Joseph Rodrigo, DO, FAOCA: To Employ or Not to Employ?

In this episode, special guest host Mike Wirth (Chief Growth Officer at Medaxion) sits down with Joe Rodrigo, DO, FAOCA of ProMedical to break down one of the biggest questions facing healthcare leaders today: should hospitals employ anesthesiologists or outsource? Dr. Rodrigo shares why the answer isn’t as simple as it seems, explaining the hidden costs, operational challenges, and long-term risks of employment models. They also discuss private equity’s role in rising costs and why many systems regret rushing into major staffing decisions. This conversation offers a practical look at how healthcare leaders can avoid costly missteps and make more informed decisions.

Explore the full episode page: https://www.medaxion.com/dr-joseph-rodrigo-promedical-anesthesia-staffing

Jeff McLaren introduces the speakers and panelists whose discussions were recorded live at the 2026 Anesthesia Economics Summit.

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Transcript

Introductions

SPEAKER_00 0:06

I'm Mike Worth with MedAction here at the Anesthesia Economic Summit in Charleston, South Carolina. I'm here with Joe Rodrigo, present founder of ProMedical. Joe is a practitioner, does a tremendous amount of work with organizations all across the country, and we're talking about all things anesthesia. Joe, one of the topics that has come up here at the summit is really around this notion of to employ or not to employ anesthesiologists. Now, you know that it's not that simple. Tell us

Industry Shift

SPEAKER_00 0:38

why.

SPEAKER_01 0:38

Yeah, exactly. So we're in 2026. Twenty years ago, I would say the majority of anesthesiologists were employed in some form, not necessarily with a directly with a hospital system, but a private group or something. In the period of time between then and now, a lot of people have ventured off into locums work, independent contractor work. And so you've got that dichotomy of uh W-2 versus 1099. So, but then when you talk about an employment model versus a you know other type of models uh for a hospital system, um that's uh kind of another angle that we'll look at. And so to employ or not to employ, so you're a healthcare um executive, CEO of a hospital, president of a hospital, and you're having trouble with your anesthesia coverage. Uh the group, private group isn't meeting your needs or the costs are going up, your subsidies are going up, and you're thinking about making a change. And so one of the thoughts is, alright, I can do this myself.

Employment Debate

SPEAKER_01 1:48

Let's bring everyone in, I'll employ them. And when I sit down with the healthcare leaders, I said, Alright, well, what is the reason why you want to employ? You know, think about um.

SPEAKER_00 2:01

What do you often hear from them?

SPEAKER_01 2:02

Uh

Cost Drivers

SPEAKER_01 2:03

most of the time is cost. You know, there's cost, or uh the anesthesia group is not um fulfilling their contract because they can't supply the needs. And it's usually directly related to cost because uh the group typically at that point is having trouble recruiting and they either need to pay more or there just isn't the availability of the providers out there. So I always ask them, you know, what's the reason you want to in-source uh an employee? And they will give me their answer, and I said, well, really the only thing you gain out of employment is control. Cost will probably be the same or higher to in-source.

Hidden Costs

SPEAKER_00 2:40

Interesting.

SPEAKER_01 2:40

Because your startup costs are gonna be astronomical uh the first couple, two or three years. Um, and then the infrastructure that you have to build into ancillary support to support, scheduling, um, you know, practice managers, everything else, suddenly there's all of these other uh uh costs that you didn't really think of. You're thinking of a fixed cost of anesthesia just to cover ORs, but really what you're doing when you're employing is you're actually building another business inside of your business, which is going to cost more money. So I always ask them why do you want to do this? If there's some way to salvage uh your relationship with a previous group, you know, maybe both sides they're looking at things differently, they can come together, maybe you know, talk, you know, maybe have a mediating type of session.

SPEAKER_00 3:28

Interesting.

Salvaging Groups

SPEAKER_01 3:29

Where, you know, all right, is it just money, is it coverage, or is it expanded coverage, or or what is it, and try to really get in the room to see if you can get to common ground because sometimes you want to, you know, keep these people, these are good providers, you know, and there's no guarantee these providers are gonna come over as an employee model.

SPEAKER_00 3:47

Well, or if or if they do, might not be there very long anyway, right? Right, exactly.

