Strategy
What Changing Anesthesia Groups Costs a Hospital (and What It Does Not Show Up As)
By Andrew Woodmancey, Managing Director · Published
The short answer: nobody publishes the total cost of switching anesthesia groups, and we found no source that does. What exists are documented cases, some component figures with real sources, and several costs that depend entirely on the contract. In the best-documented case, a hospital alleged its subsidy had grown to more than $16 million, that the group demanded about $20 million to waive its restrictive covenants (later $12 million), and that it lost at least $6.2 million in revenue while rooms went unstaffed. Those are one side’s allegations. The costs that tend to be underestimated are not the ones in the new contract. They are the gap between the old group leaving and the new one billing, and the staff who do not stay.
What documented cases show
| Case | What happened | Dollar figures |
|---|---|---|
| St. Joseph’s Hospital Health Center (Syracuse, NY) and NAPA, 2023–24 | The hospital declined to renew effective July 1, 2024 and offered employment to the group’s clinicians. The court recorded that about 45 accepted. The Second Circuit affirmed denial of the group’s injunction in March 2025. | Hospital’s complaint alleges: subsidy capped at about $4.4 million originally, then at least $6.6 million; “more than $16 million” in 2023, over budget by more than $10 million; a covenant buyout demand of about $20 million, later a $12 million “discount”; “at least $6.2 million” lost when 11 of 13–14 rooms were staffed. |
| Broward Health (FL), 2025 | Elective surgeries at four hospitals were postponed when unpaid anesthesiologists walked off. A judge ruled the group’s noncompetes could not be enforced. | The outgoing group requested a $6 million lump-sum buyout, according to published reports. The replacement contract value was not published. |
| Methodist Le Bonheur (Memphis), February 2024 | The group reported losing 14 of its 31 staff and could not provide full coverage. The hospital hired temporary staff and rescheduled some elective surgeries. | Not published. |
| Advocate Sherman (Elgin, IL), 2021 | The hospital’s Level II trauma designation was downgraded on September 24 and restored October 15. The hospital said the prior group sought a “nearly 300% increase in pay” (the hospital’s claim). | Not published. |
| Billings Clinic (MT), February 2024 | Moved to an in-house department. It said a fully staffed department needs “between 30 and 40 anesthesiologists” and would use traveling and contracted anesthesiologists meanwhile. | Not published. |
| San Mateo Medical Center (CA), 2023 | The incumbent group gave notice that it was ending its contract; a replacement was engaged for March 2023 to February 2026. | Replacement not to exceed $6,616,890; prior contract amount not verified. |
Treat the St. Joseph’s numbers as allegations in a complaint, not findings. Treat the rest as evidence of what disruption looks like, not as a price list. We found no published one-time transition payment or retention bonus tied to a specific switch.
The components, and what is known about each
| Component | What the sources show | Status |
|---|---|---|
| Interim clinician coverage | Locum anesthesiologist pay of $300 to $425 an hour in 2026 (Locumstory); CRNA $125 to $325, most $190 to $225 (Barton Associates). AOC’s September 2026 postings: CRNA median $225, anesthesiologist $333. These are clinician rates; agency margin is on top and no neutral source gives it. | Rates sourced; markup not verified |
| Sign-on and relocation | AMN Healthcare’s 2026 review: anesthesiology signing bonus averages $81,733 (range $2,000 to $550,000); physician relocation averages $13,594. Average starting salary $525,000 for anesthesiologists and $286,250 for CRNAs. No CRNA bonus figure. | Sourced for physicians |
| Turnover | A 2017 JAMA Internal Medicine paper reports that “historical studies suggest that the cost to replace a physician is 2 to 3 times the physician’s annual salary,” and cites one system’s estimate of $500,000 to $1 million. These are general physician figures, not anesthesia. | Reference only |
| Restrictive covenants | Contract-specific. The St. Joseph’s and Broward figures above are the only dollar amounts we found. The FTC’s noncompete rule is not in force, and enforcement of state laws varies: one September 2026 summary counts 18 states that generally ban or void physician noncompetes. | Contract and state law |
| Malpractice tail | For claims-made policies, extended reporting coverage is typically 200% to 230% of the expiring annual premium for unlimited duration (Ethos Insurance); The Doctors Company’s multiple is 2.3. Who pays depends on the contract; no default exists for a hospital and group. | Multiple sourced; payer is contract-specific |
| Medicare enrollment | CMS’s manual directs contractors to process 95% of applications needing no development within 30 days (paper) or 15 (web), longer where development is required. Billing generally starts at the later of filing or service start, with retrospective billing up to 30 days. | Sourced |
| Commercial payer enrollment | Vendor sources say 60 to 120 days per payer. We found no authoritative figure. | Not verified |
| Receivables and first collections | Who owns outstanding accounts receivable, and how long until the new group’s first cash, depends on the agreement. No neutral source gives a norm. | Contract-specific |
| Operations | The only peer-reviewed study we found is one ambulatory surgery center (Dobie and colleagues, 2020), where average recovery room time fell 13.9 minutes after a change. It does not measure disruption. We found no study of delays or cancellations after a hospital changes groups. | Evidence thin |
A worked example: 10 locations
Take the illustrative program from our stipend request guide: 10 locations at a 1:3 ratio, costing about $7.25 million a year to staff. Suppose the outgoing group leaves and the hospital must cover weekday daytime cases with locums while the successor starts.
