Anesthesia Whiplash

For most of recent history – since the 1980s at least - anesthesia services were functionally “free” to hospitals.? Meaning that while anesthesia was routinely delivered in hospitals, the hospitals did not pay for the service.? Instead, hospitals credentialled anesthesiologists to deliver care at their sites, the anesthesiologists delivered the care and then billed payors directly for their work.? With few exceptions (like a new hospital building up volume or unusual need for call coverage), the money generated from anesthesia billings was enough to cover the cost of the providers and their overhead.? And so viola: anesthesia was a vital specialty with “no cost” to the hospital.

That dynamic began to change dramatically around 2018. Suddenly, geography by geography, the money generated from billings began to not cover the labor and overhead costs to administer the service. Suddenly, hospital leaders had to allocate budget to support the provision of anesthesia. And while this new dynamic is not unique to anesthesia, its sudden presentation and the rapid acceleration took almost everyone by surprise. Viola:? anesthesia whiplash.?

This is a very complicated topic of course but at its core is a labor shortage exacerbated by declining reimbursement.? Why is there a labor shortage?? Because growth in demand for anesthesia care has exceeded growth in the available supply of anesthesia clinicians for a few decades.

Interestingly, the supply of anesthesia clinicians has grown steadily including with rapid growth in CRNAs and the more recent introduction of CAAs. This supply growth is offset a bit by changing expectations of clinicians entering the workforce compared to the retiring colleagues they replace, as well as by increasing numbers of providers who work exclusively outside the hospital and do not take call.

But the larger shift has been on the demand side with rapid growth in desired points of service driven by the spread of ambulatory surgery centers (ASCs) and increasing non-OR anesthesia locations (aka NORA) such as anesthesia coverage for colonoscopies and cataracts.? These trends are both patient-centric, but they also increase the demand for anesthesia care.

This combination of demand growing faster than supply has – no surprise - led to a labor shortage which as driven up costs. Worth noting is that in anesthesia there is not a hybrid onsite-offsite option to alleviate workforce stress.?

Anesthesia groups and hospitals are responding with steady adoption of “care team” models - wherein an anesthesiologist directs CRNAs and they work as a team to serve more patients at a net lower cost – and by improving OR efficiency to maximize productive time. ?The anesthesia community is also investing in many ways to increase the pipelines of anesthesiologists, CRNAs and CAAs. But these have not so far been enough to alleviate the supply-demand mismatch.

The resulting shortage drives up labor costs through a constant nationwide shuffle to find the anesthesia providers necessary to deliver care at all desired points of service.? Groups compete to attract the next available recruit from a residency or CRNA program through culture, compensation and benefits like weeks of vacation, tuition assistance and maximum call commitments. In fast growing areas, there is sometimes a step function increase in compensation when one provider organization expands and seeks to hire a bolus of clinicians at once which “resets” the market as the other groups and hospitals react to retain talent and backfill staff. And there’s no time to lose of course because surgery is core to every hospital’s mission and economics but it cannot proceed without anesthesia.? ??

Meanwhile, the situation is further exacerbated by declining reimbursement per unit of anesthesia care from both commercial and government payors. For example, a recent study found that Medicare reimbursement for anesthesia has declined by 20% over the last 20 years after adjusting for inflation1, leading to an ever larger cross-subsidy from commercial payors who are also working to decrease their reimbursements.

This transition from surplus to deficit has played out over several years with the whiplash occurring facility by facility, group by group, city by city across the US. A service that had been essential but seldom expensive has become an area of significant expense. Executive teams and groups are reacting but unfortunately, there’s neither an easy culprit nor a silver bullet.? The path forward requires groups and hospitals to work more closely together with a new premium on transparency, predictability, and partnership.

This simple financial comparison illustrates how modest revenue decreases coupled with steady cost increases have created the whiplash dynamic.

The good news is that the quality of anesthesia care remains at “six sigma levels” thanks to the skill, vigilance, processes and excellence of anesthesia professionals.? We’re all very fortunate for that, but there’s work to do to ensure affordable access to that great care everywhere that it’s desired.

1.????? Caroline J. Liang, Jonathan S. Gal, Thomas R. Miller, Alexander A. Hannenberg. Medicare payment trends compared to inflation for anesthesia services.? Journal of Clinical Anesthesia, Volume 97. 2024, 111505, ISSN 0952-8180.

2.????? Amr E. Abouleish, M.D., M.B.A.; Paul Pomerantz, F.A.C.H.E.; Mary Dale Peterson, M.D., M.S.H.C.A., F.A.C.H.E.; Maxime Cannesson, M.D., Ph.D.; Oluwaseun Akeju, M.D.; Thomas R. Miller, Ph.D., M.B.A.; James P. Rathmell, M.D.; Daniel J. Cole, M.D. Closing the Chasm: Understanding and Addressing the Anesthesia Workforce Supply and Demand Imbalance.? Anesthesiology, August 2024, Vol. 141, 238–249.

3.????? More on the 1990s anesthesia residency gap:? https://www.dhirubhai.net/posts/jrterry_as-many-know-there-is-a-shortage-of-anesthesiologists-activity-7186387059102625792-ypb9?utm_source=share&utm_medium=member_desktop