September 25, 2023

Is big better when it comes to anesthesia practices? The answer depends on who is asking the question and what the goals and objectives of the practice are. Merger mania has certainly dominated the marketplace for decades, leaving many providers with the impression that only the largest entities will survive the challenging currents of American healthcare. The prevailing perspective is that small group practices are dinosaurs en route to extinction. The reality is that there has never been such turmoil in the specialty. So many practices have either merged, been bought out or simply ceased to exist. Hospital employment seems to be claiming an ever-growing percentage of providers. Paradoxically, this may be an especially opportune time for small practices willing to partner with their hospital administrations. After all, the key to success in today’s market is customer service.

The Main Objectives

Let us begin by asking a very fundamental question: what is the purpose of an anesthesia practice? In basic terms, it is an efficient structure for the provision of all the anesthesia services required by a facility. It must have a structure and governance that will ensure consistency and quality of care. Beyond this, though, there are the expectations of the providers who must decide whether this is the best organization to work for. Most providers would agree they have three main objectives:

1. Income
2. Security
3. Quality of life

When all three can be met with a reasonable degree of certainty, most providers are content and productive. Perceived challenges and compromises on any level can result in frustration, dissatisfaction and often termination. Herein lies the explanation for so much of the current mobility of anesthesia providers. Anesthesia residents are usually advised to pick the practice that will support their personal and professional objectives till they retire; in other words, pick the horse that will stay the course. The reality is that an ever-growing number of practices simply do not meet the test, leaving so many providers wondering what they should do.

Sizing up the Practice

The fact is that size is often a confounding factor. All practices have their pros and cons: small practices must contend with the challenging and often mercurial requirements of hospital administrations. Big practices may have more options and better resources, but they are no less challenged by the current market for healthcare. There is a saying in business that if you want to solve a problem, create a bigger one. While small practices must generate enough revenue to recruit and retain a sufficient number of qualified providers to meet the service expectations of a given administration, today’s mega-groups must accomplish this across a broad spectrum of practices and practice types. Small practices worry about losing their contract, but large practices lose contracts all the time as they compete in an increasingly competitive market.

Merger mania is often driven by a blind belief in the notion that large practices have more leverage to negotiate better rates with key insurance plans. It is true there are notable examples of mega-groups that have accomplished this with some of their insurance plans. Let us not forget, however, that a few good contracts when viewed through the lens of the practice’s payer mix does not produce a cash windfall. Positive PPO contract rates are always offset by the significantly discounted Medicare and Medicaid payment rates. And the percentage of patients covered by Medicare is growing as the American population ages. Victories on this front are fewer and further apart, even among the nation’s largest anesthesia companies.

The simple fact is that most practices need the financial support of their facilities to balance their budgets. Hospital subsidies are achieving new levels heretofore never envisioned. And this may be one aspect of practice management companies where the big players excel, although such accomplishments often involve the services of outside independent management consultants available to all practices.

A Matter of Perspective

The notion of practice security depends on one’s perspective. If the goal is to buy a house, raise a family and become part of a community, then small practices in isolated communities have the best chance of success. The large practices may require you to move from one facility to another, especially if they lose a contract. National staffing companies may need you to relocate to start new practices as they gain new contracts. What they guarantee you is employment but not necessarily a specific job. For many providers, this is a plus; but, for others, it’s a considerable detriment.

Quality of life is a very personal thing. There was a time when anesthesia group practices consisted of like-minded individuals who shared a core set of values and approach to the provision of care. Many practices included a number of providers who had trained together. Such practices were often referred to as professional fraternal organizations because they functioned more like clubs than commercial entities. As the market has evolved, however, these clubs have morphed into serious businesses, and the culture and nature of the role of each provider has changed dramatically. This is especially true of today’s mega-groups which are looking for qualified providers to fill particular job descriptions. It used to be that providers took particular pride in what occurred inside the operating room, but now their future depends on what occurs outside the OR, in the C-suite.

What makes for contented and productive providers? Most will tell you it is fair compensation, a reasonably secure work environment and the ability to balance work and home. The truth is that the larger the organization, the harder it is to balance all three. The biggest complaint of many employees of the nation’s largest practices is lack of constituency; they have little or no input with regard to the factors that determine their income and lifestyle. The larger the organization the more providers are dependent on the quality and effectiveness of management.

As individuals, all anesthesia providers must ultimately ask themselves the following questions: do they want to be master of their own destiny for better or worse, or do they want the security of being an employee in a large organization that will deploy them wherever or however they may be needed? It is not a simple decision, nor are there necessarily clear answers. As is true of providing anesthesia, sometimes no amount of preparation and planning guarantees a perfect outcome.

If you have any questions on this topic, please reach out to your account executive.

With best wishes, 

Rita Astani
President—Anesthesia