs associated with anesthesiology services: (A) availability services required by the hospital and provided by the department, (B) anesthesiology services provided during the elective, staffed OR hours, and (C) anesthesiology services provided in remote locations.

For all three components, we used the regional health care consumer price index, which measures the average change over time in the prices paid by urban consumers for a market basket of health-care-related goods and services. This index, produced by the U.S. Bureau of Labor Statistics, allowed us to account for annual inflation in contract rates.

Part A: Availability services

Part A detailed a cost-sharing arrangement between the anesthesiology department and the hospital as part of a purchased-services agreement for our 1,100-bed teaching hospital. We established consensus around the availability services deemed necessary to fulfill institutional goals (i.e., trauma care, transplant services, emergency “code” teams, preoperative assessment; see Table 1). We itemized the Part A costs, which include expenses associated with the anesthesiology department personnel (based on department choices) who provide those services, and we divided the total costs based on our agreement about relative economic responsibilities. Costs included salaries, estimated average bonuses, and all benefits, but excluded allocated overhead expenses.

Table 1
Table 1:
Cost-Sharing Details of the Availability Services* Covered by Part A of a Contract Between One Hospital and the Anesthesiology Department

Teaching programs that employ resident physicians to provide some or all of these services will likely have different expense profiles than those that do not. Part A of the contract may reflect the impact of resident duty hours changes.

We intentionally did not incorporate OB anesthesia or critical care services in Part A, choosing instead to address them at a later date because of local considerations. Accounting for OB and critical care services in Part A would, however, be reasonable. Depending on institutional volume and payer mix, these services can lie almost anywhere along the availability-based/productivity-based continuum. OB and critical care services should be incorporated into the contract where they best conform to the principles of cost sharing, department autonomy, hospital flexibility, personal and institutional goal alignment, and quality and safety.

Part C: Remote anesthesiology locations

Because services covered under Part B of the contract required the most consideration, we will return to Part B after describing Part C. We addressed remote anesthesiology services through a “backstop” arrangement by which the hospital finances any shortfall in revenues needed to cover any personnel expenses incurred by the department as a result of providing these out-of-the-OR services. Although remote services are generally inefficient by their very nature, we designed an incentive program whereby the hospital may reduce the funds it transfers to the department either by controlling schedule density or by colocating procedure sites (i.e., placing two or more anesthetizing sites at one location) to achieve greater efficiencies in service. Using department cost models based on the number of teams needed per site and on either estimated or historical revenue projections, the hospital first determined the number of remote anesthetizing locations and hours of operation, fully recognizing the estimated amount of money it would need to transfer to support those business decisions (Table 2). We combined revenues from all remote services, including high-density areas (e.g., endoscopy) and lower-density areas (e.g., interventional radiology), to offset total expenses rather than treat each area as a discrete business unit. We felt that combining high- and low-density areas was a win–win agreement, and we were content to accept reduced margins in some areas in exchange for complete elimination of department losses, although these details are clearly negotiable.

Table 2
Table 2:
Remote Anesthesiology Services Costs per Annum at One Medical Institution*

Part B: Anesthesiology services during elective, staffed OR hours

Determining metrics.

Crafting Part B of the contract required metrics that would be readily measurable, that would not depend on billing performance or departmental staffing choices, and that would relate directly to OR productivity. To achieve the defined goal of maximal work per unit of cost, we first needed to define “work.” One commonly used metric to calculate work is utilization, which is defined as time in the OR per available OR hour. This metric is often the basis for allocating surgical block time. However, it does not necessarily correlate with productivity; that is, the slow surgeon may have maximal room utilization with very low patient throughput. Another possibility was defining work on the basis of revenue per case, but that was also problematic in that revenue per case is highly dependent on payer mix and billing performance, and it does not accurately reflect productivity if an institution provides significant amounts of indigent or poorly reimbursed care.

