Before you renew: 10 questions for your anesthesia contract

When an anesthesia subsidy request arrives, the number on the first page is not the place to start. Start with the facts behind it: what the group collects, who it staffs, where and when, and what the contract promises in return.

The stakes are real: an anesthesia subsidy is a large, recurring line in the hospital budget, and it deserves the same scrutiny as any other. Our benchmarks guide covers what published subsidy figures look like nationally; this piece focuses on the questions to ask your own group.

The work goes better when the questions are asked early, before a coverage deadline sets the pace. Here are the ten we would ask before any renewal or new anesthesia services agreement.

The data to request from the group

1. What does the group collect, by payer?

Ask for three years of monthly data: billed units, collections and net collection rate, split by payer. Medicare, Medicaid, each major commercial plan, self-pay.

Payer mix drives the gap you are being asked to fill. Medicare's 2026 national anesthesia conversion factor is about $20.50 per unit.¹ The national average commercial payment was $80.70 per unit in 2024.² A small shift in payer mix moves collections by real money.

Rates vary, too. Kaufman notes that some hospital-based groups receive as much as twice the commercial reimbursement of others, depending on how well rates were negotiated with payers.² If the group's commercial rates are weak, or its billing is slow, the subsidy request carries that cost. You should know that before you agree to pay it.

2. Who is on the schedule, by role?

Ask for FTEs by role: anesthesiologists, CRNAs, anesthesiologist assistants and any locum tenens clinicians. Ask for the cost of each, and how many positions are open.

The care-team model is one of the largest cost levers. Under Medicare payment rules, an anesthesiologist billing for medical direction can direct no more than four concurrent cases.³ Whether the group runs one-to-two, one-to-three or one-to-four, and in which rooms, changes how many physicians you are paying for. Heavy locum use deserves its own conversation. It is costly, and it tells you something about recruiting and retention.

3. What does the coverage grid look like, by location and hour?

Ask for the grid. List every anesthetizing location: main ORs, endoscopy, cath lab, interventional radiology, labor and delivery, off-site areas. For each, show staffed hours by day of week and who covers nights, weekends and holidays.

Then compare it with your own case data by location and hour. You are paying for staffed locations, not for cases. The grid shows where coverage and demand have drifted apart, such as a late-afternoon room that runs light most days.

After-hours coverage deserves a separate look. Is call taken in-house or from home? What response time is promised? Is obstetric coverage separate? The right answer depends on your volume and acuity, but you cannot judge it without seeing it.

The metrics that matter

4. What is our cost per anesthetizing location, and how is it counted?

Divide the total subsidy by the number of anesthetizing locations covered. Then check the definition. A room staffed ten hours a day is not the same as a room staffed around the clock, and a comparison that mixes the two will mislead.

Agree on one definition with the group and use it every year. That turns a one-time negotiation into a trend you can watch.

5. How full are the rooms we are paying to staff?

Measure utilization by location and by hour, using your own OR system's data. Look hardest at rooms that open late in the day or run light.

Idle capacity is expensive. A JAMA Surgery study of 278 California hospitals found an average OR cost of $58 per minute, against revenue of $66 per minute, in fiscal 2022.⁴ Extra anesthetizing locations that do not add cases raise the subsidy and lower each clinician's billable time at the same time. Sometimes that trade is worth making for growth. It should be a decision, not a default.

6. Do first cases start on time, and how long are turnovers?

First-case on-time starts and turnover time tell you whether paid minutes turn into cases. Use standard definitions so both sides measure the same thing. The Association of Anesthesia Clinical Directors glossary defines turnover time as the time from the prior patient out of the room to the next patient in the room, for back-to-back cases.⁵

Be fair about ownership. Late starts and slow turnovers involve surgeons, nursing, sterile processing and anesthesia. Track them as shared measures, and tie only what the group controls to its payments.

The contract terms to scrutinize

7. How long is the term, and how do we get out?

Look at term length, automatic renewal and the without-cause termination notice for both sides. Ask whether the notice period is long enough to run a request for proposals and recruit a replacement. If the group can leave on short notice and you cannot, the contract is not balanced.

For-cause termination should name specific failures and allow a cure period. These provisions carry legal consequences, so review them with counsel.

8. What does exclusivity buy us?

Exclusive anesthesia contracts are not new. In 1984, in Jefferson Parish Hospital District No. 2 v. Hyde, the U.S. Supreme Court found that a hospital's exclusive contract with a firm of anesthesiologists did not violate Section 1 of the Sherman Act.⁶ Whether your own arrangement is sound is a legal question specific to your market, best folded into that same review.

The business point is simpler. Exclusivity should come with obligations. Ask for a written coverage guarantee: every location on the grid, every scheduled hour, staffed. Spell out what happens if the group cannot fill a shift, who pays for locums, and whether the subsidy drops for rooms that go uncovered.

9. Which performance measures affect payment, and can we see the data?

Kaufman's advice is direct: the hospital and group "must agree on metrics for quality, productivity, professional conduct, efficiency and administrative services."² Put a defined share of the subsidy at risk against a short list of measures the group can influence.

Pair that with data and audit rights: monthly reports on collections, units, staffing and coverage, and the right to audit billing and staffing records. Without them, the next subsidy request arrives with no way to test it.

10. What happens if volume changes, or if we transition?

Volume will change. Ask how the subsidy adjusts if you open or close locations, add a service line or lose a busy surgeon. A formula agreed now costs less than a renegotiation later.

Then plan for the day you might change groups. You may want to keep the clinicians who already know your ORs. Check the non-solicitation clauses in the hospital's contract and the restrictive covenants in the clinicians' own agreements. Either can block a smooth transition. Review both with counsel before you sign, not after notice arrives.

Where to start

You do not need all ten answers before the first meeting. You need the data request out the week the letter lands, and a clear view of what you are buying.

Sources

1. American Society of Anesthesiologists, "CMS Finalizes Policies Undermining Anesthesia Payments and Ability for Anesthesiologists to Meaningfully Participate in the Quality Payment Program," ASA Washington Alerts, October 2025. https://www.asahq.org/advocacy-and-asapac/fda-and-washington-alerts/washington-alerts/2025/10/cms-finalizes-policies-undermining-anesthesia-payments-and-ability-for-anesthesiologists-to-meaningfully-participate-in-the-quality-payment-program ↩

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/ ↩ ↩² ↩³

3. U.S. Code of Federal Regulations, "42 CFR § 415.110 – Conditions for payment: Medically directed anesthesia services," via Legal Information Institute, Cornell Law School, current text. https://www.law.cornell.edu/cfr/text/42/415.110 ↩

4. Arman Ashrafi, Melinda Maggard-Gibbons and Christopher P. Childers, "Costs, Charges, and Revenue of Hospital Operating Rooms in California," JAMA Surgery, July 2026. https://jamanetwork.com/journals/jamasurgery/fullarticle/2850853 ↩

5. Tamas Fixler and James G. Wright, "Comment on 'Identification and use of operating room efficiency indicators: the problem of definition'," Canadian Journal of Surgery, October 2013. https://pmc.ncbi.nlm.nih.gov/articles/PMC3788018/ ↩

6. Supreme Court of the United States, "Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2," United States Reports, March 1984. https://www.law.cornell.edu/supremecourt/text/466/2 ↩