Inside Anesthesia: What (Really) Broke the Anesthesia Market

In this bold and revealing episode, we sit down with Randy Moore — former military CRNA, past CEO of the AANA, and now a top executive at one of the country’s largest anesthesia organizations — to explore how the anesthesia market unraveled, and why no one stopped it.

From workforce blind spots to failed strategic planning, Randy walks us through the early warning signs that went unheeded, the flawed assumptions that fueled collapse, and the slow-motion crises that turned into full-blown disruption. We break down the shift from hospital dominance to ASC migration, the chilling effects of the No Surprises Act, and how private equity’s playbook fell apart.

But we don’t stop at systems. Randy also gets personal — reflecting on the cost of unchecked ambition, the value of thoughtful leadership, and the non-negotiables he now looks for in partners and teams.

Whether you lead a group, manage hospital operations, or just want to understand the business forces reshaping anesthesia, this conversation pulls no punches — and offers rare clarity from someone who’s led on every side of the table.

Keywords:

Anesthesia, CRNA Leadership, Healthcare Strategy, No Surprises Act, Workforce Crisis, Private Equity, Surgical Services, Hospital Operations, ASC Growth, Healthcare Leadership

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Transcript

Joseph Rodriguez (00:00.098)
Randall Moore, you are one of the most interesting people. I think you're one of the most interesting, I'm serious, I'm not making this up. United States military, practicing CRNA. Soon after becoming a CRNA, you got into hospital leadership, perioperative leadership. You're the only person I know of that served on the board and then became the CEO for, it looks like seven years or so, of the ANA. What kind of people?

Are you no longer willing to build with? don't like to work with people who are not ambitious. You wrote, this wasn't a sudden implosion. It was a predictable failure of workforce planning. Back in 2013-14, it started to become pretty clear that there was a supply demand imbalance.

Everyone real quick, if you're listening to this, you're probably the kind of anesthesia provider who wants to understand more than just how to push drugs. This podcast is about understanding what's really going on, whether it's legally, clinically, or financially, and the often small but powerful ways you can protect and advance your career outside of the OR. Anesthesia Deconstructed is already one of the top podcasts, at least in anesthesia.

Out there, we get a few thousand listens per episode, but subscribing helps us keep that momentum and it helps us bring on more compelling guests that are commentary and the kind of insight that actually moves our careers forward. Subscribing is free. It helps us keep doing what we are trying to do and it means you'll stay sharp, connected and stay a step ahead. So please hit the subscribe button and enjoy the show.

Randall Moore, you are one of the most interesting people. think you're one of the most interesting. I'm serious. I'm not making this up. You're one of the most interesting CRNAs. In fact, you know, in marketing, there's, you know, there's this idea of only is better than best. And I was looking at your career. So United States military practicing CRNA, right? You went soon after becoming a CRNA. Correct me if I'm wrong on any of this. Soon after becoming a CRNA, you

Joseph Rodriguez (02:16.1)
got into hospital leadership, perioperative leadership. You were on the board of the ANA, the ANA Foundation, and then, and this is the only, you're the only person I know of that served on the board and then became the CEO for, looks like seven years or so, of the ANA, the American Association of Nurse Anesthesiology, and now you're the top CRNA for, I think one of the more reputable.

big box shops in the country. It's not a small, it's not a small amount of things you've done. Well, thank you. I do have to crack you on one fact, which is Wanda Wilson was that right before she became executive director of netball switches. Okay. Okay. think and I've John guard also was, is that right? I think both of them are president of the organization, which was a title like I didn't have. Okay. Okay. Interesting.

didn't want. they both are. So yeah, not totally unprecedented, but certainly a unique and pretty incredible experience to go from a board member to managing the organization as CEO. And now you're, I think you're one that you're putting out some of the most thoughtful stuff that I'm reading in anesthesia. And I read a lot of anesthesiologists, a lot of CRNAs and you're just, you're clocking at a vibration that I'm not seeing anyone else do. And you wrote this article.

called Inside Anesthesia, or actually industry insider, what really broke the anesthesia market? Everyone knows this is going on. And you wrote, this wasn't a sudden implosion. It was a predictable failure of workforce planning. What does that mean? Can you break that down for us a little bit more? Well, I'm not the sharpest pencil in the pile. So back in 2013, 14,

It started to become pretty clear that there was a supply demand imbalance, which was at that point in time, maybe a simmer and then came to a boil not long after. So if you think about it, it was the most predictable thing that you could imagine. Like if you looked at, we zoomed out, and we actually didn't do a great job of this, but if we zoomed out and said, look, look at the average age of a CRNA, average age of an anesthesiologist, we look at workforce.

