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As a CRNA, the career you’ve enjoyed for five or ten years—or perhaps even several decades—is changing at an alarming rate. While there’s tremendous and continued demand for CRNAs, you are now operating in an environment that’s more competitive than ever with downward pressure on fees. How can you compete against other CRNAs or the burgeoning number of anesthesiologist assistants, many of whom will be younger and more willing to work for less pay? How do you not just survive but thrive in your career and build a legacy you can be proud of?
Along with the evolving role as a CRNA, health care, as a whole, is changing. Over the past decade, we’ve seen a significant transformation in health care and the distribution of wealth, from the Affordable Care Act to volatile markets. And just as waves eventually collide, 2015 served as a tipping point of wealth in the United States and health care for CRNAs.
First, we’ve seen a monumental shift in the US population and the distribution of wealth. Millennials (born between 1981 and 1997) have surpassed baby boomers (born between 1946 and 1964) as the nation’s largest living generation.1 There are now 75.4 million millennials, surpassing the 74.9 million baby boomers. By midcentury, the baby-boomer population will dwindle to a mere 16.6 million. And according to the 2015 Ipsos Affluent Survey USA, this is the first point in history that there are more affluent gen Xers (born between 1965 and 1980) than affluent baby boomers.2 The survey defined affluent as over $100,000 in household income, which represents the top 23 percent of US households.
But while there are more affluent gen Xers and millennials than ever before, many are overwhelmed by debt. MyBankTracker surveyed its users and discovered that 30 percent of millennials said they would sell an organ to get rid of their student-loan debt and that 56 percent of them are putting off major life decisions like getting married, buying a home, and having children due to their overwhelming debt.3 Because millennials took on more debt than generations before to fund their education and graduated during a market downturn, many are having trouble paying down their student loans, let alone starting to plan for their retirement.
Second, health care has vastly changed in the past few years, primarily driven by the Affordable Care Act, which was signed into law in 2010. Now that significantly more people have health insurance, hospitals face an increase in the demand for care and patient revenues and lower uncompensated-care costs for the uninsured. Hospitals are several years into their cuts to Medicare reimbursements, with the savings used to help pay for the new law. While the hope is that the drop in revenue will be made up by an increase in new patients as more people become insured, hospitals still feel the effects of these cuts.
Furthermore, the new regulations and changes to how hospitals are paid have resulted in more mergers and consolidations. Large organizations and university hospitals are more inclined to sign up for the best rate they can negotiate, which means physicians will have more patients and lower reimbursement rates. Within a five-year span starting in 2009, there were nearly one hundred takeovers (buyouts or mergers) of anesthesia groups by major health-care corporations, including Amsurg, EmCare, Somnia, Mednax, NorthStar, and Sheridan. Mednax alone acquired around twenty practice groups between 2012 and 2014, and Team Health Holdings acquired eleven practices in 2013.4 In 2015, the merger and acquisition rate continued steadily with around twenty-six closed transactions, and experts expect there to be at least twenty in 2016.5
Anesthesia practices across the nation are selling to corporate buyers or merging with other groups at an unprecedented pace, largely because physicians worry that the Affordable Care Act will bring sharply reduced compensation. This concern is valid, as the Wall Street Journal reported that Blue Shield of California sent contract amendments to many physicians, requesting them to accept fees up to 30 percent lower for insurance-exchange patients than the standard commercial rates.6
As many of today’s insurance plans have higher deductibles, patients will have to pay more out of pocket for anesthesia. In an effort to cut costs, negotiate higher reimbursement rates, and dominate a clinical census, smaller anesthesia groups will continue to merge into bigger groups.
Meanwhile, health-care workers have had to take on dramatically increased workloads and intensified paperwork regulations. The ACA’s financial incentives for and penalties against medical professionals are tied to quality and performance metrics, but with more patients and more paperwork to handle, it’s significantly harder to maintain adequate ratios of quality care. And due to the Affordable Care Act’s cost-sharing reduction, hospitals are forced to find ways to cut costs. There’s also the debate surrounding supervision. While it depends on the state, many CRNAs do not have to be supervised, but anesthesiologist assistants do. Some physicians and hospitals may view this ruling as anti-physician and be more inclined to hire anesthesiologist assistants.
All these factors significantly affect CRNAs, their job outlook, and their future retirement.
First, it affects CRNAs’ finances. While the recovering economy and new jobs continue to improve our standard of living, many affluent CRNAs are still concerned about their finances. Though CRNAs can earn a significant income, the path to a high-paying position includes expensive tuition fees, lost wages while in school, and delayed higher earnings.
The average graduate from nurse-anesthesia school can face student-loan debt upwards of $200,000.7 In addition to student loan debt, many CRNAs accumulate credit-card debt, personal loans, car loans, and even a home mortgage before, during, or after their educational years. Unfortunately, for a lot of CRNAs, the more you earn, the more you spend. Despite high wages, many CRNAs have trouble balancing these debts and other bills while simultaneously trying to save for retirement.
