Latest anti PE thing some shade vs Acep and usucks

[EctopicFetus]

Opinion | The Wrath Toward Contract Management Groups Is Right Where It Needs to Be

Emergency medicine is facing a reckoning

t.co

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[RustedFox]

Paywall'ed.

 

[EctopicFetus]

Paywall'ed.

Until recently, the American College of Emergency Physicians (ACEP), the largest specialty organization for emergency physicians, has largely ignored the issues of the corporate practice of medicine and contract management groups (CMGs). Despite their own data demonstrating the concerns of their members, ACEP leadership has been historically riddled with private equity-owned CMG executives and those who sold their practices to them. Long before private equity firms were involved, warnings of commoditization of emergency physician colleagues was detailed in the 1992 book, The Rape of Emergency Medicine, which led to the formation of the American Academy of Emergency Medicine, the organization now suing (the now bankrupt) physician staffing firm Envision Healthcare for violations of the corporate practice of medicine in California.


Fast forward 30 years, and private equity has super-charged this commoditization. In just the past year, we have now witnessed the dramatic failure of two private equity-owned CMGs in emergency medicine, KKR's Envision and Brown Brothers Harriman & Co's American Physician Partners. In June 2023, the ACEP released an uncharacteristically strong statement opposing the corporate practice of medicine after emergency medicine experienced what ACEP qualified as a catastrophic match. The ACEP's national board of directors is now nearly bereft of CMG executives. Nearly. There remains one CMG represented by the chair of the ACEP board: US Acute Care Solutions (USACS).

USACS, started with minority private equity owner Welsh, Carson, Anderson & Stowe, shares a similar origin to U.S. Anesthesia Partners. In 2021, as criticism of private equity in emergency medicine heated up, USACS "bought back" their group with a $711 million 10.5% interest loan from the notorious private equity firm Apollo Global Management, placing a private equity executive on their board.

Recently, Jesse M. Pines, MD, MBA, MSCE, and Amer Aldeen, MD, two USACS leaders, wrote an opinion piece titled "Questions you should be asking about how your physician group works," and sub-titled, "some of the wrath toward CMGs may be misdirected." In this editorial, they mention how some groups are taking strategies contrary to the best interests of physicians and their patients, but fail to mention how their own employer, USACS, has at times acted in this manner. An infamous example is the 2017 switch at Summa Health when it began staffing some of its ERs with physicians from USACS, which led to a number of complaints from local EMS, patients, and staff. The residency program was shut downand could not be accredited to be re-established.

Medical News from Around the Web​

There are other examples too. One would hope the USACS leadership role at the ACEP would not affect the support of physicians fighting for patients. But when USACS was at the center of controversy after firing the medical director, Jeff Chien, MD, for speaking out about dangerous staffing levels at the Santa Clara Valley Medical Center in San Jose, the then-president of ACEP, Gillian Schmitz, MD, posted on social media to upwards of 20,000 emergency physicians saying, "Look at the sources when you read these ridiculous articles and please be smarter than some of our patients who are drinking their own urine because someone read it 'cured' COVID on social media." Eventually, with the vocal support of many of the nurses at the hospital, the county decided not to renew their agreement with USACS.

A novice to the business side of emergency medicine may ask, "Why would a company with no tangible assets have over $700 million in debt?" USACS is saddled with debt from a bygone era of emergency medicine characterized by massive leveraged growth and consolidation. The American Antitrust Institute report on private equity in healthcare concluded that private equity acts as an "anticompetitive catalyst in healthcare markets." Many private equity-backed companies used debt to grow while employing out of network/surprise billing strategies, maximizing profit to pay off the debt. The No Surprises Act ended that practice and emboldened insurance companies to really hammer all emergency medicine groups in the arbitration process. Leaders of these companies like to say the debt is akin to a mortgage on your home. The difference is they own nothing tangible and need the labor of the groups' "owners" to pay down this massive debt. Substantial amounts of debt are simply not needed to run a successful emergency medicine practice that is locally accountable and provides autonomy to the practicing physician to serve their patients' best interests.

