Anesthesia subsidy increase request? Review it before you say yes

Your anesthesia group has asked for a larger subsidy. The letter or the meeting probably came with a number, a deadline and a warning about coverage if the number is not met. It can feel like there is only one safe answer.

There is not. Remember this above everything else in the request: a threat is not a number. Before your board signs off on a bigger check, get an independent read on whether the number is right, separate from whatever pressure came with it.

The threat is a negotiating position, not a fact

"We will have to give notice" is something a group can say whether or not it intends to act on it. Leaving is genuinely costly for the group too, and that cost is easy to forget under pressure.

Its clinicians have lives in your community: houses, spouses' jobs, kids in school. Most anesthesia agreements carry a notice period the group must honor, and many clinician contracts include non-solicitation or non-compete language that limits where they can work next, though a growing number of states have moved in the last two years to restrict or ban non-compete agreements for physicians specifically, so what binds a given clinician depends on your state and needs a look from counsel.¹ A departing group cannot simply reopen down the street.

A group that walks away from a hospital contract also walks away from the revenue that comes with it. It still has to find work for its clinicians, keep them from taking local jobs with whoever replaces it, and explain the exit to every other hospital it hopes to serve. The hospital feels the risk of a coverage gap. The group feels the risk of losing the contract. Both are real, and only one of them is usually said out loud.

None of this means the group is bluffing. Its economics may be strained, and the request may be entirely reasonable once you have tested it. It means you have room to ask questions before you agree to a number, and that the "or else" attached to the ask is not, by itself, evidence that the number is right. If a deadline and a coverage warning have already landed on your desk, our first-30-days plan for a group threatening to leave walks through the contract review and contingency planning to run in parallel with the review below.

What's actually in the request

Most subsidy requests arrive as a pro forma: a model of what the group collects and what it costs to staff your rooms, with the subsidy as the gap between them. Ask for the model itself, not just its bottom line, and expect it to show:

• Collections by payer. What the group assumes it collects from Medicare, Medicaid, Medicare Advantage and commercial plans, and in what mix.
• Units and case volume. The anesthesia units the model assumes per case and per location, and how that ties to your actual schedule.
• Staffing cost by role. Pay and headcount for physician anesthesiologists, certified registered nurse anesthetists (CRNAs) and certified anesthesiologist assistants (CAAs), and the ratio the model assumes between them.
• Locum use. How much of the coverage plan already leans on temporary clinicians, and at what rate.
• Benefits and overhead. Loaded cost per clinician, beyond base pay alone.
• Billing and collection fees. What the group pays a billing company or in-house team to collect what it bills.
• Management fee. Any amount paid to a management company or corporate parent, separate from clinician pay.
• Margin. What the group keeps after every other line, and whether that figure is stated at all.

Every one of those lines is an assumption, and every assumption is testable against something you can independently check.

Verify it against your own data

You do not need the group's books to build a competing view. Your own systems already hold most of what you need.

• Case volume and payer mix from your own registration and OR systems, not the group's estimate of either.
• Staffed hours against used hours by location, pulled from your OR information system: when rooms actually open and close versus when the schedule says they should.
• The current coverage grid, site by site, so you know exactly what the group is staffed to cover today.
• Clinician pay benchmarks for your market. National surveys are a starting point. Doximity's 2026 report put average anesthesiologist compensation at $557,131 for 2025, which is a useful sanity check against whatever pay figures sit inside the group's model, even though your local market may run above or below the national number.²
• Payer rate assumptions. Medicare's national anesthesia conversion factor for 2026 is $20.4976 per unit for most clinicians.³ Commercial rates vary enormously by contract and market; one national survey of anesthesia groups put the average commercial conversion factor at $82.43 per unit in 2025, against a 2024 Medicare rate that the same survey calculated at 25.2 percent of the commercial average.⁴ If the group's payer mix assumption skews more toward Medicare than your registration data shows, the gap it is asking you to fill may be smaller than presented.

If your contract does not give you the right to see the group's collections, staffing detail or payer mix, fix that at this renewal regardless of how this particular request resolves. Our ten questions to ask before you renew covers the data rights to negotiate for.

Red flags in how the request is built

Some patterns should slow you down, whatever the number attached to them turns out to be.

