The CAA Certification Debacle, the Locums Bubble, and Why Anesthesia Groups Keep Losing Contracts. They Shouldn't.

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Speaker: Randy, the quote I heard this week, uh, coming out of Boston was, "You cannot swing a dead cat in the exhibit hall without hitting a locums company."

Speaker 2: All right, we're back, everybody. Welcome back. Tracy Young and Randy Moore, two of the smartest guys in this industry. How's it going, fellas? Great to see you both. Hey there. Good to be back. Hey 

Speaker: there. Good to see both of you as well. 

Speaker 2: We just- we all just got back from Boston, and although it's not exactly the, uh, the role we're speaking from today, uh, Tracy, you became president of your professional association.

Congratulations to you, sir. 

Speaker: Thank you, sir. Three, three days into the role as we tape this today, and I can tell you that the sun has risen all three days, so things must be going well. 

Speaker 2: That's right. I love it. Uh, and I think, Randy, uh, you were there as well, and we both mentioned we're getting, getting good feedback from people listening.

It's a good thing. 

Speaker 3: Yeah. Lots of, lots of, uh, folks came up and, [00:01:00] uh, mentioned the podcast, which I, I was pleasantly surprised, uh, to, to hear, and I, I was always- 

Speaker 2: Surprise ... 

Speaker 3: very intentional- What? ... to say that- 

Speaker 2: Come 

Speaker 3: on ... well, I, I guess surprise is not the word- uh, not the right word. Uh, I always-- I was, uh, very intentional in saying, "This is Joe's project.

I'm just a supporting- I see ... 

Speaker 2: a 

Speaker 3: supporting actor, supporting player in- Well ... in the project." But, uh, yeah, it definitely seems to be getting some traction, and, uh, that's really exciting. And I'm not surprised. I am not surprised that it's getting traction. 

Speaker 2: Thank you. Thank you. Yeah. Uh, you know, it's interesting, uh, 'cause this is-- You know, we talk a l- we'll, we'll get into the issues here in just a moment.

There's a lot to talk about on the r- some big issues to talk about on today's docket. I've always been an ideas guy, but, uh, like, I'll come up with ideas, but I always have surrounded myself, thankfully, with people who know actually how to get things done, and you guys both check that box, so obviously this doesn't-- this does not happen without your very insightful points.

Uh, I did get, uh, just one feedback note. A anesthesiologist named Christopher Holst from my home area, Lehigh Valley, reached out and [00:02:00] just gave us kudos on this podcast. And for those listening, we are gonna have an anesthesiologist, uh, regularly on the show coming up in a few weeks, getting things scheduled now, and that kinda speaks to the-- what we're trying to do here.

So let's, let's get into the docket. We're talking about the CAA big... Oh, man, just brutal, bad news for the CAA national certification. We're gonna get into the details. We'll talk a little bit about the market, and then at the end, this very, very unfortunate Ascension medical error. But first, the headlines from the National Commission, uh, for Certification of Anesthesiologist Assistants.

And 

you can s- if you're looking on the screen, if you're watching on YouTube, which is apparently one of our big, big avenues for listeners, skip right down to the bottom. The NCCAA has invalidated all results from the June 2026 administration, but the details are a little bit worse. Obviously, first point there, it-- June was invalidated.

They had actual exam content which had been circulated [00:03:00] before the exam, and they included-- they found a document circulating this evidence. But this is where I was a little bit surprised The-- This apparently has impacted 20 exam windows. That's almost seven years of certifications that has, is potentially indicated here.

And in a contrasting point from the National Board of Certification, uh, for CRNAs, which is entirely separate organization, they use fairly sophisticated computer-based questioning. I'm not qualified to share, but I know it's not a simple one hundred and eighty multiple-choice exam question approach. So there's, there's differentiations in the way those exams are created.

Uh, Randy, w-we'll start with you first. You may be already seeing some of the impact on the, on the locums market and specific markets. What are your thoughts here? 

Speaker 3: Well, I'm, I'm probably gonna get out of my depth pretty quickly here if we start talking about testing methodology and, and all of this. But it seems to me, uh, that-- And I, I get kind of right into the [00:04:00] practical, like- 

Speaker 2: Please ...

Speaker 3: im-implications of, like, think about all of the-- I don't know h-exactly how many folks were impacted by this, but an entire June cohort of testees who thought that they were gonna be practicing anesthesia, ge-generating income, and employers thinking that they were going to have clinicians in seat by, call it September, uh, or earlier, are, are waking up or have woken up and realized like this is, this is really bad for them personally and for those facilities and groups that have hired them.

This is, um, you know, this is potentially a, a significant impact to them. And, um, you know, it's, it's too bad that there's a-- I don't know how many folks are implicated in this, and I don't know exactly if they're gonna be able to, uh, do anything about it from a discipline perspective. But, you know, that's, that's a lot of folks who, uh, who were, uh, thinking that they're gonna be starting a job and then find out, guess what?

You have to take the big test again in September or October. The practical implications of that personally and operationally are not [00:05:00] insignificant. I think you're-- I mean, I did a little bit of research on this and, and, uh, you know, I, I think the idea that-- 'cause I was like, "Well, how does this compare to the CRNA certification exam?"

And, and there are actually big differences in that, as I understand it, and I, I've taken the exam a long time ago. It's a, it's a computer adaptive test versus kind of the linear testing that they're using. And I, I have to wonder if the NCAA is going to have to make a change in terms of their testing methodology.

Speaker 2: Yeah. Yeah, indeed. Tr-Tracy, thoughts here? 

Speaker: Yeah, not, not a whole lot much to add, um, other than, you know, Randy left off one of the C's in the NCAA, uh- ... College Football Athletics versus the, uh, National Commission of Certified something or another. NCCA, that's right. Uh, th- now look, the NCAA is in the news plenty with, um, all kinds of scandals of, of players going pro and trying to go back and play college.

So we won't get into that today. Uh, it's a topic for another day. But, [00:06:00] um, look, this is just unfortunate. Uh, I don't think there's anything else to be able to say about this. It's, it's unfortunate for the, the, the cohort that was taking the exam, uh, the ones that were doing so without cheating, 'cause you, you'd have to assume not everyone had the test questions, but then again, maybe not.