Second, it affects the CRNA job market. As millennials overtake baby boomers in population size, we’ve seen an increase in job competition, with more young people than ever entering the workforce, and boomers retiring or preparing to retire within the next few years. Currently, the average CRNA is forty-eight and a half years old, and half of all CRNAs are expected to retire in the next fifteen years.
This more competitive workforce means employers have their pick of the crop, and as a result, CRNAs are pursuing higher education and additional degrees and accepting lower pay to stand out from the sea of other health-care professionals. However, it’s important to note a shortage of CRNAs is still expected to continue over the next few years.
Despite the demand, hospitals and medical groups still need to reduce costs because of the transforming health-care and insurance landscape. With the new cost reductions for anesthesia, hospitals and CRNAs have more cases but a diminishing cost per case. One way hospitals and medical groups are managing costs more efficiently is by utilizing newer CRNAs instead of experienced ones.
Let’s look at the cost comparisons for a recent CRNA graduate versus an experienced CRNA. Assume the average base salary is $119,000 for a recent CRNA graduate, and the base salary for an experienced CRNA is $162,000. With benefits comprising 28 percent of that base, the total package is $152,320 for recent graduates and $207,360 for experienced CRNAs. Assuming an average revenue of $35 per unit*, a recent graduate only needs 544 cases per year to cover his or her salary in comparison to the 741 required by an experienced CRNA. When looking at employee revenue production, we see yet another benefit for employers hiring recent graduates over experienced CRNAs:
This is a hypothetical example and is not representative of any specific situation. Your results may vary.
*The chart assumes an average revenue of $35 per unit ($15 minute), which will vary depending on the payer and geographic location of service provided. This example also assumes an average of 8 units per case. This does not include expenses such as billing, accounting, clerical, legal, etc. Actual billing revenues and units per case will vary.**Assumes 5 cases/day x 255 days***Assumes billing costs are 6% of revenue
Another route that hospitals, medical groups, and private practices are taking is avoiding hiring CRNAs altogether and either outsourcing anesthesia or hiring anesthesiologist assistants. In 2015, the St. John Providence Health System in Michigan hired a contractor for anesthesia services and outsourced its certified registered nurse anesthetists. In the process, they fired sixty-eight CRNAs at two of its hospitals, Southfield and Novi, who refused to accept jobs with the contractor. On the flip side, that same year, the Mission Health System in North Carolina dropped its subcontractor, AllCare Clinical Associates, after its merger with SurgeryPartners. The hospital tried to directly employ CRNAs, and the change resulted in over one hundred CRNAs losing their jobs.
Although the pay was comparable, many were concerned with the different work rules, schedules, and lack of disclosure of certain policies and procedures. Even worse, as the health system states that it did not technically fire the employees, as they were offered other jobs, the terminated employees were ineligible to apply for unemployment benefits.
While the true reasons for these changes weren’t vocalized, many believe it’s because hospitals see they can reduce costs by outsourcing these anesthesia services. As large private groups start buying smaller practices, they are restructuring CRNAs’ daily duties and policies, lowering salaries, and creating more roadblocks that prevent CRNAs from doing their jobs well. As doctors gain more control, nurse anesthetists are forced to adhere to stricter rules and inflexible schedules. This trend of pressure toward more profitability doesn’t necessarily mean things will be worse for CRNAs in the future, but it does mean things will be different.
Along with outsourcing, there’s been a rise in anesthesiology assistants hired by anesthesiologist groups, partly due to the growing discourse regarding pay between CRNAs and anesthesiologists. While CRNAs have advanced education, their average annual salary is $160,2508—38 percent less than an anesthesiologist’s $258,1009. As more CRNAs find opportunities that were previously only available to anesthesiologists, the job security of anesthesiologists is threatened. As a result, anesthesiologists have felt a need to find ways to maintain job security, with one option being to hire an anesthesiologist assistant. Unlike a CRNA, AAs can only work under the supervision of an anesthesiologist. Because anesthesiologist positions are protected by employing AAs, there is an incentive to employ them—rather than CRNAs—in their own practices.
And third, this all combines to affect a CRNA’s future career and retirement. With significant debt and an uncertain job market, many CRNAs don’t understand how to adequately prepare for retirement or are behind schedule. According to a study conducted by Employee Benefit Research Institute (EBRI) and Greenwald and Associates, 57 percent of US workers have less than $25,000 in savings and investments that could be used for retirement.10 Not surprisingly, that same survey reports that 44 percent of people without a retirement plan aren’t at all confident that they have enough money saved for retirement, and 64 percent of workers admit they feel they are behind schedule planning for retirement. As a result, many workers are planning on either embarking on second careers or continuing to work during retirement. However, because most CRNAs are in the top 10 percent of income earners, they have the financial potential to avoid ending up like the average American worker and pursue a comfortable retirement if they proactively plan ahead of time.
