The Effect of Private Equity Firms on Anesthesia Groups

Administrators seeking new anesthesia management services must be extremely mindful of whether a company they are considering is privately held or backed by venture capitalists or private equity firms. There are numerous differences between the two that must be considered. When an anesthesia group is acquired by investors, margins must be widened and decisions must be approved by shareholders. One should understand the risks involved with engaging a financially backed anesthesia group to make the most informed decision possible about your facility’s anesthesia services. 

Why Private Equity Firms Are Attracted to Anesthesia

Private equity acquisitions of medical groups across all specialties accelerated between 2013 and 2016. Anesthesia groups were the most acquired (19.4%) along with multispecialty practices. Since anesthesia is administered over 100 million times annually and carries a high-profit margin, it presents an easy target for corporate investment by way of contracting with physician management companies. With the rising costs of salaries for anesthesia providers, these margins are under more pressure than ever before, leaving investors looking for other ways to enhance revenue. 

The Effect of Private Equity Firms on Anesthesia Practices

Private equity firms expect exorbitant annual returns (between three to seven years) and these financial incentives may conflict with the need for longer-term investments in practice stability, provider recruitment, quality of care and patient safety. There may be additional pressures to increase revenue streams (e.g., elective procedures and ancillary services), direct more referrals internally and rely on lower-cost clinicians. Interestingly, a study from 2012–2017 revealed physician management companies with private equity funding charged over 16.5% higher prices than those without. While there is a correlation between private equity and costlier anesthesia services, are these price increases justified? Price increases ultimately impact the patients and may not benefit the hospital directly. 

The CCI Difference

Rather than being hungry for profits, CCI helps hospitals (particularly rural hospitals) turn their anesthesia departments into revenue generators in the right ways—optimizing staffing models, increasing efficiencies, reducing PACU times and remedying anesthesia provider burnout. Along with efficient staffing models, quality leadership and loyal providers, we also bring a full suite of resources that add value to hospitals. These resources are best-in-class and provide our clients with the tools they need to scale operations safely and efficiently. Some of these resources include:

  • Real-time reporting of best-in-class perioperative KPIs powered by Merlin
  • Consulting to streamline perioperative services
  • Interim OR Director staffing to ensure seamless perioperative leadership transitions
  • Surgeon staffing and management through our sister company, NexGen Surgical
  • Tablet-based anesthesia EMR to capture performance metrics powered by Medaxion
  • Quality management and compliance benchmarking by the CCI Institute of Excellence.

Since we are a privately-owned company with no private equity or venture capital investors, we can devote one hundred percent of our attention to our clients—rather than shareholders. Our C-Suite does not have a revolving door, and your dedicated Regional Medical Officer, Regional Director of Operations and Chief of Anesthesia will keep a constant watch on your perioperative services. 

Transitioning from a Big Box Anesthesia Company to CCI 

If you have already seen the negative consequences of partnering with a financially backed, big-box anesthesia company, it’s not too late to turn your anesthesia department around. CCI Anesthesia has been providing anesthesia practice management services for rural hospitals since 2004. We understand the challenges rural hospitals face and have a proven track record of increasing revenue, building surgical volume and expanding service lines while keeping patients and surgeons happy. Solving problems is our specialty, and we are available to start solving yours now. Call us today at 800-494-3948 to get started.