SPEAKER_01 3:51

So, you know, uh a lot of times private groups, not necessarily a third-party management company, but a private group, they love their on to autonomy and they love you know to be able to function in that uh private practice world, even though they're tied to the hospital, and in some ways they're employees because they accept money from the hospital, but they still are anchored to the community, right? Yeah, and and all of those types of things. So that's the biggest thing that that I asked the the healthcare leaders is you know, why are why are you doing this? Now, sometimes there's just no way to get past the hump. And I've been involved in several of those, and it's been you know very difficult. Um, you know, lawsuits and in um you know, in one instance, the the group fired the hospital, and most instances instances the hospital fired the group.

SPEAKER_00 4:44

I'm so sorry, guys. Oh my gosh.

SPEAKER_01 4:46

No worries. I'm so sorry. You need a doctor? There's a few out there.

SPEAKER_00 4:50

Oh my gosh, something just all of a sudden I'm like my eyes like watering. Sorry, Joe.

SPEAKER_01 4:58

No worries.

SPEAKER_00 5:00

You're on a roll two. All right, um, let's go. We'll walk back, pick it up from yeah. Um man, what the heck? I don't smoke either.

SPEAKER_01 5:13

Uh I can just continue right on.

SPEAKER_00 5:15

You're great.

SPEAKER_01 5:16

Um so

Exploring Options

SPEAKER_01 5:18

you know, after we try to figure out why um they want to make a change, um and it and if that relationship is not repairable, um, then I always tell them, put out an RFP, exhaust your options on the free market with a management company.

SPEAKER_00 5:35

Okay.

SPEAKER_01 5:35

And the reason why I say that is because, again, insourcing and the infrastructure and everything else that you need to develop to be able to in-source sometimes takes a really long time. And if you don't have a significant amount of time to build that infrastructure, then you're trying to build it as you're bringing these providers in.

SPEAKER_00 5:56

You're really encouraging folks to let's walk through every scenario here and really embrace what you're doing. I mean that's

Avoiding Missteps

SPEAKER_00 6:03

really what you're having them do.

SPEAKER_01 6:04

I'm my job, I feel, is more of to make sure people don't make missteps as opposed to tell them how to fix everything. Yeah. Because it's not there's no simple fix, there's no secret sauce or fairy dust. It's really about all right, let's not make a mistake that's predictable. And so I want to walk them all the way through that. And sometimes outsourcing to a third-party company is the right answer. Um, sometimes it's not, sometimes employment's the right answer, sometimes it's not. And so I really I stress to them think about how disruptive this decision's going to be, and make sure you're making it for the, you know, making the right decision with all the information that you have.

SPEAKER_00 6:50

So employment might be the right tool, but let's just not leap to that as a proxy to solve a problem that might be solved elsewhere.

SPEAKER_01 6:58

I think we've got a lot of examples over the last 10 years or so of that exact thing where healthcare systems feel like, let's just leap right to it. They think that's the fix, but it's really not the fix. There's been sub-healthcare systems that have tried to employ, then had to go back out and bring in a management company or recontract with a private group because it didn't work out, because they didn't build the infrastructure correctly and and they weren't going about it for the right reasons.

Private Equity

SPEAKER_00 7:24

Let's let's talk about I'm gonna come back to the right reasons in as a in just a moment. Third party outsourcing. I think that there I know that there's been a lot of commentary around private equity-backed employment companies. Perhaps oversimplification of this being the root of all evil uh perhaps is the root of all evil. How would you comment on that?

SPEAKER_01 7:50

I don't think it's necessarily the root of all evil. Um I think you know, we're a lot of the issues that we have in healthcare have a lot to do with our healthcare system in total. Our payers, you know, the way the insurance companies reimburse us, where everything's kind of cut back. But um, you know, private equity uh in its early forms people thought was great, especially the physicians that were bought out by these groups and got some money in their pocket. Um and then uh but there's a lot of people now that believe that they are kind of the root of it because they come in, they overpromise and underdeliver, and they're increasing healthcare cost uh unnaturally because when they initially come in, they purposely come in a little bit low to make it look good, and then they start ratcheting up the cost. I think the average contract that a you know private equity third-party management group is about three years. They come in and they try to recover all of their uh cost and profit margin in the first three years because they don't know if they're gonna get a second chance out of it.

SPEAKER_00 9:03

Yep.

