Healthcare institutions and practitioners are in the business of changing and saving lives. Anesthesia services must operate to support this endeavor. In a conventional hospital setting, anesthesiologists and anesthesia staff are employed directly by the hospital and are assigned to operating rooms, serving patients who are admitted to that hospital at ports of entry. However, in recent years, physician-led anesthesia practice groups have risen in prominence as an effective model for delivering care. These practice groups operate as a private practice and make contracts with hospitals and surgeons to deliver care to patients. As previously discussed, anesthesia practice groups may also increase their patient volume by initiating collaborations with perioperative surgical homes, accountable care organizations, and other combined care delivery mechanisms. Anesthesia practice groups subsequently may undergo market events that are a parallel of that encountered by business initiatives and companies. Mergers and acquisitions are a representative example of how healthcare can function as a business. Moreover, changes associated with mergers and acquisitions are useful as a lever to observe how healthcare is changing in the U.S.
In exploring this topic, it is useful to discuss the ways in which practice groups can be merged or acquired. In a basic level sense, there may be geographic consolidation that is stimulated by a large or highly profitable practice group.1 This essentially translates into multiple anesthesia practice groups that are branded under one parent company of sorts, and sit under this organization with respect to essential business functions. Yet, in this scenario, individual groups may still retain either their name, therefore acting as an outpost of the larger practice group company and may function more independently as per the agreement.
Of late, anesthesia practice groups have experienced rapid consolidation due to actions of private equity companies, in addition to acquisition by large hospitals and healthcare institutions2. In this model, the acquirer typically is enacting exclusive use, meaning that they own the rights to where the anesthesia practice group delivers care. In a broader sense, private equity and other private sector companies that acquire practice groups may also dictate a consulting framework to name areas of improvement and emphasize strengths of the practice group. Moreover, private equity firms and other acquirers may pursue a diversification of healthcare portfolios, in order to stabilize profit margins by aligning anesthesia practice groups with those in related specialties, such as surgery or emergency medicine.
In a merger and acquisition that places patients and physicians at the center, while also ensuring financial stability and longevity, leadership by physicians is key3. Physicians such as anesthesiologists have the in-depth experience to understand not only the regular duties of practicing medicine, but also how patient census, segmentation, specialty referrals, and insurance reimbursement patterns have changed in recent years. Anesthesiologists and other physicians may also have worked within multiple healthcare institutions, from academic medical centers to private practices and physician groups, and thus have extensive knowledge about how each unit engages with the larger system. Finally, anesthesiologists may serve an essential role in patient and physician advocacy when initiating negotiations with potential acquirers — even those with a developed healthcare portfolio. By supporting the strategic priorities of the physician practice group, anesthesiologist leaders can advocate for their patients, ensure that physician needs are met, and support a more efficacious healthcare system for all.
1. DiCanio, Matthew. “Waking up to the Consolidating Anesthesia Marketplace.” Becker’s Hospital Review, 2014,www.beckershospitalreview.com/hospital-management-administration/waking-up-to-the-consolidating-anesthesia-marketplace.html.
2. Casalino LP, Saiani R, Bhidya S, Khullar D, O’Donnell E. Private Equity Acquisition of Physician Practices. Ann Intern Med. 2019;170:114–115. doi: 10.7326/M18-2363
3. Townsend, Scott. “Physician Mergers Are Booming: What Do Interested Physicians Need to Consider?” Becker’s Hospital Review, 12 June 2013, www.beckershospitalreview.com/hospital-physician-relationships/physician-mergers-are-booming-what-do-interested-physicians-need-to-consider.html.