Joseph Rodriguez (04:39.48)
entries versus predictive work for workforce exits, then you start to look at where surgical volume was going to go from the acute care hospital setting to the Amatory Surgery Center. And you're looking at demand dynamics there. And then you factor in the baby boomers, right? The silver tsunami. We knew that there was going to be a massive increase in healthcare consumption just based on demographics. And we

We had conversations about it. We developed strategies. This is where I'm going next. Yeah. You had the conversations. Yeah. Sure. Sure. And you know, the funny thing, and I won't let people forget this, that, know, when I was both a board member, but probably most relevant conversation, I was CEO. had conversations to ASA about this and the ASA would look at you right in the eye and say, there's no workforce problems. You're, you're, you are manufacturing this in order to promote CRNA.

Practice models. Interesting. Now they've definitely changed the tune. you know, of course, they're acutely aware of whether they were then or not, uh, that there is a significant systemic supply of demand imbalance. I guess, why do you think on this idea of you had the conversations back in 2013, 2014, you were sounding the alarm, so to speak. Why do you think those in power did not listen? What? And then the second half of that is what?

What stopped the system from responding appropriately? Cause there's really smart people in these rooms, right? You guys are having these conversations. Why did they listen? It's the same reason why almost 75 to 85 % of corporate strategy fails. Uh, and which is, wow, that's a, that's an interesting answer. Yeah, please. Yeah. I mean, like, if you look at the statistics, like, know, like 90 % of all new year's resolutions fail.

75 to 80 % of all corporate strategy fails to meet their objectives. And if you kind of peel the layers of the onion back and you look at, what are the root cause issues there? It's lack of prioritization, lack of ownership and lack of resource of deployment. Those are the three things. So if you look at this problem in particular, let's put the anesthesiologist in the parking lot, talk about CRNAs for a second. No one owns the CRNA workforce. No one owns that problem. So the...

Joseph Rodriguez (07:03.216)
The AA &A is an advocacy professional membership organization, but they don't have any orientation to, and they still don't, towards workforce assessment and development. So the board at that time and today doesn't necessarily see that as their problem. And there was a lot of conversation. There was kind of some half-assed, well, let's do a workforce strategy. But there was no resources. There was no prioritization. And there was no clear ownership. The COA, the Council on it,

accreditation will tell you until the cows come home that they have no ability to influence workforce. Their job is merely to accredit or not accredit nursing anesthesia programs based on criteria. They need to do that irrel, know, regardless of what's happening in the workforce. So it is lack of ownership, lack of prioritization, strategic indiscipline. Those are the things that happen when, whether it's organizations or people fail to deliver on important strategic problems.

Well, if no, so when you said no one owns the problem, that sounds like central planning, right? In terms when you're trying to manage a workforce of, know, 60 or 120,000 or whatever the number is, or trying to figure out how to plan that, it's got to be a collaborative effort, presumably, because I'm not sure who could own the problem. When you had those conversations, be it with the ASA or maybe industry leaders, you know, were they, you know, you mentioned the ASA before.

kind of assuming motive and saying, you're trying, obviously you're the president of an association where the sole goal is, well, the major goal is to, you know, advance the interests of members. But what about other people? Why do you think they didn't? Cause I'm sure other people were looking at this problem. Healthcare is notorious for inaction until there's blood in the water and there wasn't enough blood in the water yet. So if you think about

you know, those conversations back in 14 to call it 19. We were definitely, you know, the, the, the most leading indicator, which is super interesting and is that we saw the A &A has its own insurance company. And what we were seeing, uh, started to really tick up. just to collect, these are all cycles. So if you look at 2008, we had the market downturn. We actually had oversupply of CRNAs and anesthesiologists, primarily in kind of

Joseph Rodriguez (09:25.806)
attractive Metro or Metro adjacent markets. So there was a period of oversupply. And then what happened is, you know, those people aged out, they got their 401 case figured out. And then they then they started to really exit the workforce or decrease their, their work hours in a pretty material way. So if you so it was more of a slow burn, then we wake, we woke up one morning and realized that we had a material supply demand imbalance. What happened was there was all of these signs.

