Wow, what a day! You've just left a meeting with the hospital's CEO. Of the fifteen anesthesiologists in your openstaffed department, the CEO wants you to be the new, first medical director of anesthesia services. You've been the department's chair for the past two years, but now you've been offered an administrative stipend of $2,500 a month. It doesn't appear to be any more work than what you've been doing, and the $2,500 is more than you need for the payments on a new Porsche!Just as you feel your grip on the steering wheel, the alarm clock jars you awake. Should you savor the memory . . . or be thankful that it was only a nightmare?DREAM ANALYSIS 101Relax. Put your feet up. In order to analyze the dream, we need to back up a bit and consider the operation of an anesthesia department, as an element of the medical staff,...

Opportunity and risk. Risk and opportunity. Janus-like sides of the same coin. Of course, the greater the opportunity, the greater the risk. In a medical practice sense, anesthesiologists are surrounded by risk and are supremely aware of its existence. On a daily basis, you administer drugs that under other circumstances would be deadly. You’re also cognizant of the risk-reward analysis made by your patients in undergoing surgical procedures, as well as your own need to obtain informed consent from them. But many anesthesiologists are oblivious, or even averse, to the risk-reward duality in a business sense as it impacts their anesthesia group. In the group business context, success, that is, opportunity, is associated with the income side of the equation: increasing realized income per unit, increasing the number of well-reimbursed units generated, and increasing the amount of hospital stipend dollars received. Anesthesia groups are generally less impacted by the risk, or expense, side of the equation. But note the...

The average pre-deal predictors of anesthesia group merger or acquisition success are, well, average. Economies of scale, increased opportunities, greater profits! If life, even business life, were just so simple.Having worked with countless groups, both within and without the specialty of anesthesia practice, on mergers, acquisitions and other affiliations, it’s obvious that there are other key predictive indicators as well.This article focuses on one of the most important soft, that is, non-dollar, indicators: the impact group culture has on the likelihood of success of the combined venture. Any merger, acquisition or affiliation that does not take into account the variance between the cultures of the constituent groups is doomed, at a minimum, to trouble, and much more likely, to failure.It’s possible to discuss anesthesia group culture from several perspectives. For example, we might view group culture organizationally, socially, or psychologically.But if you allow me to assume that you’re like my clients,...

In these turbulent times for the business of anesthesia groups, in which the pace of, to use Joseph Schumpeter's term, creative destruction, is quickening, it is more important than ever to take a strategic approach to the way in which exclusive contracting and group structure and group functions are intertwined. To simply keep on keeping on with a pure focus on patient care, thinking business success, or even business survival, will follow, is folly.Consider this very instructive example:In the late 1920s, Walt Disney had his first big commercial success with a cartoon character named Oswald the Lucky Rabbit. Disney had an exclusive contract with Universal Pictures for the distribution of Oswald cartoons.  It paid Disney a tidy cut, but not nearly enough. So Disney, based in Burbank, set off on the train for Universal’s headquarters in New York City to renegotiate the terms of the deal. But Universal knew he was coming. And...

When asked why he robbed banks, Willie Sutton responded, “Because that’s where the money is.”Ambulatory surgery center (“ASC”) owners, often surgeons, seek to obtain a share of anesthesia fees for the same reason. But instead of a gun, many are turning to a new model of money extraction, the so-called “company model.”The abrupt bank robber approach to demanding a kickback is clearly illegal: “Bob, if you want to provide anesthesia at Greenacres ASC, you’ve got to pay us thirty cents on the referred dollar”.Although there are far more ASC owners willing to take the bank robber approach than the industry likely will admit, some ASCs are choosing a slightly softer approach — forcing the anesthesiologists working independently at the ASC to instead work for an ASC affiliated entity that distributes a share of the anesthesia fees back to the ASC owners.“Bob, if you want to provide anesthesia at Greenacres ASC, you’ve...