Surgical relative value units (RVUs) are a good measure of work performed, but they also did not meet our criteria because they do not distinguish between operative and nonoperative surgical work. Anesthesiology is the only major medical specialty that does not participate in the resource-based RVU system established in the late 1970s and early 1980s for physician services reimbursement. Rather, anesthesiology “work” is defined by American Society of Anesthesiology (ASA) “units,” which comprise base units for case complexity and time units valued at one unit for every 15 minutes. ASA units partially cover between-case time (i.e., transport to and from the OR), even though work outside of the OR is typically minimal. Because ASA units provide a relatively balanced weighting of utilization (i.e., time units) and case complexity (i.e., loading units), we determined that they would be a desirable metric to use for our purposes and would become the “work” numerator in our productivity equation.

We are not the first to deliberate on how best to measure the clinical productivity of anesthesiologists. In their work comparing the clinical productivity of academic anesthesiology groups, Abouleish and colleagues3,12 have discussed the usefulness of productivity measurements based on “per anesthetizing OR site” and on “per case” because both of these measurements allow meaningful comparisons between groups without influence by staffing ratios or personnel choices. These researchers have established a number of different metrics to reflect productivity including total ASA units per OR site, billed hours per OR site per day, billed hours per case, and total ASA units billed per hour of anesthesia care. All of these metrics, however, consider only the time spent in actual care delivery. Our approach is different in that we have established that the true unit of cost for work produced is the number of staffed hours provided for the elective schedule and not just the actual hours consumed. For practice groups with largely fixed personnel costs (i.e., salaries and benefits), hours provided more accurately reflects the true economic burden of staffing elective OR services. In contrast, for groups with variable personnel costs (i.e., per diem staff), consumed hours is a more appropriate measure of cost.

We used the total number of covered (provided) hours requested by the hospital for the elective surgical schedule (i.e., OR capacity) as the denominator to calculate our Part B productivity metric: “ASA units per covered hour.” The hospital determined the number of rooms and hours of operation with a specified decrement in rooms running in the afternoon and evening hours (Table 3). Because the number of actual rooms running at the end of day could surpass the expected number of staffed rooms when cases exceed scheduled duration, units produced in rooms outside the terms of contract would result in overtime. We did not include overtime units in our productivity calculations.

Table 3
Table 3:
Number of Staffed Operating Rooms by Time of Day, Monday Through Friday, at One Institution

Determining baseline measures and goals.

On the basis of survey results from 37 academic anesthesiology departments in 58 hospitals, Abouleish and colleagues13 found that the median total ASA units per billed hour across all the sampled groups was 6.7 ASA units/hour. The most productive groups were based in community hospitals with mixed private practice/academic surgical staff (7.3 units/hour), and the least productive were based in academic medical centers or teaching hospitals with only academic surgical staff (6.5 units/hour). In another study comparing exclusively private practice and exclusively academic medical center billing data, the same research team found that the academic anesthesiology programs reported a range of 6.12 to 6.51 total ASA units per billed hour compared with 8.11 to 9.01 total units per billed hour in the private practice settings.3 Differences were due largely to the longer duration of cases in the academic practices because base units were not dissimilar. These results correlate with data the same researchers published in an earlier study looking at longer-than-average anesthesia times in academic departments.14

Before writing the contract, we determined our own baseline number of actual and potential ASA units per billed hour. We generated 6.34 units per billed hour overall (rates that are consistent with Abouleish and colleagues' findings at other academic centers) and 4.7 units per covered hour in our teaching program. Using these data and recognizing that we could achieve 6.34 units per consumed hour, we selected a target value of 6 ASA units per covered hour as our productivity goal. We felt that if staffed hours were used more fully, we could readily achieve this greater degree of productivity.

To validate this target as financially feasible, we calculated the number of units needed per covered hour to cover our direct costs. We found that 6 units per covered hour was, in fact, our break-even point based on our average collections per billed unit. Although this number is likely to vary between institutions depending on payer mix and billing and collection performance, the methodology itself is a useful tool for determining a productivity target.

Developing incentives.

