Driven by changing market dynamics and a growing provider shortage, the field of anesthesia has sustained significant upheaval in recent years. These shifts, characterized in part by large, consolidated anesthesia firms replacing local groups in hospital systems, represent an unprecedented departure from traditional anesthesia field practices, with significant implications for anesthesia providers and their patients.
One of the major underlying causes of these shifts in the landscape of anesthesia groups — the national anesthesia provider shortage — is not new. In the early 2000s, the demand for anesthesia providers began to outgrow the supply (1). The aging American population that required more procedures and the expansion of hospital surgical staff across the country put pressure on the medical field, which responded by increasing residency positions by 12% and increasing medical school class sizes (1, 2). Despite these efforts, demand has continued to outpace supply, with over half of anesthesiologists over the age of 55, signaling an impending exodus of retirees that will exceed the influx of younger anesthesiologists (1). While the number of physicians in other specialties have grown an estimated average of 7% between 2016 and 2021, anesthesiologists have increased by only 1%, leading to an expected shortage of 12,500 in 2033 (3). This shortage has resulted in increased wait times for routine and urgent procedures, financial impact on hospital systems and anesthesia firms, and provider dissatisfaction (4).
In the wake of this shortage and its negative impacts on hospital systems, a new form of anesthesia firm management has emerged, represented by the wave of consolidation (5). This new form — large, consolidated anesthesia groups purchased, assembled, and directed by national for-profit healthcare organizations or private equity firms — has rapidly grown from roughly 3% of all anesthesia firms in 2009 to nearly 19% in 2019 (6). This percentage has increased due to large companies’ and private equity firms’ interest in highly specialized, relatively expensive medical specialties — including anesthesia groups, dental offices, and ophthalmology clinics — due to their high profit margins (7). Historically, hospital systems have staffed anesthesia services by contracting with local firms, but these new, large, consolidated firms appear attractive to hospitals, with promises of adequate staffing and decreased cost (7). In fact, between 2023 and 2024, more than 10 large hospital systems across the country severed ties with local firms and entered contracts with consolidated groups, representing an unprecedented shift in the anesthesia industry (8).
Unfortunately, some of these groups have been unprepared, resulting in worsened shortages, exorbitant surgery wait times, and criticism (9, 10). For example, in 2023, a hospital system in Oregon suddenly terminated its agreement with a local group and began contracting with a consolidated group backed by a private equity firm (10). Despite appearing more efficient, the new firm had cut necessary costs and jobs, resulting in a massive anesthesiologist shortage and a significant delay in surgeries (10).
Despite hospitals’ increasing preferences for ostensibly lower-cost, better-staffed consolidated anesthesia groups, shifts toward this model has been met with scrutiny from anesthesia providers, their communities, and the federal government. For example, in Texas, two private equity firms allegedly colluded to consolidate anesthesia firms across the state to create a monopoly, eliminate local groups, and hike up prices for hospitals and patients, resulting in the Federal Trade Commission filing lawsuits against the firms in 2023 (11). This lawsuit represents many anesthesia providers’ sentiments about the wave of consolidation, with many critics arguing that this shift from local physician-managed firms to national corporation-managed groups results in higher costs for patients, lower-quality care, job losses, and the pursuit of profits at the expense of patients and their providers (7, 12). The future of the industry remains unclear as many hospital systems evaluate the performance of their contracted anesthesia groups.
References
1: Menezes, J. and Zahalka, C. 2024. Anesthesiologist shortage in the United States: a call for action. Journal of Medicine, Surgery, and Public Health, vol. 2. DOI: 10.1016/j.glmedi.2024.100048;
2: American Association of Medical Colleges (AAMC). 2024. “Physician specialty data report.” AAMC Data and Reports. URL: 2016-2021https://www.aamc.org/data-reports/workforce/data/percentage-change-first-year-acgme-residents-fellows-specialty-2016-2021.
3: Kaplan, K. and Polanco, K. 2023. “Where have all the anesthesia specialists gone? Insights for healthcare leaders.” Veralon Healthcare Management Advisors. URL: https://www.veralon.com/wp-content/uploads/2023/10/Veralon-Blog-Where-Have-All-the-Anesthesia-Specialists-Gone-Insights-for-Healthcare-Leaders-Oct2023.pdf.
4: Peters, J. 2022. The physician leader’s role in navigating the anesthesia provider shortage. American Association for Physician Leadership, vol. 9. DOI: 10.55834/plj.9178639149.
5: Paone, J. 2022. “Trend to watch: inside the consolidation of anesthesia services.” Outpatient Surgery Magazine. URL: https://www.aorn.org/outpatient-surgery/article/2022-February-anesthesia-services.
6: Adler, L., Milhaupt, C. and Valdez, S. 2023. Measuring private equity penetration and consolidation in emergency medicine and anesthesiology. Health Affairs Scholar, vol. 1. DOI: 10.1093/haschl/qxad008.
7: Kotsonis, S. and Chakrabarti, M. 2023. “How private equity is changing American health care.” WBUR. URL: https://www.wbur.org/onpoint/2023/11/07/how-private-equity-is-changing-american-health-care.
8: Hollowell, A. 2024. “Why US hospitals are breaking up with anesthesiology groups.” Becker’s Hospital Review. URL: https://www.beckershospitalreview.com/care-coordination/why-us-hospitals-are-breaking-up-with-anesthesiology-groups.html.
9: Coleman, A. 2024. “Methodist delays surgeries after breakup with anesthesia provider.” WREG. URL: https://wreg.com/news/local/methodist-delays-surgeries-after-breakup-with-anesthesia-provider/.
10: Newitt, P. 2024. “Oregon hospitals’ surgeries plummet amid anesthesiologist shortages.” Becker’s ASC Review. URL: https://www.beckersasc.com/anesthesia/oregon-hospitals-surgeries-plummet-amid-anesthesiologist-shortages.html#:~:text=Surgeries%20at%20two%20Providence%20hospitals,equity%2Dbacked%20physician%20staffing%20firm.
11: Federal Trade Commission. 2023. “FTC challenges private equity firm’s scheme to suppress competition in anesthesiology practices across Texas.” FTC press release. URL: https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-challenges-private-equity-firms-scheme-suppress-competition-anesthesiology-practices-across.
12: Answine, J. 2023. “War games: private anesthesia group versus hospital system versus private equity firm.” OR Management News. URL: https://www.ormanagement.net/Opinion/Article/09-23/War-Games-Private-Anesthesia-Group-Versus-Hospital-System-Versus-Private-Equity-Firm/72302.
