The Five Forces Breaking (and Remaking) Anesthesia
Why every hospital and anesthesia group feels like it’s losing the same game
I learned Porter’s Five Forces back in business school and honestly never thought I’d use it again. It felt like the academic version of a dad joke: mildly clever, mostly useless.
And yet, here we are.
That dusty little framework from the ’80s actually explains a lot about why anesthesia feels so unstable right now. When you strip away the acronyms and good intentions, what’s left is a profession being squeezed by the same economic physics that crush every other mature industry.
Run anesthesia through Porter’s lens and you’ll see why hospitals keep flipping models, why groups keep burning out, and why leadership feels harder every year.
It’s not just culture.
It’s structure.
1. Rivalry Among Competitors: Everyone Fighting for Less
Anesthesia is still one of the most fragmented spaces in healthcare. A handful of big national players, a few strong regionals, and thousands of small groups, all circling the same pool of hospitals and chasing the same limited contracts.
The market itself is growing, but reimbursement isn’t. Federal rates inch up at half the pace of inflation, and commercial contracts quietly and constantly squeezing margins Every year, the math gets a little worse.
So yes, there’s more healthcare being delivered, but the margin pie isn’t getting any bigger. Everyone’s fighting for a slightly thinner slice, trying to do more with less in an ecosystem that punishes patience and rewards short-term optimization.
Hospitals want coverage, stability, and expense control. Groups want fair pay, predictable OR utilization, and a reasonable margin. Neither side is getting exactly what they want, and both are tired of pretending they are.
Most of the big players chase scale but lose touch with their sites. They get efficient but impersonal. Small groups often imagine they’re the antidote, more local and more loyal, but that’s rarely true anymore. Most struggle with recruiting, retention, leadership depth, and long-term partnership with their hospitals. Being “not big” isn’t a strategy.
The groups that rise above all that build steady, disciplined systems. They align site leadership, communicate clearly, and manage expectations instead of selling fantasy.
Everyone else just waits for the next crisis and calls it strategy.
And that’s the backdrop. But rivalry alone doesn’t explain the instability. The real volatility comes from who controls the labor — and how everyone else reacts to it.
2. Bargaining Power of Suppliers: The Clinician Leverage Hangover
CRNAs and anesthesiologists have real leverage right now. Shortages, retirements, lifestyle shifts, everyone knows the story.
But leverage only helps if it leads somewhere productive. When every vacancy becomes a bidding war, it just accelerates instability. Hospitals overpay. Groups implode. Permanent staff burn out covering the gaps.
The problem isn’t the workforce. It’s the leadership response to scarcity. Too many leaders try to buy their way out of dysfunction.
You can’t bonus your way out of bad leadership and a shit culture. You have to lead through it.
Reimbursement pressure only tightens the vise. Every dollar spent on premium labor has to come from somewhere, and “somewhere” is usually the margin that keeps groups stable.
If rivalry defines the landscape, supply power defines the daily pain. But neither would matter without the buyers — the hospitals — who keep changing the rules mid-game.
3. Bargaining Power of Buyers: Hospitals with More Contract than Competence
Hospitals think they hold the power because they write the checks. In reality, most have no idea how to run anesthesia well, and to be fair, anesthesia is an exceedingly weird and complicated business.
Recruiting, scheduling, billing, retention, it’s a different sport entirely. So they outsource. Then insource. Then outsource again. Each time convinced this version will work better. It rarely does.
Hospitals aren’t dumb; they’re just under-equipped. Their priorities — volume, volume, volume, and cost — don’t always align with the realities of anesthesia operations. And yet, the operating room remains the economic engine of the hospital, so they can’t afford to get it wrong.
Smart groups exploit that gap by being the one thing hospitals crave: dependable.
The group that runs quietly and solves problems before they reach the C-suite keeps the contract.
The irony is that reimbursement erosion and labor costs have made even dependable groups look expensive. What feels like a business negotiation is really a stress test for trust.
4. Threat of Substitutes: The Ownership Shuffle
The biggest “substitute” in anesthesia isn’t another profession or a robot. It’s a new ownership model.
A surprising number of hospitals switch who owns anesthesia every few years. A local group gives way to a national platform. The system insources. Then outsources again. Each swap promises alignment and efficiency. Each time, the culture resets, the trust erodes, and the performance dips.
To be fair, switching anesthesia vendors may very well be the right move. But you’d better do your homework and make damn sure you’re picking the right one. Otherwise, you’re just trading one set of problems for another.
We’re already seeing a resurgence in contract churn as the staffing situation begins to stabilize in certain markets. Hospitals are testing the waters again, and plenty will relearn old lessons the hard way.
These aren’t strategy moves. They’re frustration moves. When administrators can’t fix a relationship, they replace it.
The best groups make themselves hard to replace, not by locking up the contract, but by being low-maintenance, high-trust partners.
Hospitals don’t actually want a new anesthesia model. They just want to stop worrying about anesthesia. The group that makes that happen wins.
5. Threat of New Entrants: Easy to Start, Brutal to Sustain
It’s not hard to start an anesthesia group. It’s nearly impossible to keep one healthy.
The barriers to entry are low: a handful of clinicians and a billing vendor can hang a shingle. But the barriers to survival are punishing: recruiting, leadership development, retention, payer relationships, culture.
Even new capital doesn’t fix that. Plenty of private equity groups discovered too late that growth without trust just scales dysfunction.
This is a business that rewards patience and punishes ego.
6. The Bottom Line: Tough Business, Winnable Game
If you run anesthesia through Porter’s model, you wouldn’t invest in it.
Too much competition. Too little control.
Reimbursement lagging behind inflation.
Labor costs at historic highs.
And yet, good groups are winning.
They win because they understand the game. They stop pretending anesthesia is a stable industry and start leading it like a complex system: human, financial, cultural, and operational.
They invest in local leaders.
They build predictable systems.
They fight fewer battles and fix more problems.
At the end of the day, a shockingly high percentage of success in this business comes down to the quality of leadership at every level. And most groups are still unable, or unwilling, to truly improve in that area.
The forces aren’t changing anytime soon. But the leaders who understand them will.
I’m glad you’re bringing these good and bad issues to the table. I know many CRNAs who are desperate for decent and consistent leaders who create strong teams.