Not long ago, an ASC paying an anesthesia stipend was considered to be a red flag. Today, it’s the norm.
Before COVID-19, about 10% to 15% of ASCs required an anesthesia subsidy, according to Adam Spiegel, CEO of Irving, Texas-based NorthStar Anesthesia. Now, he estimates about 80% of the ASCs in NorthStar’s network do.
“It used to be that if you were paying an anesthesia subsidy as an ambulatory surgery center, you were not running your ambulatory surgery center well,” Mr. Spiegel told Becker’s. “It was less about anesthesia coverage. You had low volume, slow turnarounds. Something was off.”
The centers that still avoid stipends, he said, tend to be high-volume, high-throughput sites such as GI centers, or CRNA-only centers in states that allow that model.
Demand up, supply down
Mr. Spiegel said the shift traces back to demand and supply shocks that hit at the same time.
Anesthesia, he explained, is a capacity cost, not a volume cost. An anesthesia provider has to be staffed in a room all day whether that room runs one case or four.
When COVID-19 shut down elective procedures at hospitals, many surgeons moved cases to ASCs for the first time, and many never went back. ASCs responded by adding rooms, extending hours and operating on weekends. Once hospitals recovered, they wanted more ORs staffed too, anticipating pent-up demand.
During that period, NorthStar saw about a 15% increase in coverage requests from ASC and hospital partners, even as overall volume fell about 5%, Mr. Spiegel said. Facilities that once ran six cases a day per OR were running five, and hospitals that ran 85% block utilization dropped to 70%.
“To break even, I need to do four cases and I do three, I have to pay a subsidy to make up that gap,” he said.
At the same time, the workforce shrank. Mr. Spiegel said lengthened CRNA education requirements created a gap in new graduates, while retirements and moves to part-time work spiked after the pandemic.
“Demand goes up, supply goes down — inevitably cost per clinician rises,” he said.
Compensation for CRNAs and anesthesiologists rose by almost 30%, but reimbursement didn’t follow. Commercial anesthesia rates stayed flat during that period, he said, and Medicare anesthesia payments fell about 8% since that period.
Why CRNA-only isn’t the easy fix
For ASCs looking to cut costs, CRNA-only staffing can look like an answer. Mr. Spiegel isn’t convinced it will hold up.
Even in states that have opted out of physician supervision requirements, facility bylaws often still require it, he said. And as ASCs take on older, sicker patients and more complex procedures, clinicians will need to evaluate the appropriateness of a care team.
“The patients that ASCs are increasingly taking are getting sicker and sicker,” he said. “ASC anesthesia staffing is going to look more like hospitals than it does like current ASCs.”
What ASC leaders can control
Mr. Spiegel said efficiency is the most direct lever ASCs have. More cases per room generates more revenue to absorb anesthesia costs.
The second is how centers choose their anesthesia partners. The biggest mistake he sees is picking the lowest bid in a request for proposal without scrutinizing the numbers behind it. Some groups quote costs below market rates or insurance collections projections they can’t deliver, then return to the center asking for more money once they can’t recruit at that price.
“I just swapped out my anesthesia group. I’m stuck,” he said, describing the position centers end up in. “What on paper was a more expensive group ends up being cheaper in the long run.”
His advice: ask why one group claims it can recruit more cheaply than another, and confirm it has a track record of bringing in revenue at the rates it projects.
The third lever, but most crucial factor, is culture. Mr. Spiegel said retention depends less on the size of the organization than on local leadership and how they are trained and supported, particularly the chief CRNA and medical director. Groups that offer flexible, long-term career paths with a variety of training opportunities, including for new graduates who may want to step back to start families and return later, will be the ones that keep staff.
“It comes down to local leadership,” he said. “From an anesthesia group perspective, the real winners are culture.”
A better outlook ahead
Despite the pressure, Mr. Spiegel said the market is improving. More CRNA and anesthesiologist assistant programs are producing graduates, anesthesiology residency is highly competitive, and retirements have slowed.
“You could feel the difference” between 2023 and 2026, he said, noting locum rates are stabilizing.
And for ASCs, he said, rising anesthesia costs should be kept in perspective. The contribution margin on an added surgical case far outweighs the incremental anesthesia cost. ASCs will continue to provide critical surgical capacity in a sustainable financial environment.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