To develop and align incentives around achieving the productivity target of 6 ASA units per covered hour, we examined the gap between target units and actual units produced per covered hour (i.e., nonproductive time). Full reimbursement from the hospital at a rate equal to average collections for any shortfall would eliminate department incentives to achieve the target. Alternatively, negotiating a reasonable dollar rate for shortfall units at a fraction of the average collection rate would influence the department to strive for optimal productivity. We chose a support rate of two-thirds our average collection for shortfall units; in other words, for every unit below the performance target, the department would receive about 67% of the unrecognized potential revenue through monies transferred by the hospital. Although the specific support rate is negotiable, the format of this arrangement aligns incentives by compelling the anesthesiology department to achieve or exceed performance target levels in order to drive hospital costs for underperformance to zero while increasing department revenue to 100% of expected collections.

Other details

Through the contract, we defined the process by which the hospital could expand or contract capacity, requiring greater lead time (6 months) for capacity increases in order for the department to recruit necessary personnel to meet its obligations. The contract also outlined obligations for the hospital that we felt were necessary to adequately support productivity and quality of care at all anesthetizing sites, specifically support for anesthesia technicians, equipment, and supplies. We also negotiated and defined terms for reporting, payment, dispute resolution, and contract renewal. Including all of these terms is necessary to ensure mutual accountability and optimal clinical quality, but the details are flexible, and each department and institution should modify them to meet its individual needs. We did not include specific targets or payments around quality and safety metrics because the department and institution were both already engaged in efforts to measure and drive patient safety goals. However, any contract could certainly be modified to define and reward quality and safety targets as long as the contracted parties would be able to directly influence and accurately measure those efforts. Two possible techniques are defining quality thresholds and payment scales and applying “quality modifiers” to increase payments for a given level of production.

Initial Outcomes

In the first three years (2007, 2008, 2009) of this contract, the anesthesiology department saw improvements in its finances, in faculty satisfaction and retention, in interactions with the surgery department, in OR governance, and, perhaps most striking, in its relationship with the hospital. Between 2007 and 2010, the department received a sum from the hospital equal to 14.6% of total clinical revenues (unpublished data). The immediate economic benefits of sharing the costs of Part A availability services and Part C remote services were significant and allowed the department to increase salaries, recruit additional faculty, and stabilize the workforce. Shifting attention to OR productivity and mutual accountabilities changed the conversation with the hospital around capacity requirements and led to more rational and data-driven processes linking service demands with real patient volume.

Our agreement to a fixed number of daily anesthetizing locations led to greater predictability in staffing and workforce planning and, in turn, greater faculty and staff satisfaction. Surgeons have also reported greater satisfaction with predictable OR access, and the relationship between departments has improved markedly. The department's reduced financial risk for hospital capacity decisions has positioned us to cooperate with hospital growth initiatives, and the department now plays an advisory role to hospital leaders as they consider institutional clinical service strategies. Another benefit of this contract is that all requests for incremental capacity and services are referred entirely to hospital administration, and the department is no longer in the business of negotiating service demands.

In addition, the reports produced (as required) from these contract metrics have been useful in illustrating the impact of decisions regarding the addition, reduction, and redistribution of OR and procedural resources. The reports also allow us to measure productivity by location and time of day (Table 4). Between 2007 and 2009, the hospital added a total of 1,428 hours of capacity (a 1.15% increase) to support a surgical volume growth strategy. Actual volume in 2008 fell short of projections with an absolute decrease of 6,222 ASA units and a loss in productivity (72.8% of target compared with 74.5% of target in 2007). This lost productivity was accompanied by an increase in hospital financial support to the department to cover the gap between expected and actual units produced. Under the “ABC” contract, the hospital payments offset 67% of the estimated costs of nonproductive time, expenses previously borne exclusively by the department. In the third year of the ABC contract (2009), capacity increased 3,495 hours with an increase of 14,507 ASA units, producing no additional decrement in relative productivity performance but requiring a 3.2% increase in gap payments to the department (data not shown).