And one of the first signs was in the insurance company, we started to see all of these moonlighting policies really pop. if you look at, you know, the, are like prime for the 10 99ers, right? And so what they would do is whether they kept their W2 job or they pivoted from a W2 to a full 10 999, 10 99, they had to go get a different malpractice insurance product. And we started to see the insurance company, which was underperforming financially.

for a while, all of sudden the revenue started to explode, particularly in that moonlighting product. And that was like the first sign, like there's- That's interesting. Really interesting going on. When you saw that sign, did you raise that and were people skeptical of it? I wish I was smart enough to say that like when I started to see it tick up, it's like, oh, this it's happening. It probably took me longer than it should have to appreciate that there is a fundamental

redistribution of the workforce that's going on here, not the entire workforce, but an important, a meaningful segment of it, of people either, you know, do, doing their side hustles as 1099s or, or, or pivoting completely from WSU to 1099. Now, honest moment, probably took me a year to understand that that was a leading indicator of a more systemic and profound workforce change. And then what, how many years by the time you

I would imagine you were one of the early people. So when you saw it, how many more years went on? And I would imagine that was during your transition from professional association to private sector. How many years until it really settled in for all stakeholders? And how big of a challenge was that to communicate it for them to take it seriously? Well, even when I was CEO, so I left the ANA in 2021, even the two years preceding that I was having conversations.

Joseph Rodriguez (11:53.554)
with industry, which was part of my job is to know, you know, kind of have my finger on the pulse of what's going on with industry. When I talk about industry, I'm talking about large employers of CRNAs and anesthesiologists. And they were getting very nervous in college in 2018. Like this is weird. We are really struggling. And then the wheels came off the bus in 2020. So there was an awareness in industry. This is usually how it happens is

The industry will tell you there's something fundamentally changing, whether it's workforce or whether it's reimbursement or whatever else, because they're at the tip of the spear. And we were having, or I was having conversations with the industry and they're like, this is getting really tight for us. And the conversation for what can you do to help us recruit CRNAs? And I was like, well, you could be a better company was my, was my, my first response. my gosh. Wow.

Yeah, that's not the standard pro, you know, most professional. So the audience knows most professional association CEOs would be like, here's a booth for $10,000. We support our, our mission, right? I'll take your money, that's not going to solve the problem. The problem is that you have a reputation, have a branding problem and a leadership problem. And you actually have the strategy problem, which is it, you know, we'll probably get into this a little bit more. It's like your, your, your strategic mode, which was.

a relative equilibrium of, of CRNAs and anesthesiologists and your ability to negotiate on rates with commercial pairs that all evaporated within about 24 months. And so that, that's, know, when you look at what's happened in the industry anesthesia sector, those are the two primary things. Yeah. That, you know, we're developing. so those conversations were, you know, like, well, things are getting tight. And then by the time I left the A &A and jumped into industry,

It was, we've got a real problem on our hands here, a real problem. are bleeding. And so I think that's, you know, again, entirely predictable, but nobody reacts until there's blood in the water. And the blood in the water really started to show up in like 2020. You know, COVID is not a change agent, but it's an accelerant. And with COVID, it fundamentally shifted a lot of...

Joseph Rodriguez (14:09.414)
I mean, this is not just CRNAs and anesthesiologists, but you know, that's who we're talking about today. That shifted the way people thought about work and optionality and all of that in a way that just really exacerbated issues. You've talked about blood in the water a few times. I completely agree. You describe hospital OR strategy as having quote, the discipline of a high school bake scale. That's, that's fairly strong language for a vital economic engine. No, it's...

Maybe maybe but you it's probably an actor characterization. I my perspective is I completely agree with you completely No one reacts until they really begin to feel the pain. There's not a lot of proactive thinking Yeah, but I mean we're talking about a sector that is around 1 6th of the United States economy health care on the whole hospitals surgery centers the economic engine of Their system is the operating room from your perspective now

Why do you think it's managed so poorly? Because no one goes back to my previous comment about workforce. It's similar dynamic. If we're talking about, let's think we're talking about how we utilize our ORs in this country. it's one because no one actually owns it in the end. If you look at the stakeholders, obviously anesthesia has a stake in this. The hospital has a stake in it and the surgeons have a stake in it and they all have different incentives.

And so the, the incentive that matters the most in this conversation is not me as a anesthesia executive. And it's not, believe it or not, the hospital administrator. It's the surgeon and the surgeon is, you know, that's the alpha, right? So they make it rain. And because surgeons want to have virtually unlimited OR capacity and access to the OR and Dr. Jones needs three flip rooms for, for three cases.

