What Pizza, Warfare and Venture Capital Can Teach Us About Anesthesia Management

Originally published by our sister publication Anesthesiology News

There’s much being written and said about the profound changes in the business of healthcare today. Nowhere is this truer than in our own field of anesthesiology, where more than 100 million anesthetics, many with high-profit margins—according to statistics from CCI Anesthesia, a non–private equity anesthesia group—make our field ripe for takeover by people who are very interested in making a lot of money. One might ask, “Is this a good trend or a bad one, and for whom?” I hope to tease that out.

But first, a talk on pizza. Why pizza? Well, most everyone I know loves pizza, no more so than myself. And the making of good pizza is a great metaphor for what I want to explore about anesthesia venture capital investment. Admittedly, it’s simplistic, but sometimes simple is the most illustrative. Let’s suppose that in my town there is an old and venerable family pizzeria, run by a couple from Naples, Italy, the “mecca” of pizza. This mythical establishment, in business for decades, produces the area’s only authentic Neapolitan pizza, made with the proprietary and essential ingredients of “00” Neapolitan flour, San Marzano tomatoes and buffalo mozzarella. This restaurant has prided itself on the quality of its product and has not wavered in 35 years as far as the quality of ingredients used and the manner (oven type and temperature) in which the pizza is made. People just keep coming back for more.

But sadly, the patriarch of the chain has fallen ill, and the couple are forced to sell. In come some high-powered investors who want to capitalize on the pizzeria’s name and reputation. They dangle a large sum in front of the couple who, after being assured that the quality of their pizza will live on, agree to sell. The couple cashes in, the patriarch gets better and the couple sails into a smooth and happy retirement. But what of the pizzeria and its customers?

Well, that’s where things go south—at least for the customers. The new owners, seeing a way to economize, start to change things, and not for the better. They no longer use the 00 flour but cheaper, American flour. San Marzano tomatoes are now replaced with a lower quality store-brand tomato, and the buffalo mozzarella is replaced by a cheaper and less tasty look-alike. Some of the customers notice the change and no longer eat there, but since the name lives on, less discerning diners are willing to fork over the 20% extra rise in price for an inferior product. The investors don’t care that they lost 10% of the customer base, because their price inflation more than makes up for the loss. What also helps is the jacked-up prices on the wine and beer.

So what’s the point here? I’ll get to that in a minute.

Now, let’s discuss warfare. If you have never been in a war, you have no possible way of knowing the horrors and pain caused therein. Anyone can be an “armchair general,” but if you were never in the fog and terror of battle, you are completely unqualified to speak on the tactics and costs of war.

So, here we go. I contend that if you have never been through anesthesia training, never taken 24 (or 36) hours of call, never seen a patient die on the table, never participated in a high-risk 3 a.m. cesarean delivery, never had to take a crying 4-year-old away from his crying parents to anesthetize him, nor explain to a family member that their loved one had died during surgery, you should not be running the business of anesthesia—or medicine itself, for that matter. Why? Because, contrary to popular current thought, medicine was, is and should always be a humanistic endeavor, not merely an economic one. That means that the sheer nobility of helping others should not be primarily predicated on money and money alone. Money does play a role, but it should not be the primary role. I have lived long enough to see and know that when you get involved in business with people who do not understand the first thing about what you do, how you do it and the costs (personal, emotional and all the others) entailed, quality gets somehow compromised. And in this day of shortages in staffing and legitimate questions about the quality of current anesthesia training, a compromise here at the expense of enriching nonmedically trained investors is exactly what anesthesia practice does not need.

Some people who study these issues seem to agree, at least when it comes to writing about the implications of private equity investing in healthcare in general. Writing in JAMA (2019;321[11]:1047-1048), investigators Suhas Gondi and Zirui Song remarked:

“Although it may be premature to determine the consequences of increased private equity ownership on the healthcare system, the incentive structures and tactics of buyout firms raise concerns over the proliferation of private equity in health care. Evidence comparing the quality of private equity firm–owned practices with physician-owned practices is limited. ... However, the need for private equity firms to achieve high returns on investment (often at least 2.5×) on a fast time horizon (approximately 6 years on average) may conflict with the need for investments in quality and safety. ... Some have expressed concern that private equity ownership may create an emphasis on profitability, which influences patient care. Other concerns included upcharging in billing offices and significant reliance on physician assistants in unsupervised settings, which raises questions about patient safety and low-value care and highlights the importance of regulatory standards, ... appropriate supervision of nonphysician clinicians.”

All of which gives support, I feel, to my pizza analogy. When businesspeople with little knowledge or personal connection to a delivered product get involved, quality can suffer. And warfare. When businesspeople with no experience as to the pain and personal price of delivering a necessary and vital service get involved, the same can happen. When big money beckons (evidenced by the fact that from 2019-2020 alone, venture capital [VC] funding in healthcare grew by 57%), savvy people listen. And let’s face it, most doctors have never had the time nor inclination—although that is radically changing now—to compete with the Ivy League MBAs, attorneys and accountants who make up much of the VC world. Doctors are, or should be, by the very nature of what we do, humanists first, then businesspeople second. And since anesthesia practices were the most acquired type of healthcare practice in recent years, special attention must be paid, in my opinion, as to who the investors are and what background prevails in their credibility to ensure continued quality in anesthesia healthcare delivery.

In the end, patients need caregivers to run the show, not MBAs, attorneys and accountants. We in anesthesiology need to be particularly vigilant when we join forces with outside parties in managing clinical care. And in my opinion, no group of investment bankers or number crunchers with no knowledge of what we do should be at the helm making the crucial decisions. Our patients deserve no less.

Sherer is a retired anesthesiologist. Watch for his quarterly column “Wake-up Call” in future issues.

Editor’s note: The views expressed in this commentary belong to the author and do not necessarily reflect those of the publication.