Table 4
Table 4:
ABC Contract* Reporting: Actual Productivity (in Units per Covered Hour) Achieved and Percentage of Target Productivity† Achieved

Benefits, Disadvantages and Improvements, Lessons Learned

Benefits

The primary motivations and design of this ABC contract were to create better economic outcomes for the anesthesiology department and to redefine traditional hospital–anesthesiology relationships by shifting the focus to mutual service expectations, by linking decision making with productivity metrics, and by aligning incentives to drive institutional performance. The new contract did produce the anticipated economic stability and relational improvements. Previously, economic losses for nonproductive time and services were borne solely by the department and not fully appreciated by hospital leadership. Hospital support previously required difficult negotiations and came with the stigma of “charity” and with some loss of autonomy. This contract eliminates the previously arbitrary-seeming nature of economic discussions between hospitals and anesthesiology departments by linking financial transfers both to hospital operational decisions and to departmental performance metrics (in addition to surgery department and hospital ancillary support performance). By giving the hospital freedom to make decisions about OR and procedural capacity, it places responsibility for any financial risks associated with underused anesthesia services under hospital control. The contract also preserves departmental autonomy in staffing and personnel matters which is essential to mission and, ultimately, to morale. The focus on productivity instead of utilization drives a performance goal that is tied to throughput, a link that is of particular benefit to anesthesiology groups with longer case durations for whom time-based units cannot compensate for unrecognized use (e.g., for teaching or research).

The ABC contract reporting mechanism turns out to be a useful management tool for directing capacity decisions even though this was not originally an intended purpose. Many hospitals make capacity decisions in response either to traditional utilization data or to anecdotal information and demands for access, which often result in capacity that is poorly matched to actual surgical need. The contract productivity data complements traditional utilization data to provide greater clarity around true OR production and throughput. These data have also helped identify potential targets for schedule optimization. For example, surgeons or services with high utilization but low productivity may deserve closer scrutiny to determine whether there are opportunities (e.g., earlier surgeon presence, reduced time from induction to incision, supervision of trainees for more timely closures) to improve efficiency and increase throughput. Likewise, surgeons or services that have low utilization and high productivity should be encouraged to increase surgical volume. Further, such a disconnect between use and productivity should trigger discussions around ideal block allocations and easy access to encourage service growth. Utilization and productivity that are satisfactory during daytime hours but fall off during afternoon/early evening hours should prompt investigations into whether services are unable to produce more throughput because their capacity is inadequate for the typical case duration and, if so, whether extending covered hours until later in the day would allow for additional cases.

One apparent paradox of this new contract is that the hospital has been very positive despite a significantly greater dollar transfer to the department. We attribute this enthusiasm to greater service reliability, improved employee satisfaction among surgeons, and the hospital's ability to make rapid and nonrancorous adjustments in capacity to meet strategic program needs.

Disadvantages and improvements

Despite the many relational and financial advantages we attribute to the concepts and design of this contract, we also recognize certain limitations. Importantly, our financial position is only relatively better under the terms of this agreement compared with the prior, traditional arrangement. Although the deficit is much smaller in magnitude, we still experience an absolute loss for our nonproductive Part B elective services time and our share of the Part A available services agreement. Although defining the terms of the contract to negate all department losses is certainly possible, we believe that the mutual accountability and financial incentives crafted in this contract are critical to transform and sustain the hospital–department relationship.

Although the fixed coverage agreement detailed in the ABC contract provides predictability in staffing and budgeting, it does restrict the department's ability to close rooms to match volume, leaving faculty and staff underused at times. Although closing rooms does not reduce high fixed personnel costs, the staff employed under our productivity-based incentive plan do not wish to be assigned to rooms with a higher likelihood of nonproductive time because compensation is tied to productivity. As a result, these staff may compete with residents for cases if there are empty rooms.

Under this contract, surgeons and proceduralists, who drive demand for capacity more than any other party, have no external motivation to help meet institutional or departmental goals. They may continue to function in a manner that maximizes personal convenience and productivity; they have no financial incentives to optimize productivity by scheduling cases consecutively, appropriately preparing patients before surgery (i.e., completing consents, marking surgical sites), arriving at the OR or procedure suite on time, and completing cases in a timely manner by supervising trainees and intervening when appropriate. Institutional productivity gains would likely increase if surgeons and proceduralists either paid the hospital for allocated time resulting in poor productivity or received rewards for achieving established performance targets. Targets would need to be carefully set at achievable levels; longer cases would likely require lower hourly targets than cases of shorter duration for which base units may contribute substantially to overall hourly units achieved. Turnover times would also need to be incorporated into any calculations in recognition of the reality that the anesthesiology department and hospital both benefit from minimized turnover times.

