Conventional wisdom holds that there is constant evolution in the anesthesia marketplace, that solo practices prefer to become part of larger mega-groups or become employed providers. Many a private group provider has tended to believe that, eventually, they would become an employee of a mega-group, a national anesthesia staffing company or a hospital, that such a fate was inevitable. The fact is that the market has changed, and the future of a private practice may be brighter than it once was.
Back in the Day
Clearly, most of today’s group practices were formed during the 1980s and 90s. As managed care contracting defined the future of anesthesia practice, it simply became unworkable for individual providers to practice independently. Hospital administrators recognized the value of being able to negotiate with a consolidated practice. Especially as financial subsidies started to be necessary, professional service agreements defined the market for anesthesia providers.
As practices started to form, many began to think: if a group practice provided more security than a solo practice, then the bigger the group the better! Mountain West Anesthesia in Salt Lake City was a case in point. The hospital administration wanted the providers to form a group practice. Having considered their options, the management committee endeavored to make the group as big as possible, so it could effectively deal with the local payers. Their experience was then replicated in many cities across the country.
Changing Fortunes?
The hottest topic in the current world of anesthesia practice across the country has become the cost of providing the care. As payer mix has deteriorated with the increase in Medicare and Medicaid cases, groups have had to negotiate aggressively for financial support from facilities. As anesthesia provider compensation has increased, so too have financial subsidies—some of which have become rather large. Considerable time and energy have been spent determining appropriate subsidy amounts for most practices as they renew their contracts.
In some cases, this ongoing process of determining the necessary funding support from the facility has resulted in frustration and a change in strategy. In some cases, the practice has decided to go out of business and the providers have become hospital employees. Time will tell if the employment of providers will end up saving the facilities any money.
Determinative Factors
What determines the model a given practice ultimately opts for? Financial considerations are usually paramount. Sometimes the facility simply gets tired of renegotiating with the practice. Often, the administration will simply change for the sake of change.
Given all the consolidation and change of the past few years, it is difficult to conclude that one model is better than another. Ultimately, what matters most in anesthesia is the consistency and quality of care. The fact is that this is not always improved by making practices bigger. A small practice that has a great relationship with administration, good finances and consistent quality of care is just as likely to succeed as a larger practice. Seeing how many large groups lose contracts, it is clear that big is not always better.