Saturday, March 20, 2021

Fee For Service Is Over

The Covid pandemic destroyed countless lives and businesses. Our anesthesia group was unfortunately one of its victims. After almost 30 years of independent practice, we decided that the way we conducted business was no longer tenable. It has been a long time coming but Covid gave our group a final shove into the dustbin of history.

The group was an all physician anesthesiologist endeavor. When times were good, they were very good. It was an old fashioned fee for service practice. Some of us who wanted to make more money could work harder and longer than those who didn't want as much income. Some people made money to buy fancy cars and real estate while others earned just enough to satisfy their vacation splurges. Covid put into sharp relief the shortcomings of this model.

When the economy was put into mandatory lockdown by the government, suddenly the economics didn't work anymore. No work meant no money. Most of us were really hurt economically when our incomes dropped well over 50% last spring. Almost all of us applied for the PPP loans, which we qualified for since we were considered independent contractors. Unfortunately the loans were only a temporary bandaid since we can't live on government loans for long. Luckily the lockdowns started to lift just when the PPP loan money was running out. 

Meanwhile the doctors and nurses who were employed by the hospital didn't see any cuts in their incomes, even though they too were working less (other than the pulmonary, ED, ICU, and other so called frontline workers of the pandemic). When the second surge started to hit and our surgical volume waned again, we knew that our anesthesia group needed substantial help. 

In reality, our fee for service model was terribly outdated and could not survive for much longer. There were lots of problems with a business model that had been stagnant for decades. The most pressing issue was the difficulty we had in recruiting. We had survived by hiring people who really wanted to live in Southern California. That was the number one draw. Though the cost of living was exorbitant, some people were willing to take that economic hit to live here. Over the years, as the taxes and housing costs kept rising, fewer people were willing to make that sacrifice. 

The fee for service model also did not appeal to a new generation of anesthesiologists. Yes you can make fist loads of money if you work hard enough. But younger doctors were more interested in a better work-life balance. They were willing to make less if they could be guaranteed set work hours and regular time off to spend at home with their families. We just couldn't do that with our practice. People were expected to stay until all the cases in their room were finished. It was very difficult to plan any family events as there was no way to know even 24 hours ahead what time you might be able to go home. That was a gigantic turnoff to many young doctors.

Then there was the rising cost of doing business. Our back office was taking a substantial portion of the group's income. There was staff to hire, offices to rent, computers systems that needed constant updating as insurance companies and government bureaucrats kept changing how and what kind of paperwork they needed before we could get reimbursement. It was a constant battle to keep expenses down.

I'm not sure who approached who first, but when the hospital saw the difficulties we were having, they proposed to absorb our group into their system. They valued our expertise as we were active in a substantial portion of medical care. Everything from labor and delivery, surgery, critical care, chronic pain, and many other areas of patient management involved our anesthesia training and the hospital was grateful for it. Therefore they couldn't afford for our anesthesia group to suddenly disintegrate and leave them with an unstable and unpredictable anesthesiology department. I can't say it was a buyout as none of us got a buyout offer. Instead, we became employees of the hospital.


  1. Did income or benefits change...

  2. Yes they did. Please continue to the following post.