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The rapid growth in Medicare Part B spending on physicians has sparked a renewed debate on ways of increasing physician productivity. This study concentrates on anesthesiologists, presenting original survey data on the variation in productivity defined in terms of patients, anesthesia hours, base and time units, and revenues. Supervising nurse anesthetists are estimated to raise anesthesiologist productivity by at least 20%, allowing for downtime and scheduling problems. Greater delegation could save society approximately $500 million annually in anesthesiologist costs, even allowing for an increase in nurse anesthetists. Yet, recent manpower trends show a falling nurse-to-anesthesiologist ratio. The failure to achieve substantial gains is ascribed to a flaw in third-party reimbursement that discourages both hospitals and physicians from substituting nurse for anesthesiologist time