Um, and it, it cast a shadow on previous test results as well too that may have some long-lasting effects on, on the market. It, it's unfortunate for hospitals. They're gonna rely on their services. It's unfortunate for the communities and the patients as well too, all across the board. Uh, what, what I would caution us as a CRNA body and CRNAs to do is, would be, you know, maybe not take a victory lap on this.

Um, you know, glass houses and throwing stones, um, metaphor there. Our test though, I can tell you, um, just what Randy said, I can get out of my depth in a hurry here. Not my area of [00:07:00] specialty and expertise is, you know, looking at, uh, test methodology and those things. But the adaptive test we have, the number of test, test questions that can float in and out, uh, the way it reacts to how you answer questions and hones in to different areas, um, I think there's a lot more validity in the product, right?

Um, I tried to do a little bit of research, um, on this as well too, and when, when it first came out, and the NCCAA is made up of, you know, physicians from the ASA, um, anesthesiologist assistants, general, um, public members and stuff as well too, and their, their mission is pretty clear It's to make sure that if they're gonna certify professionals in this healthcare arena, that the certification has to have valid- validity and merit behind it, right?

This calls into question the core of what they do and the core of their existence. It's, you know, there are a hundred and ni- hundred and eighty [00:08:00] questions broken up, 90 questions, a 15-minute break, 90 questions. It's linear. You would have to assume there is a relatively large test bank of questions behind those 180 questions, but that's not public information.

We don't know. Hmm. Is it, is it 360 questions? Is it 3,600 questions? Um, I could not find those, those answers when this first broke 'cause that was the first thing I started thinking of because if test questions are floating around, how big is the bank? 

Speaker 2: Hmm. 

Speaker: Is it-- Are you gonna get 10% of the test questions or are you gonna get 90% of the test questions?

Um, those are all things that come to mind, but the bottom line for me is it's, it's unfortunate. It's, um, it's unfortunate for all those who are involved and for those who actively went out and cultivated these test questions and disseminated it to other folks, potentially maybe even sold it to them. And then for those that partook in, in getting the test questions, there's, there's gonna have to be a lot of [00:09:00] questions answered about what their future looks like in the profession.

Speaker 2: Yeah. Yeah. Well said. I think I was at this conference and sat next to an anesthesiologist and real, real practical guy, very, very friendly, and he works in a practice where CRNAs practice with a lot of autonomy. And then he said: "Well, you know, I've, I've worked in Georgia too and worked with CAAs, and you know, that model can work very, very well."

We, we went back and forth a little bit, not on the practical-- not on the practice side, but on the policy side. And I think, you know, rather than... I, I would imagine this will come up in terms of, you know, the quality of the product, so to speak. I think when we're talking about seven years of potential impact, there's-- it's...

Yeah, this could get messy. This probably will not be the last time this comes up. But I, I do have to give a lot of credit and, and this is not a criticism of anesthesiologist assistants at all I think my policy positions on that are fairly deregulatory in [00:10:00] nature, and they're fairly well known, right? So this is not a criticism of them, but I do have to give a lot of credit to the NCCAA because they did not have to publicly share this, right?

So they had demonstrated their integrity, um, which is probably, uh, you know, gonna be an overlooked part of, you know, dealing with the practical fallout here. Um, yeah. Yeah, I, I-- it's, it's gonna be interesting. I did get some text messages just from people in the markets who say, you know, their, their locums contract got e- got extended because of this.

These guys who are not- Oh my. Yeah. Yeah, who are not-- Well, they're not graduating, right? And I'm, I'm guessing, you know, there's about 400, you know, 400-plus graduates a year. This is probably around 150 people, which is meaningful, especially since the CAA, uh, group is, you know, concentrated in a number of markets, right?

Uh, so credit to the NCCA. Uh, super unfortunate. Unfortunately, human, human behavior is, is pretty predictable at a [00:11:00] broad level, and this does not surprise me that it's been circulated. I think all of these institutions are getting used to ultra-rapid communication, right? I, I often share that in, you know, the other side of my professional life, it's like, if you don't want anyone to know, just don't tell anyone, right?

'Cause once you tell someone, it's, you know, word gets out quick and yeah, this-- uh, there'll be more implications here on confidentiality, maybe even licensure, 'cause if they're indicated in, you know, cheating on their certification exam, it's maybe hard to get licensed at the state level. This is, this is gonna be messy.

Unfortunately, the, a lot of the docket today is a lot of messy items. Do 

Speaker 3: you happen to know how these test questions were, were being shared? 

Speaker 2: I personally don't. I, I monitor a lot of social media channels. I don't participate on all of them. Uh, but Reddit seems... You know, Reddit is an anonymous social media forum, and there's a lot of back-channeling that goes on.

You know, it's simi-- like LinkedIn, you know, the messages say networking happens in the messages, uh, rather than on the posts, and I think it's a similar [00:12:00] dynamic with Reddit. I would imagine- Hmm ... there's a, a running, uh, a running l-list of people. Someone's, someone probably, if I can predict human behavior again, someone probably selling them.

Again, I think over the coming months, we're gonna see more news on this issue, but it's a, uh, it's an unfortunate one. Speaking of locums, I got this from a very learned individual. Uh, actually, so Randy, this is from your slide. I, I stole it this morning, right? Uh, so you're gonna be well-positioned to speak to this.

Uh, we are already seeing-- I'll, I'll just start with my local perspective. I am already seeing Phoenix really change. Tucson, which from my point of view, is one of the hottest locums market in the country for about two or three years. Uh, we actually had-- we had a small hospital contract down there. We, we said, "Hey, we'd, we'd like to expand the relationship."

They said, "No, w-we can do a better job of this." The hospital said, "We can do a better job of this." And we unfortunately, we just, you know, sat back and watched the locums market just explode [00:13:00] over that period, for better or for worse. But everyone can see up here on the screen the current state of the population and what is coming twenty thirty.

And for those who don't know, for those in the audience, we'll come to you, Tracy, first for a reaction, uh, and then go to the author of the slide. Uh, what's key here is that anesthesiologists are relatively capped because they have to go back to the federal government to get resi-- physician residency funding, right?

So, so they can-- That's how their educational pathway is set up. The CRNA market, the CRNA educational market is, it's a free market. Anyone who meets the criteria can open up a program, and the COA does not control those numbers of graduates. And obviously, anesthesiologist assistants are just rate-limited by infrastructure at this point.