And the administrator wants Dr. Jones to bring a surgical volume there. That is the root cause of surgical services, perioperative inefficiency is really at the end of the day, a lot of hospital administrators are fighting for surgeon market share and they're going to do a trade off. in some cases, it's actually strategically smart. and other cases it's, it's not. And the play is like, look,

Joseph Rodriguez (16:34.738)
You know, I've had this conversation multiple times with the administrator, is like, get it. We're overpaying on the anesthesia. We're overpaying on, O our staff, but Dr. Jones is coming and Dr. Jones is going to bring all of these. You know, commercial cases, and I just want to make sure that he or she is happy. and that's is probably the biggest driver of issues and it's why we can't, we still struggle. It's getting better. It's getting much better.

But the rationalization of OR utilization is still a big problem in this country. When you talk to leaders about how OR utilization, there's certainly a lot of down times. It almost seems like the bigger the hospital, the more the downtime. Yeah. Which is in some ways ironic since you have more more leadership infrastructure, more and more auditability. How are they navigating that? What's that? Tell me about that conversation with an operating room leader, administrator.

CFO whomever to say, hey, you're running at, I'm just going to use example numbers, 50 % OR utilization. Here's what you have to do to, here's the acceptable number and here's what you have to do to do that. The hospital, if you look at the hospital's key stakeholders, the perioperative director is almost never the one you need to talk to. And it's because they are incentivized primarily to keep the surgeon on.

And so they're also incentivized in bringing volume. So they think the best way to bring volume, the lever for them to pull is to blow out our capacity. So they're rarely strategically aligned. Some, some are some, you know, some higher level, but my observation is it's just hard because they don't want to piss off surgeons and they don't want to be positioned in a way that they're turning away. our volume surgical volume. So the key decision makers.

are probably in the C-suite in most scenarios. And that's, know, whether or not they hear the music and understand the dynamics is, you know, entirely unpredictable. What I've observed is that the more sophisticated and usually this is health systems, hospitals and health systems will look at OR volume and

Joseph Rodriguez (18:57.734)
their strategy relative to surgeons in a much more coherent way. And they will, in some cases, turn away OR volume. They will, in some cases, turn away surgeons because they're misaligned with their goals. And the really good ones are saying, OK, I get it. We can open up ORs, but we have to meet this minimum threshold of surgical volume before we can do it. The folks who are still like, if you build it and they will come,

They're the ones that are having a lot of margin pressure that are bleeding, you know, anesthesia expense and they're bleeding. our expense. And the, know, as you know, like rarely does that materialize that, that predicted surgical volume, at least in the way that is predicted initially. And so that's the key thing. Cause it's counterintuitive. You know, if there was such thing as a hospital, CEO school, they would say, blow out, you know, increase our capacity.

You know, the operating room is the economic engine. It's going to bring in something like 85 % of your margin. You want to bring in surgical volume to help subsidize the rest of the hospital operation that they have over rotated so far in that direction that the assumption is that all surgical volume is good. And if I blow out capacity, the surgeons will come and they'll be loyal. And what we're seeing is like a lot of surgeons are pivoting aggressively to the ambulatory surgery center environment for the

And one of the big ones are financial, right? So that's how it's playing out. It's kind of intuitive in some cases and it's really hard and it requires people making hard decisions and having tough conversations with surgeons. Tell me more about this. I want to get to groups and the No Surprises Act as well, but tell me more about this for surgeons transitioning to the surgery center because your group, Neurosurgery and Endosiege obviously covers both, so you're well diversified in that.

in that scenario, but how are those conversations going? Tell me more about, you know, when that issue comes up at, you know, maybe both perspectives, both the surgery center level and the hospital level, how does that go? Yeah, and if we zoom out. So this is something else we've predicted for 30 years. I I wasn't in the game 30 years ago, but people have been predicting the movement from a surgical volume from the acute care hospital to the Amatory Surgery Center environment. And it was definitely happening pre-COVID, but COVID was again,

Joseph Rodriguez (21:20.612)
not necessarily a change agent, but an accelerator. And the situation is like, Hey, we have to stop all elective surgeons for a period of time because we were dealing with this facility, it with a spike in COVID patients, totally understandable, operational decision. Well, the surgeons who were reluctant to do their total knees and total hips and a little bit more complicated procedures at the Ampter surgery center were

