Industry Insider: What (Really) Broke the Anesthesia Market

And what the next five years are likely to look like (spoiler: it’s going to get strange)

The anesthesia world, like the rest of healthcare, has been shaken, stirred, and occasionally suplexed over the past five years.

But let’s begin with a necessary correction:

COVID-19 didn’t cause the chaos.
It accelerated it. It exposed it. But it didn’t create it.

If you're still blaming COVID, you’re either missing the plot—or conveniently ignoring the decades of systemic neglect that set the stage.

The disruption we're seeing now was already in motion. I’ve watched it build for over a decade, and it was only a matter of time before the fault lines gave way.

Let’s unpack the real drivers of instability—and where we’re headed next.

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1. A Clinician Shortage That’s Been Brewing for Over a Decade

This wasn’t a sudden implosion—it was a predictable failure of workforce planning.

We’ve faced a persistent undersupply of CRNAs and anesthesiologists since the early 2010s. Anyone who could run a workforce model and understood healthcare demographics saw this coming. I joined the AANA Board in 2014, and we were already sounding alarms.

But the signals were ignored. And then demand exploded:

• Out-of-OR anesthesia surged

• Ambulatory surgery centers (ASCs) multiplied

• An aging population brought a flood of procedural volume (so many colonoscopies and cataracts..)

More complexity. More cases. No corresponding increase in supply.

The result?
An unsustainable strain on the workforce.
Burnout, turnover, recruiting volatility, and escalating compensation.
A labor market on fire—and yet somehow, everyone acted surprised.

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2. Hospitals Have a Perverse Tolerance for OR Inefficiency

Here’s a fact: The OR generates 70–80% of most hospital operating margin. It is the economic engine.

And yet, most hospitals operate it with the strategic discipline of a high school bake sale.

Why? Because OR time is often weaponized to attract and retain surgeons:

• Surgeons = procedural volume

• Volume = market share

• Market share = political capital

So hospitals overbuild OR capacity, offer excessive block time, and tolerate rampant inefficiency—all in the name of “growth.”

And what happens when you flood the system with underutilized ORs?

• You create artificial demand for anesthesia services

• You inflate labor requirements

• And yes, you drive costs up—substantially

The core issue isn’t a labor shortage. It’s structural inefficiency compounded by a refusal to change.

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3. Surprise Billing Legislation Obliterated the Old Business Model

Here’s where the economics get interesting.

Pre–No Surprises Act:

Competitive advantage came from scale and leverage.
Grow large enough, aggregate enough covered lives, and negotiate favorable rates with commercial insurers.

It wasn’t elegant—but it worked.

Post–No Surprises Act:

That entire playbook was rendered obsolete.

The legislation gave commercial payors a new weapon: unilateral control over reimbursement via a flawed arbitration process. Suddenly, size didn’t confer leverage—just exposure.

And insurers wasted no time:
They slashed rates.
They restructured contracts.
And they upended the market equilibrium that had held for years.

Many groups—particularly those built for the old world—found themselves underwater within months. Margins evaporated. Options narrowed. Strategic clarity became a luxury.

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What the Next Five Years Will Look Like

Here’s what’s coming—and what smart groups are already preparing for:

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1. Consolidation 2.0: Fewer, Stronger Players

The era of indiscriminate roll-ups is over.
But a new wave of strategic consolidation is taking shape.

Smaller, subscale groups will struggle to survive in this new environment. The winners will be those who can merge intelligently, integrate quickly, and manage complexity at scale.

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2. Operational Mastery Becomes the New Competitive Edge

Forget better rates—they’re not coming back.

Now, the differentiator is execution:

• Precision staffing

• Maximized OR throughput

• Minimal idle time

• Advanced analytics and agile deployment

In short: the firms that run the cleanest, most efficient operations will win. Everyone else will watch their margins deteriorate in slow motion.

And let’s be honest: most firms weren’t built for this level of rigor.

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3. ASCs Will Reshape the Strategic Landscape

ASCs are no longer peripheral.
They are central—and they're growing faster than hospitals can adapt.

But this growth isn’t frictionless. It’s cannibalizing inpatient volumes and eroding traditional revenue models. Tension between health systems and ASC operators is inevitable—and likely to escalate.

Expect turf wars. Expect realignment. Expect regulatory pressure.

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4. Payor Alignment Will Determine Market Position

In this new environment, payor strategy is destiny.

It’s not about who’s largest or who recruits fastest—it’s about:

• Managing rate compression

• Navigating contract risk

• Preserving clinical access while maintaining financial viability

This will be a test of both strategic sophistication and political skill.

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5. The Talent War Will Get More Sophisticated

Clinicians aren’t just looking for pay increases anymore. They want:

• Flexibility

• Clinical autonomy

• Purpose

• Leadership they trust

Organizations that can’t meet these expectations will hemorrhage talent—no matter how large they are or how strong their brand once was.

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Final Thought

Anesthesia isn’t in free fall.
It’s undergoing structural transformation.

The future won’t belong to the biggest or the most well-funded.
It will belong to the clearest thinkers and the most disciplined operators.

So the right question isn’t:

“When will things go back to normal?”

It’s:

What kind of system are you building—and who’s going to stay to help you build it?