As a hospital leader, you’re tasked with making critical decisions that shape both your facility’s financial health and the quality of patient care. One such pivotal decision is determining how to handle your anesthesia services—an essential element of hospital operations. Should you provide an anesthesia subsidy to a private group or transition to directly employing anesthesia providers?
This decision is increasingly complex due to rising anesthesia costs, declining reimbursements, and a shrinking pool of qualified providers. Let’s explore the key considerations to help guide your choice.
The Challenge of Declining Reimbursements
Financial pressures on anesthesia practices have reached a tipping point, with reimbursement rates plummeting over the years. Between 2019 and 2024, CMS anesthesia reimbursements dropped by 8.2%, from $22.27 per unit to $20.44. For practices dependent on Medicare, this translates to just $218,000 in revenue for every 10,000 billable units—a sum insufficient for sustaining operations.
Private insurers have compounded this issue by reducing rates as well. For instance, Anthem Blue Cross Blue Shield now reimburses CRNA services at just 85% of the physician fee schedule in several states, while Cigna cut non-medically directed CRNA rates by 15%. These reductions have left many private groups struggling to maintain financial viability without hospital subsidies.
Additionally, the No Surprises Act (NSA) has inadvertently increased challenges for anesthesia providers. Designed to shield patients from unexpected medical bills, the NSA’s implementation has allowed payers to bypass in-network contracts, further reducing reimbursements. This has disproportionately impacted larger national groups but has created ripple effects across the industry, leading to more requests for hospital subsidies or even the dissolution of private anesthesia practices.
The Anesthesia Provider Shortage
The anesthesia workforce is also under significant strain. Nearly 30% of anesthesiologists are expected to retire by 2033, with 17% already nearing retirement. Unfortunately, the current number of residency graduates is insufficient to replace these departures, creating a widening gap between supply and demand for anesthesia providers.
This shortage is further exacerbated by the growing need for anesthesia services, particularly in outpatient surgery centers and non-OR settings such as interventional radiology, catheterization labs, and electrophysiology suites. As demand rises, hospitals face increased competition for a shrinking pool of providers, driving up compensation rates and intensifying pressure on leadership to maintain adequate staffing.
Burnout: A Silent Driver of Workforce Challenges
Burnout among anesthesia providers has reached alarming levels. Over 50% of anesthesiologists reported feeling burned out or both burned out and depressed, according to a recent Medscape survey. Long hours, lack of autonomy, and high stress were cited as primary contributors, leading many providers to leave the profession entirely.
For hospitals, burnout impacts more than just provider availability. Stressed and overworked anesthesiologists are at greater risk of making errors, which can negatively affect patient outcomes. This raises an important question: Should hospitals continue to rely on private groups managing these pressures independently, or would direct employment offer a better environment to address burnout and improve provider retention?
Anesthesia Subsidy vs. Direct Employment
When deciding between subsidizing a private anesthesia group or directly employing providers, several factors come into play. In most cases, private anesthesia groups cannot survive without subsidies, forcing hospitals to weigh the benefits of flexibility against the stability and control offered by direct employment.
Anesthesia Subsidy vs. Direct Employment Comparison
| Anesthesia Subsidy | Direct Employment |
| Offers flexibility to hospitals | Provides greater control over staffing, scheduling, and care quality |
| Requires ongoing financial support to sustain private groups | Eliminates dependency on external groups but increases operational complexity |
| Relieves hospitals of staffing and administrative burdens | Costs as much or more than subsidies, with additional administrative demands |
Seeking Expert Guidance for Long-Term Solutions
Given the financial, operational, and workforce complexities, engaging with anesthesia consultants can be invaluable. They can help assess the true costs of each option and develop tailored strategies for your hospital. Whether you’re evaluating an anesthesia RFP or considering the financial implications of a subsidy, expert guidance ensures you make the best decision for your facility’s unique needs. At VRAA, we understand the challenges facing hospital leaders today. Our experienced team specializes in helping hospitals navigate these tough decisions, ensuring that you achieve a balance between financial sustainability and exceptional patient care. If you’re evaluating your anesthesia strategy, contact us to explore how we can support you. Ready to optimize your anesthesia services? Let’s start the conversation.