They've made that decision now. Okay, well, I've got to, I've got to take care of these patients and honestly, I need to generate revenue, support my office and myself. So I was nervous about doing this in the Ampatory Surgery Center, but I'm going to do it and they do it. And guess what? It works. They work great. And by the way, they, they liked it so much either they already had a percentage of the facility or they negotiated a percentage of the facility for themselves. So now they are financially benefiting both from their surgical.

their surgeon fees, but also from a facility fee. So that has significantly accelerated the out migration surgical volume into the ASC. That is not going to change. in fact, it's going to accelerate. So the smart hospital leaders are thinking about this, not necessarily as competition anymore. They're thinking about how do I position this hospital or this health system to partner.

with ASCs and partner with surgeons, surgeons with ASCs instead of trying to fight them because that's not a fight you're going to win. That's where surgical volume is going. Yeah, I it's interesting. I can't tell if I were listening. Generally speaking, I wouldn't be able to tell if you were a anesthesia executive or like a hospital executive, because I think these are the or just the health care, right? You know, someone said to me recently, anesthesia is a science, health care is a business. And the sooner you realize that, the better you'll be able to navigate all of this stuff.

Right. It's and a very complicated business, but let's switch gears a little bit. You said in your article, many groups, particularly those built for the old world, found themselves underwater within months. What does that mean and what did that look like? It's the two crisis that we mentioned earlier. So the workforce, which was a slow moving train wreck, slow motion train wreck. So it was building up speed steam.

Joseph Rodriguez (23:45.358)
If you were paying attention, you saw it coming. And then there was something we didn't necessarily see coming, which is no surprise billing. So in the 11th hour of the first Trump administration, there was legislation that was passed. And, know, I'm fully supportive of the concept of getting patients out of the middle of billing disputes between- Of course. providers and insurance providers. like philosophically, honestly, ethically, it's the right move. But this is a good, what's going to shock you, Joe, is that

The government screwed up the interpretation and the making relative to that. Yeah. So which is very unlike our government or any government. So what happened virtually overnight, what was pre no surprise billing, there was a relative equilibrium between. let's just focus on anesthesia, even though this does impact or this impacts a lot more than anesthesia. But in our role, we're going to talk about anesthesia before surprise billing. We would have a back and forth with insurance.

company would say, our rates, you know, our costs have gone up 10 % over the last two years. We need to negotiate and it would be back and forth. And ultimately we would land in a zone of, of win-win with surprise billing, our ability to negotiate our leverage had evaporated overnight. because of the flawed rulemaking associated with this, which gave the insurance companies way more leverage.

You know, our leverage was like, if we couldn't come to an agreement with pre COVID, or sorry, pre surprise billing, we would just go out of network. We'd go on a network and we would bill at a rate that was so high that it would force the commercials to come back and negotiate. if we go out of network now, the commercial is like, that's fine. I don't give a shit. Go out of network. We'll drop. Please do. Yeah, please do. We're going to drop your rates anyways. And we have no leverage. So.

That's those two fundamental things happened at about the same time. So think about it as a, a two headed monster. Uh, one of them was very predictable. The other one kind of came out on left field. And so that was very disorienting even for the most sophisticated anesthesia operators. So think of people like, you know, the, you know, the Ivy league, you know, executives who have unlimited resources, expertise within the firm. Imagine now that you're a.

Joseph Rodriguez (26:09.387)
a small mom and pop shop, or even a regional player, you have gone from being a relatively stable and financially successful company to being underwater in a matter of months. And that's why you've seen a lot of them have not survived. A lot of them have, have merged or have sought out acquisition. so that's been the major disruptive.

variables in the last couple years, last few years. Now that we're living in this new era, post NSA for midsize anesthesia groups, maybe and maybe large as well, how should they be thinking about financial leverage moving forward? Obviously the subsidy well only, you know, only goes so deep, right? And just for the, for the audience again, you know, if your overall cost of business is, you know, it's called a thousand dollars, you get paid from insurance, you get paid from subsidy and a small portion from the patient. That's where

all the revenue flows in. So how are anesthesia groups now thinking about financial power as they're trying to navigate these markets? Some aren't. That's the problem, which is there is a, either it's a lack of awareness or a profound sense of denial that things are going to return back to. just, you know, the supply of CRNAs and docs are going to snap back and, and, and, or

the surprise billing stuff is, we're just going to have the hospital pay for it. So the hospital is, you know, fundamentally the financial backstop for, for many of these groups. And so if your labor costs go up 25 % and your reimbursement, we haven't talked about reading, you know, like Medicare and what's going to be coming down the road with Medicaid. But so if you see that your costs have, let's say increased 35 % in 18 months.