| Item | Arithmetic | Amount |
|---|---|---|
| Daytime CRNAs, one per location | 10 × 10 hours × $225 | $22,500 a day |
| Daytime anesthesiologists, one per three locations | 3 × 10 hours × $333 | $9,990 a day |
| Weekday total | $32,490 × 20 weekdays | about $650,000 per four weeks |
| Hiring the three anesthesiologists directly | 3 × ($81,733 signing + $13,594 relocation), AMN averages | about $286,000 |
The locum line covers daytime only. It excludes nights, weekends and call, agency fees, and any travel or lodging not included in the posted rate. For scale, the staffed-cost model above works out to about $29,000 per working day for the whole program across all hours (assuming 250 working days). Daytime locum coverage alone, at posted medians, costs more per day than that. The hiring line has no CRNA component because we have no sourced CRNA bonus figure. None of this includes tail, covenant payments, lost cases or the cost of cash delayed by enrollment. Each could be material, and the sources cannot price them.
Why the biggest costs are not in the new contract
- Cases that do not run. St. Joseph’s alleged $6.2 million lost with rooms unstaffed. Methodist and Broward postponed surgeries. The revenue lost on a delayed case sits on the hospital’s side of the ledger, so it rarely appears in an anesthesia transition estimate.
- Staff who leave. Methodist’s group lost 14 of 31 staff before the switch. Whether the clinicians follow the contract or the old group is the central uncertainty, and covenants or no-hire clauses decide how much you can influence it.
- The cash gap. A successor cannot bill a payer it is not enrolled with. If enrollment takes weeks to months, someone funds that period, and the hospital is the usual candidate unless the agreement says otherwise.
- The stipend you were trying to fix. A cheaper-looking proposal may rest on more favorable collections assumptions. Test them as you would a renewal request.
What to put in place before you decide
- Read the current agreement for notice, restrictive covenants, no-hire clauses, transition assistance and tail obligations. No rule requires either side to assist a transition, so the contract decides. See the agreement checklist.
- Price the interim period at posted locum rates for a defined number of weeks, then add a scenario in which half the staff leave.
- Ask each bidder for its enrollment plan, its start-date dependency on payer approval, and who bears the interim cash gap.
- Compare options on a full-cost basis, including employment. Our RFP checklist covers the scoring.
- Time it: see the renewal timeline.
Sources
- Complaint, St. Joseph’s Hospital Health Center v. American Anesthesiology (N.D.N.Y., February 2024); district court opinion; Second Circuit decision (March 2025).
- Broward County, surgeries postponed at Broward Health (February 2025); Becker’s, Broward Health delays hip replacements.
- WREG, Methodist delays surgeries after breakup with anesthesia provider (2024); Daily Herald, Advocate Sherman trauma designation (September 2021) and Becker’s, designation restored; Becker’s, Billings Clinic parts ways with anesthesiology group (2024).
- San Mateo County, anesthesia agreement resolution (2023).
- AMN Healthcare, 2026 Review of Physician and Advanced Practitioner Recruiting Incentives; Shanafelt, Goh and Sinsky, JAMA Internal Medicine (2017), The Business Case for Investing in Physician Well-being.
- Locumstory, locum tenens compensation trends (2026); Barton Associates, CRNA salary guide (2026).
- Ethos Insurance, tail coverage for physicians; The Doctors Company multiple via Doctors Agency; on who pays, TDIA.
- CMS, Medicare Program Integrity Manual, chapter 10; 42 CFR 424.521 and 424.520.
- Dobie and colleagues, Journal of Medical Systems (2020).
- Federal Trade Commission, press release on the noncompete rule (September 5, 2025); Becker’s, physician noncompete 50-state guide (September 2026).