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How to respond to the hospitals’ mandate of employment

Posted by Jeff Peters on Nov 4, 2019 1:44:15 PM
Jeff Peters

It’s all too common, your physician-owned anesthesia group shows up for their regular quarterly meeting with the hospital’s Chief Medical Officer. The CMO starts the meeting with:

“The hospital has made the decision to terminate its contract with Physician Anesthesia and employ all of the physicians and CRNAs. We shared this decision with the executive committee of the board, and they support management in this decision.”

The transition of anesthesia from physician-owned groups to employment is accelerating. Hospital leadership want anesthesia integrated more closely with organizational initiatives and sees employment as the appropriate model going forward. The trend toward employment is being driven by:

  • Increasing financial stipends for anesthesia
  • A general trend of employment that initially included Primary Care, but now includes both surgeons and anesthesia clinicians
  • Growth in value-based payment
  • Increasing financial pressure to reduce hospital costs
  • Growing shortage nationally in anesthesia providers

The majority of physician-owned anesthesia groups receive stipends from their hospital. The need for stipends typically results from a deterioration in the hospital’s payor mix and the request to provide more anesthesia coverage than justified by volume. Many hospital leaders feel that they will have more control over the financial support of anesthesia by directly employing the providers.

There has been a steady increase in hospital employment of physicians over the past 20 years. The trend toward employment started in Primary Care and is growing among surgeons. Hospitals feel that their employed groups are generating the referrals needed to support anesthesia, and that the organization can better integrate care delivery by having all physicians as part of the hospital employed group.

The growth in value-based payment is tying reimbursement to patient satisfaction and clinical outcomes. All healthcare providers need to work together to improve surgical outcomes – surgeons, nurses, anesthesiologists, and hospitals. Many hospital leaders feel it’s easier to get providers on the same page and move together by employing all of the participants. Typically, Surgical Homes are used to improve outcomes for surgical care, and anesthesia has a key role in driving these initiatives. Participation in these initiatives takes a lot of anesthesia’s time and resources. If the anesthesia providers are employed, it is easier to give the providers the time required to work on these initiatives. 

Hospitals are under significant pressure to improve financial performance and are looking at every possible option to reduce costs. Many hospital leaders feel they can both expand the anesthesia team coverage model and reduce the cost of providing anesthesia care. This is especially important given the national shortage of anesthesiologists. There are more anesthesia positions open than physicians available to fill these positions, which tends to increase anesthesia pricing, especially when not employed directly by the hospital.

When faced with the demand to be employed, physicians have several options:

  • Try to get hospital leadership to understand employment may not solve their problems, especially if highly qualified staff leave for better earning potential elsewhere
  • Agree to being employed and focus on getting the “best” offer
  • Explore employment elsewhere.

Every physician needs to evaluate what is best for them and their families. What’s key is to communicate with the hospital and not jump to any quick decisions. The first step is to understand what is motivating the hospital to consider employment and to have an open discussion on alternatives to meet the hospital’s needs. 

More than 50% of hospital leaders who change anesthesia groups or move to the employment model are not in their positions 12 months after a change is made.  So, in most cases anesthesia providers typically outlast any change agent. Providers need to understand what’s most important to them. If staying at the hospital and continuing to live in the community is most important, the physician needs to accept that they will be employed.

If the principal of “owning your own business” and controlling your destiny is most important, the provider needs to communicate with the hospital and make them aware of the downside of employment – decreased physician productivity and increased turnover of anesthesia. Anesthesia costs may actually increase with direct employment because of productivity reduction and additional recruiting costs.  These are difficult decisions for both hospital executives and anesthesiologists. Both parties need to consider carefully what is most important.


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Tags: Anesthesia, Engagement, Hospital Leadership, Surgical Care, Employment model, physicians, Recruiting

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