Should your hospital employ its own anesthesia team?

Some hospitals reach this question after a familiar fight: the anesthesia group asks for a bigger subsidy, the number keeps climbing at every renewal, and someone on the leadership team asks why the hospital does not simply run anesthesia itself. Others reach it from the opposite direction. A group that has covered the hospital well for years is retiring, selling or dissolving, and no obvious group is waiting to take its place.

Employing your own anesthesiologists, certified registered nurse anesthetists (CRNAs) and certified anesthesiologist assistants (CAAs) is a real option in both situations. It is not automatically the right one, and it does not reliably cost less than contracting. This is a neutral look at when insourcing tends to work, what it actually asks of your organization, and where a hybrid arrangement may fit better than an all-or-nothing choice.

When it can make sense, and when it usually doesn't

Insourcing tends to work when several things are true at once. Your program has enough scale, generally a large multi-site OR footprint, to spread fixed costs like billing, recruiting and clinical leadership across many cases. Your local recruiting market can actually support direct hiring instead of leaving staffing to someone else's contract. Your leadership team has the bandwidth to run a clinical department, not only a service line. Your payer contracts, or your ability to build them, can support anesthesia-specific reimbursement. And your board is prepared to own the outcome for years, not one contract cycle.

It tends not to work when the program is small, when your current group performs well and the subsidy is explainable by the same forces driving subsidies everywhere, or when your organization has no appetite to add HR, credentialing, scheduling and revenue cycle work that a group currently absorbs. Rural and critical access hospitals face their own math: smaller case volumes make it harder to spread fixed costs, and clinician recruiting is often the binding constraint regardless of employment model.

Before assuming employment saves money, be honest about the evidence. One consulting firm that tracks hospital anesthesia contracts argues that net anesthesia spend under an employed model will likely cost as much as, if not more than, contracting with a group, because the underlying drivers, clinician pay, coverage hours and collections, do not change simply because the hospital signs the paychecks.¹ Whether that holds for your hospital depends on its own volume, pay and collections, which is why the worked example below shows both a costlier and a cheaper outcome. More than 90% of hospitals already pay a subsidy to their anesthesia group, and some treat that level of support as de facto employment in everything but name.² If that describes your hospital, the real question may not be cost. It may be whether direct control over staffing and clinical standards is worth the added management burden. Our overview of why anesthesia subsidies keep rising covers the underlying cost drivers.

What the hospital takes on

Every function an anesthesia group performs today becomes the hospital's job, or a job the hospital pays someone else to do on its behalf.

• Recruiting and retention. You are now competing directly for anesthesiologists, CRNAs and, where state law allows, CAAs. Counts of where CAAs can practice differ by source; the American Academy of Anesthesiologist Assistants lists 22 states, Washington, D.C., and Guam.³ Our guide to care team ratios covers the fuller state-by-state picture. Clinician supply is tight everywhere, which our overview of the anesthesia staffing shortage covers in more detail.
• Compensation and benefits. You set and defend pay scales in a market where a nurse anesthetist's median annual wage was $236,590 in May 2025, according to the Bureau of Labor Statistics, and where average anesthesiologist compensation reached $557,131 in 2025, according to Doximity's physician compensation survey.⁴⁵ Benefits, retirement matching and PTO now run through your existing hospital plans, for better or worse.
• Scheduling and call. Building and defending a fair call schedule, covering vacations and CME, and handling sick calls become an in-house operational function, typically owned by a clinical director instead of a group's own management.
• Malpractice. You decide on occurrence or claims-made coverage, and you own tail coverage questions when clinicians leave, which a group's malpractice program previously handled.
• Clinical leadership. Someone needs to be the chief of anesthesia: setting clinical policy, running peer review, handling difficult conversations with individual clinicians and representing anesthesia in OR governance. This is usually a paid, protected role, not an add-on to a full clinical schedule.
• Quality and peer review. Ongoing performance monitoring, case review and credentialing committee participation move from the group's internal process to your medical staff structure.
• Credentialing. Every employed clinician still goes through your medical staff credentialing process like any other provider. Employment does not shortcut it.
• Medicare and commercial enrollment. Each clinician needs Medicare billing privileges, and the mechanics have changed recently. Medicare merged the paper CMS-855R reassignment form into the CMS-855I as of 2023: physicians and non-physician practitioners now report a new, changed or terminated reassignment of benefits on the CMS-855I itself, whether filed on paper or through the Provider Enrollment, Chain and Ownership System.⁶ Commercial and Medicaid enrollment run on their own timelines, so build them into your go-live plan.
• Payer contracting. You now negotiate anesthesia's own commercial rates instead of relying on a group's existing contracts and history.
• Anesthesia-specific billing. Anesthesia billing runs on time units, concurrency and modifiers that differ from every other specialty's revenue cycle. Our explanation of why anesthesia needs anesthesia-specific billing covers what a general hospital billing office typically misses.
• Supervision and the Conditions of Participation. Federal rules require anesthesia services to be organized under the direction of a qualified physician, and generally require a CRNA to be supervised by the operating practitioner or by an immediately available anesthesiologist, unless your state has opted out.⁷ Employment does not change this requirement. Our guide to care team ratios covers the current opt-out states and how Medicare pays each staffing model.
• The rural CRNA pass-through, if it applies to you. A narrow, older Medicare provision lets certain rural and critical access hospitals get cost-based, rather than fee-schedule, payment for a qualified nonphysician anesthetist. It generally requires that the hospital already employed or contracted that anesthetist as of January 1, 1988, with surgical volume capped at 800 procedures a year, up from an earlier 500-procedure limit.⁸ Because of the 1988 condition, this rarely applies to a new insourced program. Confirm eligibility with your Medicare administrative contractor instead of assuming it.