Then you turn to the hospital and say, guess what? We need to increase our stipend by X million of dollars. Now those conversations occurred across the anesthesia ecosystem all about the same time. So I'll think about call it 2020 to 2024. There were significant amount of renegotiation conversations, which is also the reason why the amount of contract.

Joseph Rodriguez (28:32.386)
turn spiked at that time too. So it was a weird dynamic where we were growing like crazy because of failed renegotiations and negotiations were failed because the anesthesia firm was asking for significant increase in stipend without any, like you're not given any more point of service. You're not bringing any more clinicians. fact, you're going with your hand held out. Yeah, you're here handheld and you can imagine as a hospital administrator who's drowning financially at that point in time, that's not a fun conversation.

And that resulted in a ton of RFPs and a lot of contract changes and some end sourcing too. So that all played out at about the same time. We're kind of in that we're past that period where I would say we're stable, but we're in a different world around contract negotiations. so the small, so small groups, know, regional groups, large groups started to really notice the deterioration in the margin. And there was a lot of contract turnover at the time too.

It's a good answer. You wrote now that we're moving to, you know, okay, you need to think smartly, right? you wrote the area, the era of indiscriminate rollups is over, but a new wave of strategic consolidation is taking shape. Smaller subscale groups will struggle to survive in this new environment. The winners will be those who can merge intelligently. This has a lot of impact on individuals in terms of who they're aligned with, who's controlling their practice, whether it's

at an individual solo level or anything else. What does this mean? What is strategic consolidation looking like currently? Well, we're in this weird. So I don't know if we're going to talk about private equity. We certainly can. Please, by all means. I've got an article in the hopper I'm going to release tomorrow. That's probably going get me in trouble. I think about this as, so let's zoom out one more time. In the early 2000s, anesthesia was a very attractive private equity target. And if we

What broke that in a riot, there's a lot of private equity firms who are more or less stuck with anesthesia companies right now is the value of anesthesia firms decreased significantly overnight because of the two major variables that we've been talking about. the private equity market and anesthesia is very weird and unsettled right now. If you look at the folks who are not private equity supported, and they want to survive, a lot of them decide they don't want to survive anymore. So what we've seen is a lot of.

Joseph Rodriguez (31:00.63)
particularly physician owned anesthesia groups say we're We, you know, come in source us. there's not a lot of appetite for us or anyone else to buy those companies, those groups. So they often just kind of weather on the vine and ultimately die. And they die by either being in sourced or they lose their contract to an, to an alternative anesthesia vendor. So if you want to.

to be successful today, there are things that you need to do incredibly well. And the biggest thing is you need to get butts in seats. You have to hire and retain your anesthesia talent. If you can do that even moderately well, that is a profound competitive advantage. the other piece of this is you are going to have to ask for more money from the hospital in order to sustain operations.

how you do that and how you articulate your value proposition to the hospital is critically important. Showing up with a gun to the head negotiation, which is, you know, what a lot of folks do, which is, you know, increase my stipend by five. That's not five. Let's use a less extreme example by $2 million. And here's my term notice. Sometimes that works. Often it doesn't. And so firms who, whether you're a small.

mom and pop anesthesia group or a larger one, you have to be very sophisticated and to two areas, three areas. Actually, one is you have to beat everybody else in your market and recruiting and retaining anesthesia clinicians, CRNAs in particular, because the cost is going to kill you on premium labor if you don't. And then you have to develop a very deep value proposition for your clients. And your clients are obviously hospitals, health systems, and ASCs. And third, which is

Even more boring and hard is you've got to be able to run the operations of your group very well. And all three of those things were not exactly predominant in the anesthesia sector pre crisis. didn't have to be, they didn't have to be because it was a rate game and meaning that your competitive advantage was largely based on your ability to negotiate high rates with the commercials. now that's gone. So.