Uh, so there's a lot of, lot of changes coming. Uh, Tracy, let's, let's go to you first. What do you think, my friend? 

Speaker: Yeah, I think with Randy's permission, I'm gonna steal his slide as well too for some presentations. So, um, Randy if you- Go for it ... give me a little head nod. 

Speaker 3: Yeah, 

Speaker 2: go for it. Yep. 

Speaker: Sweet. 

Speaker 3: You have to keep the North Star [00:14:00] branding on it.

Yes. And so that's, that's, uh- 

Speaker 2: Yes. That's right. There we go. North, North Star has to be there. North Star has to, the, the chief marketing officer at North Star approved. 

Speaker: So th- this slide tells a, a very compelling story, and there, there's another slide that, that the ASA, um, workforce data comes out with that tells a very similar story as well too, and it goes back to 2018, where the number of, uh, CRNAs and anesthesiologists in the US were exactly the same.

And from that point on, they have diverged, and they have grown apart. Mm. And the most recent data, I think, came out in May or June, so just a couple of months ago. There's roughly 11,000 more CRNAs than anesthesiologists. So those-- that gap is basically turning into a Pac-Man mouth. It's getting wider. An alligator mouth that's getting wider and wider.

And what this chart shows is that it, it's gonna accelerate even faster. And The reasons are exactly as you mentioned. GME funding and the ability to open new residency [00:15:00] programs with physician anesthesiologists is a lot more difficult. And it's not all federal funding though. So there are some states, there are some areas that are getting a lot more creative in how they set up GME programs.

They're, they're in some state fundings. They're having some, some private-public partnerships. So their numbers are growing, but they're not growing nearly at the rate that the CRNA numbers are. And if you look back at anesthesiology residency matches, and you go all the way back to the 1980s and '90s, many residencies, if they had 10 spots, were only filling four, five or six of those.

Their match rates were under 50% across many residencies for anesthesiologists. It wasn't a desirable field for physicians to go into at that time. However, started picking up a little bit through the early 2000s, and the last five years, matches have been almost 100%. That's right. Basically ni- I mean, statistically 99% across all physician residency matches.

So the [00:16:00] numbers are coming back, but they're not coming back nearly as fast as the CRNA numbers are. And you mentioned the free market. Um, we talked about the certifying agency for, for CAAs, for anesthesiologist assistants. Yep, there's a, there's the Pac-Man mouth that's growing that I spoke about. Um, when we think about the, the mission of these different associations, we have the COA, the Council of Accreditation.

They set standards for educational programs that they have to meet in order to be able to open new programs or to increase cohort size, so existing size of programs. So coming out of COVID seems like a long time ago, right? But, you know, we're, we're talking 2020-ish kind of coming out of COVID. By the time everyone realized that the shortage that we're seeing is here, and it's gonna be here to stay for a while, what's the first things we started doing?

We start increasing cohort size. Mm. After that-- So that's a three-year elasticity before any of those start hitting the marketplace, assuming [00:17:00] you can do it immediately, but then you gotta go apply. You have to prove that you can support an increased cohort size through training sites and faculty numbers and everything else.

So there's a lag there just to get approval, and then you have to admit your next class. Then there's three years to graduation. And the other thing we started doing is other universities and other, um, areas started saying, "Hey, we need more CRNA programs. Let's open one up." What is the lag there? From inception to opening a program and accepting your first co-cohort, maybe two years.

It's a lot of legwork- Mm-hmm ... between funding and hiring staff, going through the accreditation process for a brand-new program, getting contracts for all the clinical sites. I mean, this is not a real quick, uh, elastic market, right? Where we could just open up a spigot and start getting more. My point being, the hockey stick in Randy's chart there on twenty thirty of those five thousand graduates, that hockey stick is happening because everyone responded to the shortage [00:18:00] coming out of COVID, and we're gonna start seeing the fruit of all those efforts, which is a lot more graduates.

Twenty twenty-five is not listed on here, but the data came out less than a month ago. Uh, we graduated over three thousand for the first time ever. So it's continuing moving up and to the right as well too. So we're marching to that twenty thirty, uh, projected number that Randy has on the slide. And we're gonna get there.

Um, and look, everyone-- You have to give the market kudos. It responded Is it responding correctly? Probably not. We'll probably be oversupplied in sometime in the relatively near future unless demand starts changing or unless retirement trends start changing. Um, but this isn't anything new. We, we've never really- Mm-hmm

been-- we've never really matched supply and demand for any period of time, more than a very short period of time. In the three cycles that I've been involved in since I started my anesthesia training in 1988, [00:19:00] during that time, we've had about two or three cycles of oversupply, undersupply, oversupply. The only time we get it right is when we're crossing over the median line from under to over- That's right

or over to under. 

Speaker 2: The-- It's like, it's like matching up, uh... It's like a solar eclipse where the Earth, the Moon, and the Sun all line up. It's a very brief window, and then it all diverges again, you know? 

Speaker: Yeah. 

Speaker 2: So Randy, this is your slide. What do-- You know, this is- Yeah ... this is some of your thinking here, by all means, my friend.

Speaker 3: So I, I've been prognosticating on this for a little bit. My, my sense is that- Yes, you got 

Speaker 2: roasted the first time you, you did this. Yeah. 

Speaker 3: I, I think the roasting is, is- They were like, "Evil corporate 

Speaker 2: man." 

Speaker 3: I think the roasting is probably gonna start to diminish. So I, I'm directionally correct. Timing is always iffy on these things, right?

So it's, it's, you know, if you wanna look foolish, make precise predictions on what's gonna happen on specific workforce-related indicators. Even though you know the direction, the timing's gonna be hard to figure out because it's complex, multidimensional stuff. I would say, um, uh, you know, one of the things I love about CRNAs is, like, they're [00:20:00] incredibly-- Um, there's a real palpable vein of entrepreneurship in the CRNA workforce, and that is manifested in, if you walk- We can, you know, just to timestamp this, as Joe mentioned, we were at Annual Congress just recently.

So walking through the- I- every year I do a lap, one lap around the exhibit hall to take kind of a mental note of, like, what do the booths look like? What's the composition? What are they selling? How are they positioning themselves? And I walked away this year thinking that we are probably e- going to be experiencing a locum tenem company bubble, uh, meaning that, you know, you look at the number of...

