In Brief: How to address rapidly rising CRNA costs with survey data that is inherently one year behind the current state of the market when published.
ECG has observed an uptick in CRNA compensation in recent years. The supply of anesthesia providers is outweighed by the demand for anesthesia services, which presents substantial recruitment and retention challenges for hospitals and health systems. The shortage and increasing compensation has placed significant pressure on hospital margins, hospital operations, and most important of all, patient care.
Over the past five years, CRNA compensation has grown by 3.3% at the median and at 3.4% at the 75th percentile.
These rising CRNA costs, coupled with additional coverage demands that are both more complex (e.g., cardiovascular and trauma cases) and less clinically efficient (e.g., surgeon flip rooms, NORA sites, weekend ORs) and payer pressure stemming from the No Surprises Act, have put increased financial pressures on anesthesia groups. As a result, many of our clients encounter the same problem: how to address rapidly rising CRNA costs with survey data that is inherently one year behind the current state of the market.
Consideration One: Understanding the Survey Data
Benchmarks and reports provide the foundation for a consistent approach to compensation planning as well as valuations. The reported benchmarks include pediatric, academic, and community organizations. Total cash compensation benchmarks are frequently used, which can be defined as the amount reported as direct compensation on a W2, 1099, or K1 plus all voluntary salary reductions (i.e., 401(k), 403(b), etc.)¹.
The MGMA, AMGA, and ECG surveys publish data nationally, regionally, and in some cases sub-regionally and at a state level. ECG typically relies on national data for the purposes of compensation planning and valuations; however, we understand that local markets play a big part in the rates that organizations must pay in order to recruit and retain providers. For valuation purposes, adjustments are often applied to the market data in order to reflect these local market factors.
It is important to note that CRNAs are classified as exempt employees under national FLSA overtime laws. However, in certain states CRNAs are considered as nonexempt employees and are eligible for 1.5x overtime pay. If there is a lack of clarity on CRNA exemption status, consult with your legal counsel.
It is important to recognize the limitations of relying solely on survey data:
- The data is inherently dated, being at least one year old, and may not reflect the fact that most arrangements last for several years.
- ECG utilizes blended survey data from three organizations, which has the potential for benchmark overlap.
- Organizations using benchmark data to which they report introduces selection bias, resulting in survey participants coalescing artificially toward similar compensation levels that have nothing to do with organizational economics.
Consideration Two: Work Expectations
Compensation for CRNAs should be commensurate with work expectations, most commonly defined via annual coverage hours. ECG typically sees between 1,750 and 1,930 scheduled work hours per CRNA FTE. Often, scheduled hours may be much lower than the actual work hours (inclusive of callback hours). Additionally, work hours vary widely by state.
Further, call coverage expectations for CRNAs are evolving. Historically, CRNAs were not required to take call as part of their compensation program. However, ECG has seen some organizations start to require call participation for CRNAs to alleviate the burden borne by anesthesiologists, especially in opt-out states. In ECG’s experience, of the organizations that do require call participation, CRNAs take four or fewer call shifts per month before receiving excess call pay.
Consideration Three: Local Market Factors
While survey data can and should be used to justify CRNA compensation, it is a starting point. Local market factors have to be considered to ensure that organizations can successfully recruit and retain their CRNA workforce.
From a compliance perspective, without extenuating facts or circumstances, the 75th percentile of the published TCC per FTE survey data by specialty/subspecialty is generally the maximum TCC that an organization can pay without having to justify the payment relative to production, work effort, or other metrics of performance and services to support a higher level.
TCC per FTE above the 75th percentile may be supportable based on facts/circumstances including but not limited to the following:
- Physician supply/demand in the local community
- Documented community need for the services
- Clinical productivity
- Annual hours/shifts worked in excess of market norms
- Local rates for comparable coverage higher than what national market data would suggest
- Regional premiums
- Opt-out premiums
- Subspecialization
- Call coverage shifts in excess of those typically worked by peer providers under similar circumstances
- Clinical quality outcomes achieved
- Professional collections
- Chief CRNA services
- First call
- Care team models
Learn More about Our Physician Enterprise Services Team
¹ https://www.mgma.com/provider-compensation-benchmarks
Published July 18, 2024