Some might contend this debt is necessary to compete with insurance companies. What they fail to mention is the regional labor monopsonies simultaneously created by debt-driven-consolidation, where market power can just as easily be applied to driving down wages and worsening working conditions for its physician-labor. USACS has a reputation among some of being significantly below market in their pay but often touts their "benefits." Some are meaningful, like a 401k match, while others are effectively worthless in our opinion, but allow them to bloat the value of the benefits package. We believe the strategy is to prey on physicians who are geographically limited or buy into the "ownership matters" mantra.

The Pines and Aldeen op-ed mentions doctors should ask if physicians are owners. USACS "owners" should ask themselves if their "ownership" in USACS is at all more meaningful than owning index funds in the S&P 500 as far as control of those businesses is concerned. I ask of any USACS "owner" how many shares are outstanding, what the market cap is of the company, and how much debt has been paid off? What will happen to ownership and control in 2026 when Apollo (the private equity behemoth) can force the sale of USACS if they don't recover their investment? Do they have a say in the staffing ratios of nurse practitioners and physician assistants in the department, or is this dictated to them top-down with the bottom line likely to be top of mind? Do they have easy access to what is billed and collected in their names using their professional licenses, and can they find out without fear of retaliation?

While it is true there is no perfect model that will satisfy everyone, it is clear the massive debt burden falling to younger physicians is due, at least in large part, to the sale of their labor to private equity. As emergency medicine plummets in popularity and the fallout of staffing group failures ripples throughout the profession, the public's health is at risk, and the profession faces a reckoning.

 

[BoardingDoc]

Paywall'ed.

Weird. Not for me, and it isn't like I have a login to whatever this site is.

 

[FlaminHotER]

Serious question For those that work for usucks on this board:

Are you not concerned at all about the train of financial disaster that is full steam ahead in 2026?!?

Every time I talk to a colleague or friend that works for usucks they are either in the camp of “yeah I hate it, I am trying to get into a different group asap”

or they are in the camp “as long as the money keeps getting deposited into my checking account it’s all good.”

For love of God, jump off the crazy train while you still can!

 

[Birdstrike]

It’s a shame to what extent physician labor has been commoditized. It’s not just EM. A large urology group near me sold out to private equity. The private equity group then went bankrupt a few years later. The docs were forced to either scatter for new jobs or buy the practice back. They chose to buy it back.

This problem was created one doctor at a time, choosing to work for other people. I see no solution other than for it to be reversed one doc at a time, by individual physicians choosing to only work where they can be true owners of their practices.

For that to happen, physicians need to be proactive enough to choose the option where available or create it, where it’s not.

 

[ScepticSkeksis]

Serious question For those that work for usucks on this board:

Are you not concerned at all about the train of financial disaster that is full steam ahead in 2026?!?

Every time I talk to a colleague or friend that works for usucks they are either in the camp of “yeah I hate it, I am trying to get into a different group asap”

or they are in the camp “as long as the money keeps getting deposited into my checking account it’s all good.”

For love of God, jump off the crazy train while you still can!

Even more importantly, knowing that 2026 is potentially armageddone for USACS, has leadership discussed it with the pit docs? If so, have they offered any solutions beyond corporate platitudes?

 

[EctopicFetus]

Even more importantly, knowing that 2026 is potentially armageddone for USACS, has leadership discussed it with the pit docs? If so, have they offered any solutions beyond corporate platitudes?

Dom said it will be fine and they have a plan (not shared with anyone other than insiders).

I imagine they will refinance their debt.

 

[ScepticSkeksis]

Dom said it will be fine and they have a plan (not shared with anyone other than insiders).

I imagine they will refinance their debt.

I'm not sure you can re-finance as it's already in junk territory. That would require lengthening the payoff time and increasing the interest rate.