SPEAKER_01 9:03

And a lot of times they don't. And sometimes they do, and a lot of times uh the healthcare executives are scared to make a change because they made one change, they don't want to have to do it again, so then they just start paying the increased cost more and more and more. And some of those costs are legit. Not that they're purposely gouging, but they've got a 30 to 40 percent profit margin that they have to meet for their investors. And uh so it's you know, it's an interesting thing, you know. You see private equity getting out because honestly, you know, the only way private equity can meet their margins now is the subsidies paid for by the hospitals. We don't generate enough revenue and collections uh for anesthesia specifically to cover our own costs. So we are reliant on healthcare systems to subsidize us. That's how they make their money.

SPEAKER_00 9:53

To employ, not to employ, to subsidize or not subsidize, or to what level? Another question for another time, right?

SPEAKER_01 9:58

Yes, I can go on for kids on that as well.

SPEAKER_00 10:00

Let's let's go back to something that you talked about earlier. You said that a lot of the reason these systems, these organizations are looking to employ is cost. That's uh that's that's opening up a door to a lot of other discussions. Let's talk about the places that you've seen that do employ or that have made that decision. What was their motivation in doing so? So instead of starting with cost, when was it when did it work? When was it, I guess, pure or what when was the the motivation one that lined up with how uh employment came to

When It Works

SPEAKER_00 10:31

be?

SPEAKER_01 10:32

So different projects. Uh like I mentioned earlier. I've been involved in projects where the group has canceled the contract on the hospital, and I've also been in projects where the hospital canceled on the group. And uh and we'll go with the the typical scenario uh where the hospital cancels on the group. And um usually it's going through that contract renegotiation process where things start to fall apart, or there's an early renegotiation called, and that's usually not necessarily based around cost unless it's requested by the private group, but usually based more around um the group not fulfilling the needs of the hospital, or the hospital has increased needs and they need to renegotiate the contract for more FTEs and subsidy. And um so but typically you know things fall apart in the negotiation process. Um you typically will have uh individuals that are running the group that are very strong personalities, and then they end up biting heads against the health care administrators, and then it just comes into all right, we're moving in different directions just because, and they just refuse to negotiate any further. And you get into a lot of that, and there's a lot of infighting uh that you'll see. And uh the two most recent projects that I was involved in, there it was a significant amount of that, and um way more than I ever remember in the past seeing, and it seems like it's it's going further.

SPEAKER_00 12:08

Tensions are rising. I mean, the storm the storm's getting bigger and the tensions are rising.

SPEAKER_01 12:13

And they and they really are. You know, the private practitioners they don't want to lose control, they don't want to lose their contract, they've done things a certain way forever, they want to continue the same way. Um, and then the hospital system, they're like, like, well, the costs are too high, we need to figure out you know how we control costs, we need to increase services, or you're not providing, you know, coverage for the services that we have. It can go wrong at so many different levels in and for different reasons, but it usually comes down to a couple of those, or you get into, like I said before, uh, strong personalities, and then they just refuse to re to negotiate with each other.

SPEAKER_00 12:54

Yeah. So well, the old adage of uh uh a vote of uh one to ninety-nine is a tie. Yeah. Right? Uh in any group of practitioners like that. Right. Can be. Can be. Uh any other thoughts on employment that you want to make sure that you close with, or you know, really if if anybody's embarking on uh or thinking about this?

SPEAKER_01 13:15

Uh you know,

Final Advice

SPEAKER_01 13:16

like I mentioned before, employment's not always the right answer. Uh I think it seems like the right answer, the easy answer, uh, you know, the little the easy button, uh, but it's really not. And I will always challenge the healthcare administrators, you know, to think about why they are making this decision. Is, you know, the contract with the previous group salvageable or the management company? Uh and if it's really not, then exhaust all other options, RFPs or whatever you need to do, uh, because it's going to be a huge endeavor. It's way more involved, laborious, and cost uh prohibitive than what you would think. Um the project I'm working on right now, when we transitioned over, we had almost all locums initially. And the first month of locum's cost in the system turned out to be more than the whole year subsidy would have been if the the previous group in the hospital just would have worked it out. But with that being said, though, the previous group did not have the providers to be able to cover the health system either. Um just that was sticker shock value. They thought, okay, we're gonna do this, and you know, uh we're gonna be better off, the money's not gonna be quite as bad, and they were they were shocked.

SPEAKER_00 14:44

Amazing.

SPEAKER_01 14:44

Yeah.

SPEAKER_00 14:45

Uh I've been here with Joe Rodrigo, uh principal and owner of uh ProMedical. Joe, thank you for your time. Absolutely. I'm Mike Wirth uh at the Anesthesia Economics Summit here in Charleston as part of the anesthesia management network.

unknown 14:59

Thank you very much.