Value-Based Enterprise Compensation Models for Anesthesiologists Overview

Over the past five years, multiple factors have disrupted the economics of anesthesiology: declining commercial and government payment for anesthesiology services; flawed implementation of the No Surprises Act (NSA); workforce supply/demand imbalance caused by retirements, transition of many anesthesiologists from W2 to 1099 employment; and increasing demand for anesthesia services. Regardless of size, complexity, or employment model, almost all anesthesiology practices now require financial support for recruitment, staffing, and care delivery. For some practices, facility-based support is greater than fee-for-service revenue.

With greater financial support, however, hospitals and Ambulatory Surgery Centers (ASCs) also have higher expectations for alignment with anesthesiology practices around strategic growth. Hospital and ASC partners are increasingly requesting visible and demonstrable partnership, linking financial support not just to staffing/coverage, but also to performance incentives around staffing, clinical quality, operational performance, management and leadership, and patient experience.

Current economic headwinds require that practices consider compensation strategies that offer greater sustainability and alignment with healthcare systems. Based upon Centers for Medicare & Medicaid Services (CMS) and US Department of Health and Human Services Office of the Inspector General (HHS OIG) guidance, some practices may wish to evaluate and create contracted compensation models that reward anesthesiologists for their unique clinical, operational, leadership, and management skill sets.

These value-based enterprise (VBE) compensation model materials are meant to do the following:

• Educate anesthesiologists about value-based enterprise compensation models that create more sustainable and aligned contractual relationships with their partner facilities.
• Provide anesthesiologists and their groups with tools to promote their value-added services to both internal and external stakeholders.
• Describe hospital and facility-based contracting models that are feasible, scalable, and applicable to anesthesiology practices regardless of size, employment model, or case mix.

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What are value-based enterprise (VBE) compensation models?

VBE compensation models link a portion of a group’s financial payments from hospitals and ASCs to the quality, cost-effectiveness, and patient experience of care, rather than just the volume of services provided. These models often involve contracts that set targets for quality, operations, and service, with rewards like bonuses based on achieving high scores on agreed-upon metrics.

Key characteristics of VBE compensation models include the following:

• Anesthesiologist compensation aligned with shared performance in patient outcomes, care quality, administrative leadership, and resource utilization.
• Written documentation detailing the activities, performance measures, and remuneration methodology.
• Clearly defined value-based purpose, a target patient population, and verifiable criteria for achieving shared goals.
• Specific, agreed-upon targets for quality, patient experience, and cost-effectiveness that must be met to earn rewards.
• Enumerated financial rewards and risk, including whether physicians would be required to return a portion of earnings for failing to meet targets (two-sided risk).

What are the benefits of VBE compensation models for anesthesiology practices, hospitals, and ASCs?

For anesthesiology groups and anesthesiologists, VBE compensation models clearly aligned with hospital goals and initiatives will often lead to stronger relationships with hospital and ASC executives. When effectively completed, the VBE compensation models will offer higher pay for achieving quality and service targets and will likely generate a stronger sense of purpose and professionalism by allowing flexibility in delivering the right care at the right time. Anesthesiologists will likely experience reductions in burden on non-clinical work through increased efficiency and prevention of redundant services.

Hospital and ASC executives hope to and likely will experience reduced healthcare costs achieved through aligned efficiency, coordination, and outcomes. Aligned and agreed-upon contracts will lead to fewer unnecessary services because of better care coordination among different healthcare professionals. Ideally, execution of VBE compensation models will lead to improved patient  outcomes and satisfaction and an elevated facility reputation as a provider of high-quality, cost-effective care.

For anesthesiologists and their groups, as well as hospitals and ASCs, common benefits include greater alignment around strategic growth, greater alignment around perioperative management and optimization, better transparency, contract sustainability, and better collaboration and communication.

What are the key data management principles for VBE compensation models?

Most VBE compensation models will include some of the following elements but local circumstances and goals will influence their final forms. In general, implementation of VBE compensation models should:

• Include practical, meaningful, and actionable performance metrics. Anesthesiology practices should be engaged in identifying, defining, and agreeing to all performance metrics. The performance metrics should be valid and be consistent with clinical practice, workflows, or care delivery. Performance measures should be collected and reported at or near real time.
• Include real-time dashboards to track discrete process and outcome measures.Hospitals and ASCs should share appropriate data with anesthesiology practices in a timely fashion. Dashboards should clearly show the performance threshold, target, and stretch goals. The dashboards should include data sources, frequency of data reporting, and any patient or operational exclusion data based upon performance metric definitions.
• Include a process for department and/or multidisciplinary performance metric reviews. Anesthesiologists must be educated and held accountable for accurate documentation, closure of records, and timely data submission. Anesthesiology practices must review dashboards and other information to ensure data accuracy, identify opportunities for care or process improvement, and continually engage providers on their performance.

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