Anesthesia proposals that look too good to be true

A proposal lands on your desk promising to cut your anesthesia subsidy in half, or take it to zero, right when your current group says the number can only go up. It is tempting to take the win and move on to the next item on the agenda.

Some low bids are honest. A bidder may have a genuinely leaner staffing model, better payer contracts, or a coverage grid that fits your case volume better than the one you have today. Other bids are built to win the contract, not to run it. This article is about telling the two apart before you sign, not after.

The pattern to watch for

Hospitals that get burned by an anesthesia proposal tend to meet the same shape of problem. A bidder offers a subsidy well below the current one, sometimes zero, built on assumptions about volume, payer mix and staffing efficiency that look reasonable on a page. The hospital switches groups. Within a year or two, the new group is back asking for a subsidy increase. If the hospital has already let its incumbent go, allowed interim coverage arrangements to lapse and moved its OR schedule onto the new group's staffing model, it has little leverage left to say no. A second increase sometimes follows the first.

This is not the behavior of every group that bids low, and it is not confined to any one kind of bidder: local groups and national companies alike can price a bid too thin. Some low bids hold up exactly as proposed. The issue is a pattern some hospitals meet, not a category of bidder: a bid built around assumptions that were never going to survive contact with your actual case volume, payer mix and staffing costs.

Rebuild the bid's math before you believe it

A subsidy figure is the output of a model: projected collections minus projected cost. If a bid's subsidy looks too good, the model behind it is usually optimistic somewhere. Ask the bidder to show you the model, and rebuild it using your registration and financial data.

• Collections assumptions by payer. What Medicare share and what commercial share did the bidder assume, and at what rate per unit for each? Your own registration data will tell you the real payer mix. Medicare's anesthesia payment has been flat to declining for years; our piece on why anesthesia subsidies keep rising walks through that trend. A bid that assumes a richer payer mix than you actually have will not collect what it projects.
• Where the commercial rate assumption comes from. Ask whether the bidder's commercial rate depends on being in network at negotiated rates, or on going out of network and relying on payment disputes. Under the No Surprises Act, out-of-network anesthesia claims can go to federal independent dispute resolution. Providers and facilities won 80% of disputes resolved through mid-2024, and the median payment determination for anesthesia disputes specifically was about twice the insurer's benchmark rate.¹ A bid built on that outcome is a bet on a federal process neither of you controls, not a stable subsidy plan.
• Whether the assumed rate is one this bidder actually has. Commercial reimbursement for hospital-based anesthesia groups varies widely even within the same market, as Nathan Kaufman's analysis for HFMA describes.² Ask the bidder to show which of its own signed payer contracts produce the rate its model assumes. If it cannot, treat the number as a projection, not a fact.

Test the staffing plan against your coverage grid

A subsidy is only as real as the staffing plan underneath it. Compare the bidder's plan, room by room and hour by hour, against your actual coverage grid, not the grid the bidder assumes you need.

• Roles. Ask how the bidder intends to staff each site: physician anesthesiologists working alone, a care-team model built on certified registered nurse anesthetists (CRNAs) or certified anesthesiologist assistants (CAAs), or a mix. Our explainer on anesthesia care team models covers how each is staffed and paid. A plan that assumes a leaner ratio than your current group runs, without a clear reason it will work in your rooms, deserves a direct question.
• Pay assumptions against the market. If the bidder's cost model assumes clinician pay below current market rates, the model will not hold once it tries to hire. Bureau of Labor Statistics data for May 2025 put the mean annual wage at $360,570 for anesthesiologists and $248,320 for nurse anesthetists.³ A bidder pricing its ramp-up against older or below-market figures is building in a gap it will likely ask you to close later.
• Locum tenens assumptions. New groups often lean on temporary coverage while they recruit into open positions, and the anesthesia workforce is tight enough that ramp-up coverage is rarely quick or cheap. Ask directly who pays for locum coverage during ramp-up, for how long, and at what rate. Our piece on new groups asking hospitals to fund locum costs goes further into this specific request.

Read past the price to the contract terms

A low number in a proposal does not bind anyone unless the contract locks it in. Before you compare bids on price, compare the terms that decide whether the price actually holds.

