California’s population of nearly 40 million is served by just 8,500 anesthesiologists, 2,200 of whom are certified registered nurse anesthesiologists (CRNAs). California’s recent anti–independent contractor bill, AB5, is making this shortage much worse and making anesthesiology more dangerous for patients.
I recently spoke to a California physician who is an anesthesiologist, and who is helping a group of CRNAs who work primarily in the state’s Central Valley. We spoke at length about the state’s severe shortage of anesthesiologists and how AB5 is making this serious problem so much worse.
Because most MD anesthesiologists choose to live in major urban areas such as Los Angeles, San Francisco, Silicon Valley, and San Diego, or in smaller communities right on the coastline, such as Santa Barbara, Monterey, and Newport Beach, there is already a shortage of anesthesiologists to serve in rural areas and other underserved communities that tend to be far from the California coast. CRNAs provide a large share of those anesthesia services.
CRNAs are licensed to dispense anesthesia much like an MD anesthesiologist. However, despite providing the same services, CRNAs are treated fundamentally differently by California’s new law, AB5, which forbids CRNAs to work as independent contractors. Rather, they must work as regular, W-2 employees. In contrast, physicians such as MD anesthesiologists are exempt from AB5 and are free to work as independent contractors. This difference in how physicians and CRNAs are treated by the law is leading to enormous problems, creating an even more severe shortage and damaging the level of care provided by anesthesiologists.
One important reason is the hours restrictions that W-2 workers and their employers must obey. A W-2 CRNA typically works an eight-hour shift, because overtime pay requires a 50 percent wage premium beyond eight hours. Since many rural hospitals are struggling financially, it is rare that a CRNA will be asked to work beyond their regular shift, because the hospital is unable to absorb that additional cost.
Before AB5, many out-of-state CRNAs would come to California for a short period of time to earn considerably more income than they could working in their own state. These temporary CRNAs understandably prefer to work longer shifts, as much as 12 hours or more, so that they can maximize their earnings. After two weeks or so of working in California, they return to their homes.
But AB5 now forces all CRNAs to work only eight hours, which is a 33 percent cut relative to their preference for a 12-hour shift. Consequently, they no longer find the option of working in California sufficiently rewarding, so very few are now coming. Temporary anesthesia-staffing service firms have pulled out of placing CRNAs in rural areas of California because of AB5.
This obviously makes the state’s anesthesiology shortage worse, as California struggles to recruit MD anesthesiologists, adding to the problems of high medical liability insurance, the state’s high cost of living, and the fact that California lawmakers frequently float new bills that would place limits on physician earnings, such as AB 3087.
Another reason to oppose forcing CRNAs into W-2 positions is that it disrupts continuity of care, which is the important medical principle that providers who treat you from the start of a procedure are there to see things through to the end.
To understand just how important this is, consider a surgery in which a team is in place to treat you, including an anesthesiologist. Providing anesthesia is a delicate dance that requires providing enough medication to sedate the patient for their own safety and comfort, while ensuring that the medication does not create other health problems. Without the limitation on hours worked established by AB5 restrictions, the anesthesiologist you begin with—who has met you and asked you important questions about your conditions, and who has answered your questions—is there at the end.
But with AB5, things are different. Suppose a surgical team is in the middle of your procedure and a W-2 anesthesiologist comes to the end of their eight-hour shift. What happens is that another anesthesiologist must now step in to take care of you. But the new anesthesiologist has not met you, spoken with you, nor examined you. The possibility of replacing an anesthesiologist midsurgery because a W-2 employee has come to the end of their shift means that continuity of care is disrupted, posing a significant risk to the patient’s safety and comfort because the new provider is not familiar with the patient.
The intention of AB5 was not to make anesthesia riskier or increase the state’s anesthesiologist shortage. But these are the predictable outcomes of what happens when a market is distorted by government restrictions. Lawmakers rarely think about the broader consequences of how laws can damage market outcomes.
Sadly, those who are already suffering from a shortage of medical care—those who live in rural and other underserved areas—are the ones who will be hurt most by AB5’s effects on health care, in terms of both risks and delays.
AB5 continues to be a law that is inflicting substantial damage on those who wish to earn a living as they see fit and the consumers of those services. This is a clear case where partisan politics has gotten in the way of sensible economics.
Over 100 California-based economists and social scientists, myself included, are calling for the immediate suspension of AB5. Here’s to hoping that the governor makes the right decision to suspend the law before it does more damage.