Joseph Rodriguez (33:21.876)
Where, what is your competitive advantage today? And it's in unsexy stuff. It's the stuff that, know, the private. It is is the fundamentals. It's basic blocking and tackling leadership, culture, partnership, relationships, operational rigor. Those things are really hard to do, which is why most people don't do all of them. Well, what does it mean to merge intelligently from an anesthesia group point of view? I think, you know, it depends on what.

size you're talking about. So call it groups of, you know, 20 to 50 people, you know, looking at merging, uh, you know, with, with groups 10 act, you know, 500, 300, you know, 500 that range. And maybe then, you know, the next step is 1000 to 3000, right? Something like that. Yeah. What are those phases look like? Yeah. There's a whole conversation around MNA and how to do it intelligently starting with deep.

You know, is this the right partnership? it the right acquisition? And we have, you know, starting maybe on the reverse of what you proposed, we're on the larger scale. We, we have turned our and a off, since 2021. Now that doesn't mean we wouldn't offer opportunistically acquire a firm. We've had conversations with firms, with groups, but at the end of the day, we, our perception of their value was very different than their perception of the value. So what is that?

What does that mean? Because every, you know, every owner of a firm, whether it's three people or 300, it's their baby, right? It's aligned with their identity. Right. So what does that mean when you say they're, you know, in their head, it's worth a million, millions and millions. But what does it mean from your point of view that it wasn't worth what they thought it was worth? And for us, it's like we take a look at their finances. We do a deep dive on their finances and we say, look, you know, the value, we don't say it like this, but the value of your firm has decreased 55%.

In the last three years and it's increased because you're over leveraged. have, um, you are, um, You're 30, you have 25 % vacancy. Your revenue, your margin by contract has decreased significantly and there's no line of sight for that changing. So we usually don't even get beyond that. would say, you know, thank you for the conversation, we're not interested at least not at this time. Now we have had some conversations that have gone to the next level, which is like, we think your value is X.

Joseph Rodriguez (35:51.522)
They think their value is why, and that's too big of a gap. And it is, you know, it is psychological to some degree, and it is financial too, which is they, you know, lot of those folks passed up on opportunities pre COVID for acquisition. So they've got a number in their head. And you know, that, that multiple of their EBITDA, uh, it has was much higher. Pre crisis than it is post crisis. And some of them just can't come to terms with it.

And then there's a private equity piece, is, you know, there are private in private equity, you know, yeah, please. Like, so people talk about private equity, like, you know, it's like saying restaurant, there are different kinds of restaurants and there's different kinds of private equity. And I think it's interesting. We, know, it's definitely private equity is definitely a punching bag. And, um, I am pretty agnostic about this in terms of whether it's good or it's bad. The market will tell us it's good or bad. Right. So

the, I, the, fundamentals of the business have changed right now in that there's not a ton of private equity interest in anesthesia. It was actually, and that may shift, you know, as, as some of the groups start to stabilize, in, the coming months and years, but you know, private equity has lost interest in anesthesia for awhile. And the private equity firms that have a position in anesthesia companies right now, a lot of them are stuck with them.

because they can't sell them. so they're trying to figure out what's... Nobody wants to buy something with a 5 % margin and lots and lots of, you know, healthcare risk, right? Whether it's clinical risk or healthcare regulatory risk, which is extreme compared to buying a car wash. Yeah, 100%. So it's not exactly a... It's not the early 2000s where the private equity is like, this is anesthesia is where we need to be. It's now it's...

Let's stay away from anesthesia, at least for a while. And for the companies that have, you know, anesthesia platform, it's like, what's our off-ramp? Because we've been in this too long. So that's the traditional buy and flip private equity. So think about this as flipping houses, right? they come in. It's the Red Lobster example. Exactly. Right. By the asset, like we're going to be in this thing for five to seven years. We're going to, you know, we're going to control or drive down costs. We're going to grow. We're going to roll up a bunch of.

Joseph Rodriguez (38:14.572)
contracts, and we're going to drive top line and margin, and we're going to flip it to either another private equity firm or to a strategic. that changed when the value of anesthesia firms decreased significantly during this crisis period that we're talking about. So there's a lot of buy and flip PE right now can't flip. And they're kind of trying to decide what's my off ramp. Do I sell at a loss? Do I try to take it public?