Legal and compliance questions for counsel

Employing physicians and other clinicians who refer, order and bill for federal healthcare program services sits directly inside Stark law and the federal anti-kickback statute. Neither prohibits employment. Both require the arrangement to be structured correctly, and this is not a decision to make without healthcare counsel.

Stark law's bona fide employment exception generally requires that the employment be for identifiable services, that the compensation be consistent with the fair market value of those services and not tied to the volume or value of referrals, and that the arrangement would be commercially reasonable even if the employed clinician made no referrals at all.⁹ The anti-kickback statute has a parallel safe harbor for bona fide employees, built around the same idea: amounts an employer pays a genuine employee for furnishing services are not treated as prohibited remuneration.¹⁰ Ask counsel to structure and document compensation against both standards before you extend an offer, not after.

Separately, read your current group's contract and your clinicians' individual agreements for non-solicitation and non-compete language before you approach anyone about direct employment. In September 2025, the FTC's chairman sent letters warning healthcare employers and staffing companies to review restrictive covenants in their employment agreements, noting that unreasonable noncompetes can limit clinicians' options and patients' access, particularly in rural areas.¹¹ Our transition plan for changing anesthesia groups covers the same contract checkpoints in more detail.

Hybrid options short of full employment

Full employment of every clinician is not the only path. There are several ways to land in between.

• Employ CRNAs and CAAs, contract physician medical direction. The hospital hires and manages the anesthetists directly and contracts separately with a smaller physician group, or independent anesthesiologists, for medical direction.
• A management services agreement. The hospital employs the clinicians but pays an outside company for billing, credentialing support, scheduling systems and HR administration, keeping clinical control in-house while outsourcing back-office complexity.
• Employ, and contract a billing partner. The hospital handles recruiting, compensation and clinical leadership directly, and hires an anesthesia-specific billing vendor instead of building that expertise from scratch.
• Phased insourcing. Start with one site or one service line, obstetric anesthesia or a single ambulatory center are common starting points, and expand only after the first phase proves out operationally and financially.

How to take over anesthesia staffing: a phased plan

If the feasibility work says yes, the transition itself is where most of the risk sits. This is the order we would take it in. Every step that touches the current group's contract or its clinicians goes through counsel first.

1. Read the current agreement. Notice periods, termination terms, exclusivity and non-solicitation language set your earliest realistic start date. Nothing else can be scheduled until you know it.
2. Choose the model. Full employment, employed CRNAs and CAAs with contracted physician medical direction, or a phased approach by site. Decide before you recruit, because it decides who you recruit.
3. Name the chief of anesthesia early. The clinical leader should help design the department, the call schedule and the compensation plan, not inherit them.
4. Build the back office before the first hire starts. Choose an anesthesia-specific billing partner or build the team, start Medicare, Medicaid and commercial enrollment, and open payer contracting. Enrollment and contracting run on outside timelines you cannot compress.
5. Recruit, starting with the clinicians who know your rooms. Where the contract and counsel allow it, the clinicians already working in your operating rooms are often the fastest and safest hires. Then recruit to the rest of the coverage grid.
6. Plan interim coverage with a cap. Vacancies on day one are likely. Budget for temporary coverage with an end date and a ceiling, the same terms we recommend when a new group asks you to fund locums.
7. Give notice and go live in phases. Give notice on the timeline the agreement requires, then bring sites across one at a time where the schedule allows, starting with the site that is simplest to staff.
8. Measure from the first month. Coverage delivered, first-case starts, cost per anesthetizing location, collections per case and vacancies, reviewed monthly in the first year and quarterly after that.