• No books shared. A request built on a spreadsheet you cannot trace to underlying collections and staffing data is a request you cannot verify.
• An increase with no coverage grid attached. If the dollar figure is not tied to specific sites and hours, you have no way to know what you are buying.
• Automatic escalators. A built-in annual increase with no metric behind it locks in future budget growth on faith.
• "Market adjustment" with no survey cited. Fair market value claims should point to a specific benchmark, such as an MGMA survey or a documented local search, not an assertion.⁵ Ask your healthcare counsel to review any new payment structure; federal fraud and abuse law requires that payments to anesthesia providers reflect fair market value for services actually rendered and are not tied to referral volume.⁵
• A locum line that keeps growing. Occasional locum use to cover a vacancy is normal. A locum line that has become a permanent part of the staffing plan usually means recruiting has failed, and it is worth asking why before you fund it indefinitely.
• A deadline bundled with a coverage warning. A tight response window paired with language about coverage risk is a pressure tactic on its own, separate from whether the underlying number is justified.

Worked example: staffed hours versus used hours

This example uses made-up numbers to show how the assumption plays out.

Say a group's pro forma assumes a single procedural location, a GI endoscopy suite, needs staffing 10 hours a day, five days a week: 50 hours a week, 2,500 hours a year. At a loaded clinician cost of $220 an hour, that is $550,000 a year in staffing cost for that one location, before any collections are counted against it.

Now pull your own OR system data. Last-case-out time for that suite averages 7 hours a day, not 10. Actual anesthesia time used is closer to 35 hours a week, or 1,750 hours a year: 750 fewer hours than the staffing plan assumes. At the same $220 hourly cost, that gap between staffed and used time is worth $165,000 a year, money the pro forma is asking you to cover for time nobody is in the room.

That does not necessarily mean the group is wrong to want the location staffed for 10 hours; a room held open for late add-ons and turnover has value too. It means the 10-hour assumption is a decision, not a fact, and trimming the schedule, staggering the start time or combining the last hour with another location are all ways to close part of the gap without touching the group's rate per unit.

Options besides yes or no

A request framed as a single number rarely has to be answered with a single number back.

• Move to an open-book, reconciled subsidy. Rather than a fixed annual payment, true up what the hospital owes against actual, audited collections and costs each period. Our guide to open-book anesthesia subsidies explains how this structure works.
• Tie any increase to a written coverage grid. Pay for defined sites and hours, not an undifferentiated total.
• Phase it against milestones. Step the increase up as vacancies are filled or a metric is hit, instead of funding the full amount on day one.

For the fuller negotiation playbook, including term length, performance metrics and the care-team model, see our first-30-days plan for a group threatening to leave.

Before you answer

Get the request in writing along with the underlying model, not the total alone, and put one executive in charge of a small team drawn from finance, the perioperative director and healthcare counsel. Rebuild the pro forma using your own case volume, staffed versus used hours, payer mix and current staffing, then check every line against a source you control, such as a pay benchmark, Medicare's conversion factor or your own coverage grid. List the assumptions that move the number most and ask the group to defend each one, then bring back a structured counteroffer: a coverage grid, phasing, a shorter term or reporting requirements. Decide with your team what you would do if the group did leave, so the answer is a choice and not a reflex.

Sources

1. Sara Berg, "9 ways states are moving to clamp down on physician noncompetes," American Medical Association, September 2025. https://www.ama-assn.org/medical-residents/transition-resident-attending/9-ways-states-are-moving-clamp-down-physician ↩

2. Doximity, "Doximity 2026 Physician Compensation Report," Doximity, August 2026. https://www.doximity.com/reports/physician-compensation-report/2026 ↩

3. Centers for Medicare & Medicaid Services, "Medicare and Medicaid Programs; CY 2026 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies (final rule)," Federal Register, November 2025. https://www.federalregister.gov/documents/2025/11/05/2025-19787/medicare-and-medicaid-programs-cy-2026-payment-policies-under-the-physician-fee-schedule-and-other ↩

4. Gordon Morewood, Jonathan Gal, Steven Schulman, Randall M. Clark, Thomas Miller and Helen Olkaba, "ASA Commercial Conversion Factor Survey Results – 2025," ASA Monitor, November 2025. https://journals.lww.com/monitor/fulltext/2025/11000/asa_commercial_conversion_factor_survey_results__.19.aspx ↩

5. 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