Do I see if a strategic will buy it, you know, at a discounted price? Do I sell it to another PE firm? So those conversations are going on in the background. There's tons of that right now with bankers. I want to just want to switch to the personal side of things, the personal side of leadership. And I've been watching you for a long time. I've always been a fan of your leadership. You've posed really compelling questions over the years. And, you know, it seems like you're in this space where

You still have this drive, right? But there's also this calmness and clarity that only comes with having this much experience. Right. So has your thinking about leadership change over the past five years and over the past five years, what did you get wrong? I think my it has evolved. And if my sense is if I'm not evolving, like if my threshold

question is like, if I'm not embarrassed by who I was three or five years ago, that I'm not growing. Right. So there are things that I, I look back at some of the shit that I did three or five years ago, the mistakes that I made or the assumptions that I had. it's like, shake my head. It's like, you're so dumb. I think anything specific that you feel comfortable sharing or you said, you know, at the time I really thought I was going to knock this out of the park, but with, you know, the benefit of hindsight, you were like, yeah, I would do that again. How much time do we have?

So here's, this may be a little bit out of left field. Is it left field or right field? I think left field. Try left field. I have learned. I I'm someone who does like, don't deal with regret. Like, I mean, I don't live in a world of regret. So I tend to think of my mistakes and my failures as a gift. And it's made me better as a dad or a husband or a leader.

Joseph Rodriguez (40:39.394)
And, there's one exception and this dates back to kind of the pre AA and a days and 100 % during the AA and a days, which is for whatever reason, and we can ask Dr. Freud later for whatever reason I had a, and still I'm still an ambitious person, but I had a white hot ambition. And so I, know, if you look at my CV, you know, like my, my academic accomplishments, you know, coupled with my military stuff and then my leadership.

in a healthcare system and within the AA &A, like there was a lot that was happening in a short period of time. And I was lying to myself about what the cost of that was, right? So, and I was telling myself stories around like, you know, I'm building a better future for my family and I'm solving really hard business problems. All of that annoyingly was true. But the truth of the matter was like, it was much more about me than...

And what in the problems I was trying to solve and I lied to myself and other people about what the root drive cause or drivers of my ambition was. And so if I could tell my earlier self, my younger self, and this I do take the opportunity sometimes to talk to younger leaders about this stuff or earlier career leaders is I would have told myself then. It's going to happen. Settle down, take your time, smell the roses, go to the dance, go to the soccer games.

Say no to the speaking engagements or some of them. You don't have to put in 70 hour weeks. You don't have to live in hotels, know, in call rooms and all of that stuff. and there were at least not endlessly. Not in, right. Yeah, exactly. mean, there, there are times where you got to lean in and, and, and you, you are going to be, you're going to steal a little bit from your family time, in order to do some stuff at work and, and vice versa. Right. So.

I think I was running so white hot for so long and became so kind of disillusioned with that, not understanding why, because it worked like the effort worked and I was putting W's up on the scoreboard. But the more success I had strangely, the less content and happy I was. And so.

Joseph Rodriguez (42:57.834)
I think that for me, you know, if I had to give myself advice and that was probably my biggest mistake was like, you know, your kids are only young ones, your marriage or your relationships are incredibly important. and you should invest in those and you should be both physically present, but also, you know, engaged in a real way. I think that, know, leaving the AA and a and coming to North star, that was that period of kind of recalibration for me. it took longer than it should have. and.

I think I'm in a much better place, but I wish I would have had that time better. Well, your service is appreciated. You know, during that time, it was very challenging, you know, very challenging time. You end, I want to end on this question. You ended your article by asking the audience, what kind of system are you building and who's going to stay and help you build it? Right. So I want to flip that on its head and close with this question.

What kind of people are you no longer willing to build with?

I have, this is going to sound like I'm talking out of both sides of my mouth, but I don't like to work with people who are not ambitious. And so meaning.

When I, the leaders that I tend to really focus on developing and promoting and hiring are folks who show up and who have ambition, yes, about themselves. I think that's important, but more importantly about solving hard problems and who are, who have the courage to lean in and do hard shit. I think that's the stuff that I tend to really prioritize. So.

Joseph Rodriguez (44:40.33)
I don't like working with people who confuse busy with being effective. Like I can tell the difference. So I think, you know, for me, people who avoid accountability, but love the posture are a real turnoff. People who want to push decision-making to other people, people who tend to want to sweep things under the rug. I have a strong predisposition bias towards action.

And I think that's the way that I've kind of organized my personal professional life. And those are the people that, you know, that kind of, those kinds of characteristics and qualities are the ones that I look for when I'm hiring and promoting and, just, or even like in the future of people I want to work with, I'm not going to work with people who are ego oriented, who aren't going to roll their sleeves up and do the hard shit. Because I think that's really important to solving hard problems. Randy, I think it's a great place to leave it, man. Thanks for being on.

It's a pleasure. been a really fun conversation. absolutely.