A feasibility checklist

• Volume and scale. Do you have enough anesthetizing locations to justify dedicated clinical and administrative leadership?
• Local labor market. Can you realistically recruit and retain anesthesiologists, CRNAs or CAAs in your area, on your timeline?
• Administrative capacity. Do you have, or can you build, in-house or outsourced expertise in anesthesia billing, credentialing and scheduling?
• Payer position. Can you negotiate commercial anesthesia rates on your own, or will you need a billing partner with existing relationships?
• Legal readiness. Has counsel reviewed Stark and anti-kickback structuring, and checked your current group's contract for non-solicitation and non-compete terms?
• Governance. Do you have a named clinical leader in mind, and a governance structure for quality and peer review?
• Time horizon. Is your board prepared to commit for the years it takes to build and stabilize a department, not just the current contract cycle?

Worked example: employed versus contracted costs

The numbers are invented to show how the arithmetic can move in either direction; they leave out one-time transition costs such as recruiting fees and interim coverage.

Suppose a hospital pays its contracted group a $2,000,000 annual subsidy to cover ten anesthetizing locations. Inside the group's books, that subsidy fills the gap between $8,800,000 in collections and $10,800,000 in costs, including a management fee and margin.

	Contracted (today)	Employed, year one	Employed, once stable
Clinician pay and benefits	$9,000,000	$9,500,000	$9,000,000
Billing, scheduling, leadership and overhead	$1,000,000	$1,300,000	$1,200,000
Management fee and margin	$800,000	none	none
Collections	$8,800,000	$8,300,000	$8,800,000
Net cost to the hospital	$2,000,000	$2,500,000	$1,400,000

In year one, the employed model costs more: the hospital pays a little more to recruit and keep clinicians, builds its own back office and collects less while enrollment and payer contracts catch up. Once pay, overhead and collections settle at the group's levels, removing the management fee and margin makes it cheaper than today. Miss on pay or collections and it never gets there. That is the whole decision in one table, and the reason to build it from your own coverage grid, market pay and payer data before you trust the answer either way.

Where to start

Employing your own anesthesia team is a governance decision as much as a financial one. Before your board votes on it, you want a feasibility study built from your own data, a clear view of what a chief of anesthesia role would look like, and counsel's sign-off on the compensation structure.

Sources

1. Enhance Healthcare Consulting, "Anesthesia Subsidy vs. Employment: Best For Hospitals?," Enhance Healthcare Consulting Insights, November 2024. https://enhancehc.com/anesthesia-subsidy-or-hospital-employment-the-best-choice-for-hospitals/ ↩

2. Enhance Healthcare Consulting, "Anesthesia Employment Models For Hospitals And Healthcare Systems," Enhance Healthcare Consulting EHC Insights, June 2024. https://enhancehc.com/ehc-insights/anesthesiaemploymentmodels/ ↩

3. American Academy of Anesthesiologist Assistants, "Certification Practice Map," AAAA, undated. https://www.anesthetist.org/certifcation-practice-map ↩

4. U.S. Bureau of Labor Statistics, "Nurse Anesthetists, Nurse Midwives, and Nurse Practitioners," Occupational Outlook Handbook, May 2025 data (page last modified 2026). https://www.bls.gov/ooh/healthcare/nurse-anesthetists-nurse-midwives-and-nurse-practitioners.htm ↩

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

6. Centers for Medicare & Medicaid Services, "Consolidated CMS-855I/CMS-855R Enrollment Applications," CMS provider enrollment bulletin, July 2023 (revised March 2024). https://www.cms.gov/files/document/consolidated-cms-8551-bulletin.pdf ↩

7. Cornell Law School, Legal Information Institute, "42 CFR § 482.52 – Condition of participation: Anesthesia services," current text. https://www.law.cornell.edu/cfr/text/42/482.52 ↩

8. Cornell Law School, Legal Information Institute, "42 CFR § 412.113 – Other payments," current text. https://www.law.cornell.edu/cfr/text/42/412.113 ↩

9. Cornell Law School, Legal Information Institute, "42 CFR § 411.357 – Exceptions to the referral prohibition related to compensation arrangements," current text. https://www.law.cornell.edu/cfr/text/42/411.357 ↩

10. Cornell Law School, Legal Information Institute, "42 CFR § 1001.952 – Exceptions," current text. https://www.law.cornell.edu/cfr/text/42/1001.952 ↩

11. Federal Trade Commission, "FTC Chairman Ferguson Issues Noncompete Warning Letters to Healthcare Employers and Staffing Companies," FTC Press Release, September 2025. https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-chairman-ferguson-issues-noncompete-warning-letters-healthcare-employers-staffing-companies ↩