And 

CRNA-owned and non-CRNA-owned locum tenem companies. I, I don't have any data to support this, but I would say, you know, it's been explosive in- Oh, yeah ... in terms of the number of groups, you know, 

Speaker 2: and- Oh, yeah. And, and there's- We, we just spoke about Crew selling just last week, so- 

Speaker 3: Yeah. 

Speaker 2: Yeah, 

Speaker 3: so, so 

Speaker: there's a- Maybe they didn't get Randy Randy, the quote I heard this week, uh, coming out of Boston was, "You cannot swing a dead cat in the exhibit- Yes

hall without hitting a locums company." So that was the quote I [00:21:00] heard. So your observations matched up with others. 

Speaker 3: Yes. Yeah. So again, what I'm not here to say is, like, all those companies are gonna be gone five years from now, but there will be a culling of the herd. I think you'll see the, the ones that have kind of sophisticated strategy infrastructure are positioned better to be successful.

The ones that are, um, are, you know, thinking about how they can change their value proposition to the employers m-m-are in a good position. But I think there's, there's a material amount of these groups that just are not gonna exist, uh, as the, the locum tenem market gets, just gets harder and harder. And that's a prediction I made on the stage at annual congress.

So, you know, I'm... And I'm-- I, I, I feel pretty good about that. What I'm not saying is this is like flipping a light switch on or off. You know, we're gonna wake up tomorrow- For sure ... or six months from now, and the locum tenem market's gonna be gone. The other thing, uh, that I, I, I have said, and I said this to several locum tenem company owners- Mm-hmm

uh, in the exhibit [00:22:00] hall, 'cause they are very good at finding me, is the-- I, I think there is a very valuable role for locum tenems and locum tenem companies in the anesthesia space that will continue in p- in perpetuity. Uh, and so I think what we're seeing is a correction in, and I think it's an appropriate correction in the kind of the laissez-faire ov-ov-overutilization of locum tenems and, and the cost, both financial and non-financial costs, that that brings to employers of anesthesia clinicians, and you're starting to see that correction.

That correction is happening faster and, and, and more kind of acutely in the metro, metro-adjacent markets, so think of markets that are generally just easier to recruit to because they're- Mm-hmm ... they're more attractive from lifestyle An employment, uh, um, opportunity perspective. We- we've got data inside North Star, and I would argue that, you know, this is true outside of North Star, that you're seeing W2 staffing go up, and you're seeing locum tenem utilization [00:23:00] rates and overall locum, locum tenem utilization demand go down in those markets.

And I think that will be the case, and I think that will accelerate, especially in markets that are well supported by nurse anesthesia programs. So think of a market like Louisville, Kentucky, where we have, you know, pretty sizable presence, and they've had three nurse anesthesia programs, I think three new- 

Speaker 2: Oof

Speaker 3: nurse anesthesia programs come online over the last, call it thirty-six months. So that market is positioned very well for a faster correction, uh, you know, in the future as that supply really starts to ramp up. 

Speaker 2: Yeah. Yeah. Very, very good points. I think for anyone who's listening, 'cause we are learning that we have a broad, uh, audience between CRNAs, anesthesiologists, and I even had RNs come up to me and be like, "I'm learning about things."

And I was like, "Wow, you are a, you are a jump starter." Uh, for those listening, there's always going to be unknowns, right? I think overall the, you know, demand is strong, the profession is strong. You know, we haven't figured out how to do [00:24:00] surgery without anesthesia quite yet. Um, so there's a lot of unknowns still, but I think, you know, the general trend as you, you both have identified is in a certain direction.

I think the other two points which occur to me are The curve of the speed of supply runs at a much, let's see if I can get my algebra correct, much lower rate of rise, right? So the, the curve is much more gentle as compared to the, the curve of demand. Demand absolutely spiked, right, for all the reasons everyone knows, COVID, retirements, et cetera, right?

And now it's starting to curve off just a little bit. But that curve of supply is still ramping up and it will go up, right? And now I'm laughing, and someone's gonna clip that and be like, "Look at these evil, bad business owners." Okay? And so this is my third point, and it may be the most important for anyone who really wants to understand anything about how the service sector economy works.

So because, you know, we, we talked about unions and populism on this last episode, [00:25:00] where people are generally angry, right? And there's a lot of validity to that. But the way that the service sector economy works, which I did not truly understand until, like, the last three years of my career, is that fundamentally, there will be a period of arbitrage where the anesthesia management companies have deals that were set up two years ago, and suddenly it's much easier to recruit.

And that's true, right? That doesn't mean margins will change, however, and that's the-- I think that's the perception, um, generally in the population. It's like, well, it's easier to recruit and I can't keep, you know, raising my rates twenty, thirty percent every year or something like that. That's-- the margins won't change, right?

And there will be a period of arbitrage where it's easier to recruit suddenly, right? And then, but eventually, if the margins of an anesthesia management company go up for some reason, let's say expenses start to really go down. If the margins go up, the market will correct it. Just like there's-- we, we've spoken about the educational program market, we've spoken about the individual market, which is [00:26:00] kind of what we're discussing here, but then there's the market for all of these anesthesia management companies which have pressure from above, right?

Generally, the larger companies, some, you know, North Star, USAP, the middle of the market, and the mom and pop shops But ultimately, the, all of our contracts will go up for renewal, and those hospitals will say, 'We love you, but we can't pay too much.' Right? You've gotta, you've gotta lower your expenses somehow because we recognize the market has changed over time.

And that's the third curve, I think, is, you know, you have the curve of supply, slow; curve of demand, really fast; and then the curve for margins for anesthesia management companies, they're gonna go up and down as well, right? I mean, we al- at Guide Anesthesia, we almost bit the dust in 2021, '22 when all that changes were happening.

And, you know, that's just, it's the nature of the market, right? I mean, this is, this is the free enterprise system at work. Um, I always tell people, "Just spend less than you earn. Don't buy new cars," right? Buy used cars. Um, uh, Tracy, Randy, any other thoughts here? [00:27:00] 

Speaker: Um, briefly, you know, the, uh, I think you're right.

Uh, uh, and I think Randy's right as well, too. I think we're seeing a bit of a stabilization in the market. I don't think we're there yet. I don't think we have, you know, supply reaching demand. Um, I think that's, you know, y- Randy said, "If you wanna look foolish, make a prediction," so I'll look foolish. I think 2027, the, the back half of 2027, when some of those May grads and then when the December grads start taking all of their, all their jobs and planning for their future.

