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March 2, 2022
David Burda
Economics Outcomes System Dynamics

Waking Up to Higher Prices for Anesthesia Services

By now, you should know that, as a skeptical journalist, I don’t believe in coincidences. I don’t think it’s a coincidence that the medical service patients have the least choice of—anesthesia—is the same medical specialty most coveted by physician staffing companies and private-equity firms. 

Physician management companies and PE firms can charge you whatever they want for anesthesia services and what are you, lying in pain in the operating room waiting to have your red-hot appendix removed, going to do about it? Shop for a better deal online? Use your health plan’s out-of-pocket cost calculator? No, and that unfair market advantage is what led to the No Surprises Act. 

If you’re skeptical of my skepticism, check out this new study in JAMA Internal Medicine, which you can download here.

Researchers from Columbia University and the Weill Cornell Medical College wanted to know how prices charged by anesthesiologists to commercial health plans changed after hospital outpatient departments and ambulatory surgery centers contracted with a physician management company for anesthesia care rather than employing or contracting with anesthesiologists directly. 

The study pool was about 3,000 facilities that never contracted with a PMC and about 700 facilities that switched to using a PMC for more than 60 percent of their available anesthesiologists. The researchers defined prices as the “allowable amount,” or what a health plan paid plus what the patient had to pay out of pocket for their anesthesiology services. 

Here’s what the researchers found after analyzing nearly 2.3 million anesthesia claims paid by three national commercial health insurance carriers between 2012 and 2017 and controlling for surgical procedure and duration of the surgery:

  • Prices rose by 16.5 percent for facilities that switched to a PMC
  • Prices rose 12.9 percent for facilities that switched to a PMC not owned by a PE firm
  • Prices rose 26 percent for facilities that switched to a PMC owned by a PE firm

“These results suggest that price increases were associated with higher prices paid per service,” the researchers said.

Further, the PMCs were able to negotiate higher prices after a new contract with a facility because of market share, negotiating experience, stronger incentives to generate faster returns for investors and threats not to contract with the facility, the researchers said.

Throw in the fact that patients don’t have much say in the matter as they’re either in pain, sedated or completely out, you see why anesthesia is everyone’s darling. Anyone still think that healthcare isn’t a business and a cutthroat one at that? Or do you still believe in coincidences?

Thanks for reading. 


About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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