 

[Apollyon]

Dom said it will be fine and they have a plan (not shared with anyone other than insiders).

I imagine they will refinance their debt.

"The check is in the mail. Yes-sir-eee, Bob, it's on the way!"

 

[ScepticSkeksis]

"The check is in the mail. Yes-sir-eee, Bob, it's on the way!"

Love Fargo

 

[Apollyon]

Love Fargo

I was trying to channel "Big Trouble in Little China", but the sentiment is def the same!

 

[thegenius]

Paywall'ed.

Worked for me, and I definitely haven't given money to medpagetoday.com

 

[FlaminHotER]

I'm not sure you can re-finance as it's already in junk territory. That would require lengthening the payoff time and increasing the interest rate.

That’s the other mind blowing of all this. It’s not like Apollo PE did this just out the kindness of their heart. Apollo PE WILL get their money back and make a profit, one way or another. Even if it means the total destruction and collapse of usucks.

 

[bravotwozero]

Dom said it will be fine and they have a plan (not shared with anyone other than insiders).

I imagine they will refinance their debt.

Do you think the revenue from their Houston contract would make a significant dent in their liabilities?

 

[EctopicFetus]

Do you think the revenue from their Houston contract would make a significant dent in their liabilities?

I imagine there is good profit there. I don’t know how much. Rumors were $15m. So it won’t hurt.

 

[ScepticSkeksis]

That’s the other mind blowing of all this. It’s not like Apollo PE did this just out the kindness of their heart. Apollo PE WILL get their money back and make a profit, one way or another. Even if it means the total destruction and collapse of usucks.

So a win-win?

 

[cyanide12345678]

I'm not sure you can re-finance as it's already in junk territory. That would require lengthening the payoff time and increasing the interest rate.

If global interest rates are low in 2026, then it’ it would be possible to get it at lower rates even with junk status.

Plus apollo itself might work with usacs to figure out a payment plan, or usacs might have to give away a part of their business in return for some debt relief.

I’m guessing apollo actually owning usacs might be worse for physicians.

 

[cyanide12345678]

That’s the other mind blowing of all this. It’s not like Apollo PE did this just out the kindness of their heart. Apollo PE WILL get their money back and make a profit, one way or another. Even if it means the total destruction and collapse of usucks.

Yeah they eventually will. But if they can’t restructure their debt or refinance, then they will have to give equity to apollo. Apollo could end up owning the usacs ‘brand’.

 

[ScepticSkeksis]

Yeah they eventually will. But if they can’t restructure their debt or refinance, then they will have to give equity to apollo. Apollo could end up owning the usacs ‘brand’.

I can't see them wanting to own the business itself. The debt is one thing, but the business may not be profitable enough for there portfolio.

 

[EctopicFetus]

I can't see them wanting to own the business itself. The debt is one thing, but the business may not be profitable enough for there portfolio.

Yes. much like the debt owners now "owning" envision. They dont want to but will try to sell it at terms they want eventually.

Apollo and blackrock are the 2 most blood thirsty of the PE companies. The issue with the USACS debt is rates were super low in 2021.. and they basically paid well above prime the t bill whatever baseline market you want to compare to. Those have all gone up 3-4% meaning USACS debt will likely go up at least that much as a baseline and THEN adjust the risk to the financial metrics of the group.

I think it would be disingenuous to think them getting those methodist contracts wont help a decent bit. Much depends on the churn of docs out of there, cost for locums etc.

AFAIK Houston is fairly saturated and a fair number of people still want to live there. Their labor is cheap. If I was a doc tied to houston i would be nervous rates will start to approach the Denver ones in the next 5 years, I know pay right now has been good but that wont last for these new "owners".

 

[DoctwoB]

It’s a shame to what extent physician labor has been commoditized. It’s not just EM. A large urology group near me sold out to private equity. The private equity group then went bankrupt a few years later. The docs were forced to either scatter for new jobs or buy the practice back. They chose to buy it back.