To me, that kind of feels like the time of real stabilization to me, and I've been saying that for two years. So we only have, um, we only have about a year left to see if I was right or wrong, but, um, that, that's what it feels like. The other thing is that the, the curve of business is a lot faster than the curve of the supply.

Right. The demand curve will get... And, and the, the supply curve is relatively stable as well, too, right? And it's slow and stable. It takes a long time to educate these professionals. [00:28:00] The demand side, we could see spikes for different reasons. We could see macroeconomic things where all of a sudden demand starts falling off.

Uh, I think the average listener would be shocked to see that ambulatory surgery center volume plummets when the stock market plummets. Like, I don't think people correlate that. No, they don't. However, unemployment starts going up, stock market starts crashing, there's macroeconomic events, ambulatory surgery center volume also goes down.

I've seen it throughout 20-something years in the business. Um, so that's something else to consider. That's a, 

Speaker 2: that's a great insight, Tracy, 'cause I, I'm closest to the everyman, sort of newest to this role I wouldn't have been able to make that conclusion. So yeah, great insight 

Speaker: And look, we can't predict these things.

We don't know when macroeconomic events are gonna happen. Um, but the speed of business is faster than both of those. Many contracts are gonna get renewed sometimes every six months, and the second a hospital administration thinks, "Hey, I might be overpaying for anesthesia because, you know, [00:29:00] we were, we..." The times have changed, right?

And when they go to an RFP process, it is a highly, highly competitive market. And when, when an RFP goes out, request for proposals, this is, you know, usually four, five, six anesthesia groups get invited to bid on an anesthesia contract. The, that's a very competitive bid process. Cost is one of the major factors they look at, um, and then the ability to actually execute and operate and do a good job often comes in second, which is unfortunate because that should be primary.

Um, 'cause if someone costs less and you, you have a poor culture and you can't recruit and you, you're stuck in a locum spiral, then you haven't done anything to save any cost, right? You just kick the can down the road. But that, that's the world we live in. We're in a competitive marketplace across anesthesia groups.

Everyone's trying to put their best foot forward, and everyone's trying to make sure that the cost to the facility is as low as possible- Indeed ... while maintaining a margin to be able to continue to survive. 

Speaker 3: The kind of [00:30:00] macro, what's happening in the anesthesia business world, you know, a lot of that has been impacted by supply and demand.

And in like this, you know, that phase, you know, immediately kind of during and immediately after COVID, which is the, you know, the demand exploded, supply was constrained, uh, the workforce changed significantly virtually overnight, and you saw that impact the financial performance of anesthesia companies.

And, you know, it took a while for that, you know, lots of contract churn- 

Speaker: Mm-hmm ... 

Speaker 3: because hospitals were panicking because anesthesia companies couldn't put in CR- could not put CRNAs and anesthesiologists In the operating room, you saw a lot of points of service close down and launch, you know, an explosion of premium labor, locum tenum-driven premium labor.

What I think we're saying now is there's gonna be this ex- interesting new phase where supply is, is going to get closer to demand, even though there probably will continue to be a delta between demand and supply. And then you're gonna see another kind of segmentation of the groups [00:31:00] who are able to exploit that with their ability to- Mm-hmm

s- W2 staff. Uh, and then you're gonna see the gr- Well, stability 

Speaker 2: becomes the new premium then, right? 

Speaker 3: Yep. And then you're gonna see the groups who should be able to exploit that but don't. 

Speaker 2: Mm-hmm. 

Speaker 3: And then though they're gonna lose their contracts, right? Because the, now the hospital and health systems are aware that, "Well, w- wait a minute.

Well, you know, the place down the street that's staffed by Acme Anesthesia Company, they're, you know, they're 95% W2 staffed. Why are you not able to do that?" And then so that, you know, that will play out in a very interesting way. So you'll see, like, as these cycles change, the, the business implications change too.

It's still kind of the net thing is like, if you're gonna lose a contract, it's like 70% of the time it's 'cause you can't cover the points of service. That's, that's typically, you know, what we see. And when we're getting inbound business interest, that's the thing. It's coverage issue. And, and- Mm-hmm ... the coverage issue is driven, you know, almost exclusively by CRNA, uh, recruiting and retention.

[00:32:00] And- Mm ... the result of high sustained never-ending locum tenum spend. And that's how that, you know, you s- seeing this, like extrapolate this out a little bit, three years from now, supply and demand's gonna be impacting the business but, uh, in, in a different way as things play out. 

Speaker 2: Indeed. Indeed. If you're an individual listening, buy a cheap car, spend less than you earn.

That's the key. Like, it's not that difficult. Um, yeah, I think the, the difference between winning and losing is often very small

We're gonna switch to a very serious, uh, sober topic, which is really unfortunate. Uh, this, the past ten days or so, this has been unfortunately all over the national news. Uh, there's a medication mix-up as, as both of you know, just to review for the audience. Medication mix-up leaves knee surgery patient paralyzed.

The New York Times reported on one patient. There was actually four. Uh, the pharm-- This is primarily a pharmacist, pharmacy-like [00:33:00] issue, but there was many issues identified within the CMS evaluation afterwards, which was also just released in recent days. There's a whole lot to dive into, so I'm just gonna give some highlights here and, and we'll talk about it from a, an enterprise and a business point of view.

But I do want to highlight for the audience that last sentence. This has become part of the conversation. Uh, this is the pharmacies asso-- Pharmacists Association. Our organizations also stand firmly against punitive actions that criminalize medication errors. I did take a cursory review of The New York Times comment section.

There was a lot of conversation around how are these people not being prosecuted, right? Something, I mean, this is absolutely devastating, where you have people being permanently paralyzed from the sternum down. You have severe neurological injury. You have people who are still on ECMO and have ejection fractions that are a quarter of what they once were.

Um, just I, I don't wanna go in too deep into the CMS survey. Um, just a c-two more points here, two more slides here. Like I said, four people have been affected. [00:34:00] The other three are severely neurologically impacted. This is from Shubhada Jagasia, uh, the CEO. Uh, you know, the obviously the administrator and the administration of the hospitals, you know, they're handling different areas of responsibility.