With so many significant changes, both new and experienced CRNAs have a lot of questions, uncertainty, and concerns. What will health care and anesthesiology look like in ten or twenty years? How will CRNAs’ salaries change as outsourcing and anesthesiologist-assistant positions grow in popularity? Do you feel secure in your current position? Where will you be in ten years? Should you continue working in this field or change careers? And how will this impact your retirement?
If you’re surprised by what you’ve just read, you’re not alone. Often, we’re so caught up in the day-to-day that we don’t have the chance to step back and look at the wide-angle view of our life and career. While some CRNAs have already felt the pressures of the changing industry, others haven’t yet.
After reading this, some of you may be thinking you need to find a new career or are worrying that you’ll never be able to retire. But that’s not the case. This isn’t meant to scare you or cause concern. Instead, it’s to offer you an accurate and honest look at the state of the CRNA community and health-care industry. Due to these changes, it’s more important now than ever to gain a stronger understanding of your financial and retirement opportunities, to plan for and think about your future retirement, and to partner with a helpful and knowledgeable guide.
As a financial planner who has been working with CRNAs for more than two decades, I’ve encountered countless financial situations, retirement goals, and market turns. Through my independent firm, CRNA Financial Planning®, my team and I strive to help CRNAs make informed decisions and pursue financial freedom. We are active in the CRNA community, and we offer clients a wide array of services and resources, including personal and business financial advice to CRNAs considering freelance options as well as coordination with CPAs and attorneys.
Through this book, A CRNA’s Life After Anesthesia, I hope to shed light on the many retirement opportunities available, including some you may never have considered or known about. Over the course of these next chapters, we’ll look at your vision for retirement, freelance opportunities, health care, income planning, leaving a legacy, and the steps that help lead toward success in retirement.
Retirement is one of the biggest milestones you’ll face in life, and there’s no one-size-fits-all plan. Ultimately, the goal is for you to live out the retirement you want. The best way to potentially get there is to take the first step and start planning today.
If you’ve finished reading this chapter, visit our website for information on how to get your CE credit. And remember, if you’d like to receive the other available CE credit and continue learning about CRNA’s retirement planning needs, order your copy of A CRNA’s Life After Anesthesia on Amazon.
Before, during, or after reading, I hope you reach out to me if you have any questions about retirement, your financial opportunities, and what steps you need to take to pursue your goals. Call us at 855.304.3748 or email email@example.com.
1 “Millennials overtake Baby Boomers as America’s Largest Generation,” Pew Research Center, April 25, 2016, http://www.pewresearch.org/fact-tank/2016/04/25/millennials-overtake-baby-boomers/
2 “Who is the affluent generation now?” BenefitsPro, September 22, 2015, http://www.benefitspro.com/2015/09/22/who-is-the-affluent-generation-now?ref=hp-news&slreturn=1461858940
3 “How Far Would You Go to Get Rid of Your Student Debt? [Infographic],” MyBankTracker, October 23, 2015, http://www.mybanktracker.com/news/how-far-would-you-go-get-rid-your-student-debt-infographic
4 “Waking up to the consolidating anesthesia marketplace,” Becker’s Hospital Review, October 22, 2014, http://www.beckershospitalreview.com/hospital-management-administration/waking-up-to-the-consolidating-anesthesia-marketplace.html
5 “Frenetic consolidation: The anesthesia market today & where ASCs fit in,” Becker’s Hospital Review, February 5, 2016, http://www.beckersasc.com/anesthesia/frenetic-consolidation-the-anesthesia-market-today-where-ascs-fit-in.html
6 “Insurers Cut Doctors’ Fees in New Health-Care Plans,” The Wall Street Journal, November 21, 2013, http://www.wsj.com/news/articles/SB10001424052702304607104579212450545926912?mod=WSJ_qtoverview_wsjlatest
7 “Does It Make Financial Sense to Become a CRNA in 2016?” CRNA Financial Planning, February 1, 2016, https://www.crnafinancialplanning.com/blog/does-it-make-financial-sense-to-become-a-crna-in-2016
8 “Occupational Employment and Wages, May 2015: 29–1151 Nurse Anesthetists,” Bureau of Labor, http://www.bls.gov/oes/current/oes291151.htm
9 “Occupational Employment and Wages, May 2015: 29–1061 Anesthesiologists,” Bureau of Labor, http://www.bls.gov/oes/current/oes291061.htm
10 “One-third have almost no retirement savings,” USA Today, April 22, 2015, http://www.usatoday.com/story/money/2015/04/21/no-retirement-savings/26070017/