• A price hold or a cap on increases. Does the contract commit to the proposed subsidy for a defined term, with any increase capped and tied to a formula you can check, rather than left to the group's request?
• Open books and reconciliation. Ask for a rolling, reconciled subsidy structure with regular reporting on collections, staffing and payer mix, and the right to audit it. Attorneys who write on anesthesia contracting describe this kind of transparency, along with regular financial and performance reporting, as standard practice for any group seeking hospital support.⁴
• The coverage grid as a contract exhibit. The staffing plan you evaluated belongs in the signed agreement, not only in the proposal deck.
• Performance metrics tied to the arrangement. First-case on-time starts, turnover, coverage of add-on cases and collection rates, each with a defined process if the group misses them.
• Step-in and transition rights. If the arrangement does not hold, what can you do short of a full RFP: bring in interim coverage, extend notice, or terminate for cause on defined terms?
• No unilateral reopener. A clause that lets the group revisit the subsidy whenever it chooses defeats the purpose of a fixed bid. If a reopener exists at all, it should run both ways and require agreement, not just notice.
• Exclusivity and notice periods. Check how long exclusivity runs and how much notice either side owes to end the contract. A short notice period from a group that just won your business on a thin bid deserves a second look.

None of this is legal advice. Have healthcare counsel review the proposed contract language against these points before you sign, and ask specifically about fair market value and commercial reasonableness, which federal fraud and abuse law requires of payments to an anesthesia group.⁴

Ask for references who lived through year two

A reference call to a hospital six months into a new contract will not tell you what you need to know. Ask the bidder for references from hospitals it has served for three years or longer, and ask each one the same direct question: what happened to the subsidy after the first year? Did the coverage grid or staffing model change from what was proposed at signing? Would they run the same process again?

Ask about turnover among the specific clinicians named in the proposal. A bid built around a handful of named clinicians who are gone by year one is not the bid you actually signed.

An illustrative example

The following is illustrative arithmetic only, not a benchmark, a real proposal or a client result. It uses round, hypothetical numbers to show how two bids that look far apart in year one can trade places by year three.

Assume a hospital comparing two bids for the same coverage grid. Bid A prices its subsidy close to the hospital's own model of collections and staffing cost, and holds it for three years. Bid B comes in far below Bid A. Then, once the incumbent is gone, it asks for more in year two, and more again in year three.

Year	Bid A (priced to modeled cost, held)	Bid B (low first year, then increases)
Year 1	$1,500,000	$900,000
Year 2	$1,500,000	$1,600,000
Year 3	$1,500,000	$2,200,000
Three-year total	$4,500,000	$4,700,000

The cheaper bid costs more by year three. Worse, the increases arrive after the hospital's fallback has gone: the incumbent has moved on, interim coverage has lapsed and the OR schedule runs on the new group's staffing model. The question is never only what a bid costs in year one. It is whether the contract lets the number move, and who decides when it does.

A checklist before you sign

• Rebuild the model. Test collections, payer mix and commercial rate assumptions against your own data before you compare subsidy totals.
• Match staffing to your grid. Check role mix, pay assumptions and locum funding against your actual case volume and current market rates.
• Read the contract, not the deck. Confirm a price hold or capped increase, open books, a coverage grid exhibit, performance metrics, step-in rights and no unilateral reopener.
• Check notice and exclusivity terms. Know how fast you could act if the arrangement does not hold.
• Call references from hospitals served three-plus years. Ask what happened to the subsidy after year one, and whether the named clinicians stayed.
• Bring in counsel before you sign. Fair market value, commercial reasonableness and reopener language are legal questions, not negotiating points to settle informally.

A bid that survives this kind of testing is worth taking seriously, whatever number sits on the cover page. One that does not survive it was never really priced to your hospital's cost of care.

Sources

1. Matt McGough, Nisha Kurani and Michelle Long, "The performance of the federal independent dispute resolution process through mid-2024," Peterson-KFF Health System Tracker, May 2025 (updated June 2025). https://www.healthsystemtracker.org/brief/the-performance-of-the-federal-independent-dispute-resolution-process-through-mid-2024/ ↩

2. Nathan Kaufman, "Nathan Kaufman: Hospital-based anesthesia and radiology operate in a broken financial model," HFMA, January 2026. https://www.hfma.org/finance-and-business-strategy/physician-compensation/hospital-based-anesthesia-and-radiology-a-broken-financial-model/ ↩

3. U.S. Bureau of Labor Statistics, "Occupational Employment and Wage Statistics, May 2025 (National Table 1)," BLS news release, May 2026. https://www.bls.gov/news.release/ocwage.t01.htm ↩

4. Rachel Carey and Elizabeth Sullivan, "Success in Anesthesia Agreements: Key Strategies for Effective Anesthesia Contracting," McDonald Hopkins Insights, August 2025. https://www.mcdonaldhopkins.com/insights/news/success-in-anesthesia-agreements-key-strategies-for-effective-anesthesia-contracting ↩ ↩²