It looks like from my read, they're handling it as well as can be. They immediately, as you can see in the reporting there, immediately reported the error to state regulators, identified its calls, and added procedures to prevent the error from occurring again. There was an apology made. Uh, this is a, I believe, a Baptist hospital, so there's some spiritual care aspects going on.

And then, then just one final quote here before we get to comments. "I wanna be very clear that this was not the doctor's fault," Ms. Dorton, the daughter-in-law, Kristin Buell, told The Tennessean last week. "This was not the anesthesiologist's fault." And reportedly, according to CM- CMS data, uh, there was one anesthesiologist involved, same anesthesiologist for all four cases.

Uh, this was not the care team's fault. She said she had no reason to believe it could have been an intentional act by a rogue employee. So [00:35:00] Randy, you had the last word on the last topic. Let's start with you, Tracy, and, uh, certainly a, a very difficult topic. 

Speaker: Extremely unfortunate. When we hear about these things, I always think about systems failures, right?

Because it's when we think about a failure of this size, uh, whether it be in the aviation industry, there's a lot of parallels, whether it be in the healthcare industry, it's usually systems where, where something along the chain of responsibility broke. People, process, culture, right? The environment in which the medication is mixed.

And, you know, I can't pontificate on what specifically happened here to cause the err- error, but I can tell you that, you know, the, some of the information out there is that the two medications that were mixed up were kept side by side to each other, and they looked very, very similar. Same color caps of the vials.

Uh, both started with the same letter, right? Um, and when I think back of [00:36:00] anytime something catastrophic has happened, usually there was a near miss at some point earlier on that wasn't reported, right? It's usually-- And it's usually not one failure. It's usually a system of failures. And at some point, you would have to think someone said, "If I'm missing-- If I'm mixing potassium, and it's kept right next to the..."

I believe it was prilocaine. Was that, um- 

Speaker 2: Uh, mepivacaine. Yeah ... sh- 

Speaker: mepivacaine? Um, and They look very similar. We probably need to separate these, but it wasn't done, right? You would think at some point someone would have noticed that, but, but maybe not. I, I think it's an unfortunate situation. It's something that I hope other organizations can learn from so that it doesn't happen again somewhere else, which is, which is the point of, of making sure that it's public.

It's the reason why we're talking about it. Not to crucify people, but to make sure that others learn from a mistake that was made somewhere else. 

Speaker 2: Yeah. Indeed. Indeed. Randy? 

Speaker 3: I mean, there's a couple things that come to mind. One, to [00:37:00] call out, like there was an incident in, in Nashville in 2017 where a nurse was cri- criminally prosecuted, uh- Yeah.

That's right ... for giving vecuronium instead of versed And I, I tend to think, y- you know, and I don't know the details of this situation, so I'll be careful not to weigh in, you know, definitively. I, I'm inclined to agree human error should not be pro- you know, be criminally prosecuted, uh, and that this is probably a systems issue, maybe a training issue, uh, that, you know, we should study and we should, uh, you know, do everything we can to share the root cause issue here, root cause drivers across the entire healthcare system so this doesn't happen to the patients again in the future.

That's, that would be the best outcome of what is obviously a terrible, terrible situation. The other thing I think about, like I was just in the operating room Wednesday, and you better believe, I, I usually double-check, I was triple quad- you know, quadruple checking everything that I was doing just because this was on the, you know, the, [00:38:00] the forefront of my mind, just having, uh, you know, read the articles and talked to folks at annual congress, which w- 'cause this was also a kind of a topic because anesthesia folks were unfortunately involved in this in a way that doesn't appear that they were culpable in any way.

But still, can you imagine being the anesthesiologist or CRNA who injected that? Mm. Knowing that they did nothing wrong- 

Speaker 2: Mm ... 

Speaker 3: but still they were in, you know, involved in a process that, you know, could take someone's life or, you know, could result in permanent paralysis and all other kinds of like terrible sequelae.

So I am often reminded of like w- how high stakes what we do, um, in the operating room really is, right? So, and this is, you know, even like in the endoscopy suite, which is, you know, kind of theoretically lower stress, but if you look at the closed claim system, like a lot of bad shit happens in an endoscopy s- suite when, when there's sedation involved and with and without anesthesia providers.

So what we do is, is high risk, low, you know, low margin, I mean, uh, high risk, low [00:39:00] threshold for bad stuff happening. And, um, I am, it, you know, my sense is like we should never lose focus of the fact that we're, we're administering very dangerous medications. Uh, we are in a situation that can change rapidly.

There's a high degree of vigilance. And even when you do everything right- Mm ... things like this can happen. And, and that's, you know, the unfortunate nature and the risk that we take on in the work that we do in the operating room. 

Speaker: Yeah. And, and I, I forgot to touch on the criminalization part of this too, and I, I agree with Randy.

I agree with the, um, Pharmacist Association as well too. The AANA actually came out with a policy statement on that right around, um- Right around the time of the vecuronium, uh, era in Nashville as well too, I believe, really where, you know, we-- if we start making mistakes criminal, we run the risk of no longer reporting near misses and mistakes, [00:40:00] and start, start to try to hide things.

And, and that's not good for anyone, right? Um, when these things are, are brought to light, when they're discussed, when people learn from them, that's when we all become better. And when, when we criminalize an, an honest mistake... And, and look, humans are gonna make mistakes. We're all human. We all end up making mistakes.

We need systems, we need processes to be able to help to minimize those with checks and balances. But at the same time, when, when a, and then a mistake does happen, we need to look at the root cause, do a root cause analysis, as Randy said, and figure out was it production p- pressure? Was it a systems issue?

Was it the fact that the medicines looked alike, sounded alike, spelled alike? It's polacaine is what I was trying to think of earlier. 

Speaker 2: Mm-hmm. 

Speaker: Uh, it's another name for mepivacaine. Oh, of course, yeah. And I believe the label of that-- Yeah, I believe it was labeled right next to the potassium and polacaine.

Still no excuse, uh, but the same color tops, the same looking vials. Um, [00:41:00] understanding those things and minimizing the, the potential for any future catastrophic injuries like this is, is what we need to be focused on. Yeah. Not, not putting someone behind bars for making a mistake. 

Speaker 2: Indeed. Indeed. Uh, the criminal aspect is interesting in that I think the intent of that statement, those comments Is rooted in, in-- It's rooted in this idea of something has to, there has to be some sort of recompense.