We are currently working with hospital and surgical leaders to structure a contract that incorporates surgical incentives to both improve OR productivity and better use expensive OR resources. Our current proposal would set targets at current productivity levels (ASA units per covered hour) with no penalties incurred or rewards paid for units generated within a 95% to 105% range of this target. Productivity falling outside of this range would necessitate a transfer of monies between hospital, anesthesiology, and surgery groups. This scheme limits the hospital's financial risk because the amount of payout costs resulting from low productivity to anesthesiology groups would be capped and offset by surgery payments to the hospital for nonproductive time. Payouts to surgery groups would be tied to productivity achieved above established targets, allowing increased surgical volume to generate revenue in excess of incentive payment costs. (Payments to anesthesiology departments would be nil.)

The hospital is working in the off-site locations to achieve greater scheduling density, to appropriate staff preprocedure and postprocedure areas for greater patient throughput, and to provide necessary patient transport services to support more efficient use of the remote anesthesia teams. Alternative strategies might include setting performance targets as described above for proceduralists at remote sites to align their incentives with those of the institution and reduce hospital financial risk.

This contract does not include an accounting of schedule overruns and associated overtime expenses. We focused on productivity targets during scheduled, staffed hours because these remain the single greatest source of both expenses and revenues for the department. A plan to reduce elective overtime work is an important goal and will be an area of focus as we incorporate surgical incentives into our optimization plan.

Lessons learned

We believe the contract we negotiated offers a template that is broadly applicable in a variety of practice settings and institutional governance models. Over the course of contract development, we discovered that the greatest barrier to adopting our model was the use of ASA billing units as the primary measure of OR productivity; RVUs were a more commonly understood measure of work. Efforts to provide a clear understanding of ASA units and the rationale for using them will be critical to the success of other institutions and departments implementing a similar model and, as such, should be an early area of focus.

The terms and details can be easily customized to meet individual department needs. For example, signatories can alter those items included in the Part A availability services and/or in the fraction of shared financial responsibilities between hospitals and departments as appropriate. Any parties entering the contract should recognize that shared financial responsibility need not be equal but should, in fact, be based on factors such as the required workforce and associated financial burdens, the number of billable services anticipated, payer mix, and other institutional financial arrangements. Institutions and departments can also adjust Part B unit / hour targets and dollar/unit amounts to reflect OR case length and complexity as well as variations in average collection rate. We believe that agreeing on mutual incentives to drive throughput is essential, but it is extremely important that the target for productivity be realistic and that the dollars per unit that hospitals pay to departments for underperformance provide enough financial “signal” to the institution to drive good decision making around capacity changes. Hospital resources are generally of a magnitude much greater than that of department resources, so the economic burden of underused anesthesia services should be scaled appropriately. The Part C remote services backstop agreement should reflect true staffing preferences, along with associated expenses, in order to deliver the services requested. Additionally, it is critical that the requirements for capacity change requests are enforced and that methods for data collection and reporting are accurate and transparent.

In Sum

As health care organizations confront ever-increasing demands for quality and service and decreasing reimbursement and margins, improving productivity is essential if they are to remain financially viable. Anesthesiology groups, and academic anesthesiology departments in particular, have long required institutional financial support, and they are increasingly vulnerable to shrinking hospital funds. We have presented a contractual approach to the hospital–department relationship that aligns financial incentives, mutually encourages increased productivity, preserves department control over personnel and staffing, maintains hospital control over capacity decisions, and reduces the economic burden of those decisions on the department. We are using these principles to continue our efforts to achieve complete institutional alignment around maximizing OR productivity through the development of appropriate and effective incentives for our surgical colleagues. When coupled with operational tactics and strategies, this novel contract puts into place the motivational forces that drive individual and group behaviors to achieve institutional goals.

Acknowledgments:

The authors would like to thank Ms. Sharon O'Keefe, MSN, for her participation in the development of this contract in her role as chief operating officer for Barnes Jewish Hospital, St. Louis, Missouri.

References

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Funding/Support:

None.

Other disclosures:

None.

Ethical approval:

Not applicable.

© 2012 Association of American Medical Colleges