There has to be some sort of balancing of the scales. And our current malpractice system at a broad level doesn't do that very well. If there is an error, you know, not necessarily a bre- a breach in the standard of care, um, the standard of care being, you know, what a reasonable person would do in that situation at that time.

You can have people meet the standard of care all the time and have complications occur. But we don't have a system where, hey, something negative occurred, and we wanna make sure there's some sort of compensation for the [00:42:00] loss of, you know, whatever function that you're now going to have to live with. It would be much more ideal, a-and this relates to broader is-- societal issues where if we had a political system that did not incentivize extreme behavior, right, or extreme commentary, or w- if we had a political system that incentivized what's the best possible outcome for the greatest amount of people at the political level and the governance level to create laws where when malpractice events occur, it, you know, it doesn't take an act of God to get malpractice reform passed.

But when something does occur, even catastrophic like this, there's some sort of payment for those people to help them live their life again. Because right now, their only option is to pursue litigation through civil court, right? And then the individual provider who may have done nothing wrong is deeply incentivized to defend themselves aggressively, right?

And, and, uh, it's a, it's a messy, messy system, but I think that's where that criminal idea comes from. [00:43:00] Um, you guys have both talked about the, the necess-necessity of thinking about this from a systems point of view and thinking, you know, analyzing how can we make things absolutely safe. It, it reminds me of a time in a surgical hospital where a very lovely individual, very lovely CRNA, um, there was a, you know, forty-something-year-old man with two beautiful kids and a wife came in for a routine spine surgery.

It was an anterior posterior case in a surgical hospital, very limited supplies. Uh, they nicked the vena cava, and, uh, patient expired, right? It was a terrible, terrible thing. And I remember the look on her face and She said, "If that was my case, I don't know how I could live with myself." And that's-- So when I think about these people involved in the case or those pharmacists or those pharmacist techs, this is going to live with them for a very long time.

And that's a consistent, it relates to this idea of second victim syndrome. But for those people, that anesthesiologist, [00:44:00] po-potentially those CRNAs, they need to-- None of us here is a therapist, right? But they need to see someone, right? To get the necessary support to begin to train their mind in a way where they can still live their life, right?

And try to compensate these families in a just way and do this work that both of you have spoken to at the systems level, and I'm certain that's what Ascension will be doing. Um, the only p- other point which occurs to me is there's no evidence of intent to harm, which would be criminal, right? It flips into that other mindset.

No one sought out this morning, that morning thinking about intent to harm. So very, very difficult situation, and certainly in, in the anesthesia world, all of us are very-- we are-- none of us are real far from having this happen to ourselves. So that's the, the takeaway for the home organizations, like, let's double back and make sure we're safety-proofing or for lack of a, uh, a better, you know, m- trying to mistake-proof our processes.

When I go to the operating room, the first thing I [00:45:00] do is I pull out any drug that can kill someone with one cc, and I s- put them in a bag and I set them aside. 'Cause then even if you're moving very quickly, mistakes do happen, right? That's a known known. I know that, you know, if we give an extra vial of Zofran, much less catastrophic than 10 milligrams of phenylephrine, right?

So that's a, uh, oof, that's a... We're, well, I'm sure we'll talk about it again as more facts come to light. We're gonna close out with something a little bit lighter, right? Just something that you're thinking about, uh, as far as the, what we're seeing in the industry. I'll go first, and this is l- the way we like to close out this section on ruminations.

I think what occurs to me is, uh, I've been thinking a lot about, you know, I'm, I'm not sure if there's a trend here, but it seems like in your 30s you have an awful-- people have an awful lot of energy in their 30s, and I know I did. And I tried to exert that in the best possible way I could. And I think, I think I was learning how to, uh, h-how to utilize that power or that energy.

I was learning that I even had [00:46:00] it, right? Learning how to, that it was like, oh, you can influence things in certain ways, so on and so forth. And now that I've come into my early 40s, I'm often thinking about, okay, how do we use this power and influence for the best possible outcome, right? So one of the, uh, truisms from this weekend, and certainly we say it at Guide, is that ego is the killer of progress, right?

So it's like that is a consistent refrain. We've had some controversial issues in our home community, in the, in the CRNA community, not industry-related per se, but more internal governance. And I see the wings of the party going at each other a little bit, and increasingly I'm just thinking about, like, what's the best possible solution here?

Let's do that instead of let's figure out how we can win the debate. Which is a change for me personally, and it's been a, a, a form of personal growth, and so it's good. It's been more productive at work. People like me more at work now when I'm not trying to win the debate all the time. Uh, Randy, you wanna close out with a thought?

And then we'll finish with Casey. Uh, yeah. 

Speaker 3: Yeah, yeah. I mean, I, I'll probably go back to the business [00:47:00] side just for a second. One of the things that I, I've been thinking about and talking about a lot recently, which is like, it's, it's so obvious it's ridiculous, but-- and it's also ridiculous that it's taken me long, this long to be as cogent as I think I should be on this concept, which is how anesthesia is perceived and positioned in kind of the, the hospital ASC ecosystem.

So You know, I, you know, I woke up one morning a few months ago and, and, and I was like, "I think we talk about what we do com- completely wrong." And, like, I'm as, as guilty as everyone else because I don't know about you guys, but 90% of the conversations I have around anesthesia, uh, whether what's with, whether it's with the client or even internally at North Star, is cost-related.

Speaker 2: Mm-hmm. 

Speaker 3: Like, we're very expensive, and the reason... There is, there's compelling reason why those conversations are, are as frequent as they are is because the cost of anesthesia has gone up significantly, as we've talked about, you know, in previous episodes. So it makes sense, I guess, for cost to be part of the conversation.[00:48:00] 

Where I think we do ourselves a disservice, me in- me included, is, you know, as I see it, and I think this is right, which is anesthesia is either the enabler or constraint of surgical and procedural volume to your facility. 

Speaker: Hmm. 

Speaker 3: And, and there is a, what I would reframe as an investment that needs to be made in anesthesia that will, uh, pay off, uh, i- if you are thoughtful and strategic, and you are long-term oriented, and you understand the reality of what that c- the cost of that investment's going to be and, and the, the reward, the financial reward, the profitability it's gonna bring to your facility And I, I, you know, slowly but surely I've been trying to reframe the conversation with prospective clients, with current clients, with my own team around like we need to be careful about what we say in terms- Hmm

of what our value proposition is to the client. And that, and, and to our, to ourselves. We enable the magic to happen in terms of the-- 'cause everybody knows the [00:49:00] operating room's the economic engine of every hospital in the United States. So let's be more disciplined and when we have conversations with our current clients and prospective clients around what they're doing is making an investment in their operating room when we talk about anesthesia.

And I think the more that we do that, the less we become a commodity. And I, and I think, you know, over the last few years, anesthesia in many ways has, has become a commodity in a way that I- Mm-hmm ... I don't think is, is in the best interest of anyone who is either an individual clinician or in a group or owns a group.

And, uh, and that's created, in many cases, very transactional relationships where someone's, you know, will say, "I'm going to provide this service for five, seven, ten percent less." And a hospital who is also equally transactional and short-term oriented will say, "Okay, let's do that." Hmm. And then they go spend millions and millions of dollars they shouldn't have on transition cost and long-term premium labor.

And I think that's because sometimes we [00:50:00] don't do a very good job of communicating what our true value is to the system and the va- and how that value unlocks profitability. 

Speaker 2: Indeed. Well said. Well said. And anyone who says hospital investment now needs to send a, uh, small credit to Randy Moore. Uh, his bank account will be open at the end of the show.

Tracy? 

Speaker: Yeah. I think, um, I think I'd like to add on to a little bit about what each of you has just said and then bring a novel idea, um, that I see maybe that I've been ruminating around about the future of the healthcare market. Joe, to your point, um- When, when we think about internal governance of associations, right?

And, and how that works, ego definitely is the killer of, of many good ideas. And, and it leads to a lot of, um, a lot of these, these battles that are kind of fought where people are villainized, where with the end result, whether one side wins or the other side wins isn't really that big of a battle anyway, [00:51:00] right?

You know, recent bylaw votes that just came out, got the results, um, just here recently, and I was like, "Oh, okay. One failed, the others passed. No big deal." Um, but some people were emotionally tied to one or the other, where there were pros and cons to these, to the bylaws and, and those types of things where, you know, one may be marginally better in someone's mind or, or whatever.

But once they stake a claim to I'm pro this or I'm anti-this, then it becomes an all or all or nothing battle where, eh, I mean, you know, both results probably aren't that big of a deal, right? I go back to thinking about waves in the ocean And, and people's moods and, uh, the amount of attention things get.

We want smooth waters. We don't want the waves to be too high or too low because most of the stuff we're dealing with and we're fighting about really isn't that important, right? So when, when we lower the wave heights and we [00:52:00] discuss and we have logical, you know, pro and con debates about things, we can make better decisions as opposed to just putting a stake in the ground and saying, "I'm pro this," or, "I'm anti that, and I'm gonna battle the other side to death."

It's like, eh, is it really that important? Probably not, right? So most of the stuff is really not that important. They're- we're nibbling around the edges, quite frankly. To Randy's point, when we, we think about the commoditization of, of the anesthesia market, I, I... First of all, I smiled when you used the term because when, when I used the term, you, you, you fussed at me and you said-

No, that's not happening." That, that was a while back, but I'm glad to see you're 

Speaker 2: coming around. It's on the tape. It's on the tape. We're gonna p- roll the tape. Roll the tape. 

Speaker: When, when we think about what's happening in the market, I've been a big proponent. Like, if, if a hospital or an ambulatory surgery center looks at anesthesia as a cost center and how to minimize that cost, they're gonna be doomed to fail.

If they look at it as how do we optimize it, how do we invest in it, then they're gonna be set up for [00:53:00] success across their entire operation because, as Randy said, the OR and surgical volume is the economic engine of these facilities, and you have to invest in anesthesia. You can't just try and go out and minimize the cost.

Wrote a substack about it. Um, so I feel passionately about that as well. My new novel thought, ambulatory surgery center volume and what's gonna happen in the future. Mm. Uh, I don't think we've spoken about this, but the exclusion list for CMS or outpatient surgery centers is, is, um, basically is being thrown away, um, or at least the proposal is to throw it away, where, um, ambulatory surgery centers can decide what cases that they do, and a long, long list of procedures that they were excluded from doing is gonna be going away.

That's gonna make hospitals look different. It's gonna make ambulatory surgery centers potentially look different. It's gonna make the jobs that we do in anesthesia look different in the future if it goes through as, as, as we're, uh, expecting it to go to- through. So you know, that-- When [00:54:00] we think about the future, I think that's something else to consider.

Workforce supply, demand, where are we gonna be doing the work, the type of work we're gonna be doing in these centers is something else that's probably worth a, a little more discussion in my opinion. 

Speaker 2: Already have it on the docket for episode nine. Come back and listen for more, episode nine. No, it's great stuff, guys.

All right. Great. Everybody, thank you so much. Thanks for listening to tod-today's episode. That was a, that was a more serious one, but I hope you still enjoy the conversation. We're getting a lot, a lot of good feedback on this conversation. I want to reiterate, the working The working thesis of the show is rather than a guest format, and there's certainly a lot of that out there, rather than a guest format, we want you to get to know the guests that we have on here: Randy Moore, Tracy Young, Gerry Keeling, others.

Andrew Woodmansee's been on. We are gonna add an anesthesiologist regularly as well. We feel like that's an important voice to have. They're a big part of the industry as well. There are many ways to reach out to s- reach out to us if you have questions. Last episode, we, we went over some of those. Social, at abouttherest.com.

You can go to our website, About the Rest. I'm on [00:55:00] all the socials, Lin- LinkedIn, Instagram, TikTok, et cetera. Uh, the company which produces these podcasts and makes them sound great is Human Content Pods. You can find them on Instagram @humancontentpods. Uh, so thank you for everybody who's listening, giving us the wonderful feedback.

We're on YouTube as well. Don't forget to listen to us there. I'm your host, Joe Rodriguez. Our executive producers are myself, along with the people who really know what they're doing, Aron Korney, Rob Goldman, and Shahnti Brooke. Our editor and engineer is Andrew Sims, and our music is by the gentleman whom I've never met, but I have thankfully learned how to pronounce his name, Omer Ben-Zvi.

All of the legal, the program disclaimer, the ethics policy, the verification and licensing terms, the HIPAA release terms are all at our website. And again, you can reach out to us among all those channels or production@abouttherest.com. About the Rest is a Human Content production. Thanks everyone. Have a great [00:56:00] week.