This problem was created one doctor at a time, choosing to work for other people. I see no solution other than for it to be reversed one doc at a time, by individual physicians choosing to only work where they can be true owners of their practices.

For that to happen, physicians need to be proactive enough to choose the option where available or create it, where it’s not.

Interesting about the uro group. Any details on the sale price before and after?

Selling out to private equity, getting a big payday, and then buying your practice back from them for pennies on the dollar sounds like a hell of a business plan (for the urologists, not for the private equity backers)

 

[bravotwozero]

I doubt they got it back for ‘Pennies on the dollar’… PE always gets its pound of flesh.

 

[emergentmd]

2021 when Fed Rate was essentially zero.

USACS "bought back" their group with a $711 million 10.5% interest Loan.

This alone doomed them. There must have been an MBA involved who yelled out loud, "We are doomed if we take out this loan".

 

[emergentmd]

This may be an unpopular opinion but I do not have any issues with selling out. The writing is on the wall and private groups are going to be more unicorn than common.

If you think that private ownership is a dying breed, either take it now or have no value later. Sucks, but that is life.

 

[thegenius]

2021 when Fed Rate was essentially zero.

USACS "bought back" their group with a $711 million 10.5% interest Loan.

This alone doomed them. There must have been an MBA involved who yelled out loud, "We are doomed if we take out this loan".

So if that is a 20 yr loan using standard amortization schedule
Monthly payment = 7M
Total Cost of Loan = 1.7B
Total Interest Paid = 1B

all on the backs of hard working doctors.

 

[thegenius]

US Acute Care Solutions Clinical Leadership Directory

Our leaders are owners and innovators who are constantly looking for ways to improve acute care. Browse our talented leaders at USACS.com.

www.usacs.com

Most of these 50+ leaders at USACS probably make somewhere between 3K - 30K/month, depending on their role. How are these 50+ people helping the regular ER doc in the PIT with their hourly and daily tasks? That admin team probably costs somewhere between 250K - 500K/month.

How many dollars/chart does USUCKS take to pay just the interest on that loan? The interest is 6M/month.

 

[EctopicFetus]

This may be an unpopular opinion but I do not have any issues with selling out. The writing is on the wall and private groups are going to be more unicorn than common.

If you think that private ownership is a dying breed, either take it now or have no value later. Sucks, but that is life.

I disagree and think the pendulum is swinging the other way. The CMGs are dying. TH just had to borrow another $1B. Usacs we are discussing. I Envision is broke, APP is dead. I cant speak to SCP.

Vituity is being discussed elsewhere but if what i have heard is true then they are just a very large DG.

To me the race is their debt/interest/NSA/insurance company/medicare financial stress vs the rapid growth in EM docs and the drop in our pay that is coming.

The SDGs that remain seem to have started to optimize their business. Hard to see the stress that private groups face when compared to the CMGs. I see the disparity growing. As the feds sort out the needs of the CMGs the SDGs will benefit, the revenue and profit will go up or stabilize while the workforce issues we see will cause a steady drop in EM pay for the CMG employees.

 

[EctopicFetus]

So if that is a 20 yr loan using standard amortization schedule
Monthly payment = 7M
Total Cost of Loan = 1.7B
Total Interest Paid = 1B

all on the backs of hard working doctors.

USACS loan is due in 2026. I am sure it is amortized over a longer period of time. I dont know how long but as you astutely pointed out just the interest is 70+M a year. All those new grad signing up who benefitted 0 from the sale are paying the p&i on the loan. Its a great scam if you are the one selling.

The next CMG is here BTW.

Home

Emergency Care Partners Establishes New Partner in MissouriEmergency Care Partners (ECP), a leading physician-owned national emergency medicine service

ecp.net

Run by former ACEP "leaders"

 

[Kryptocoin]

This is the consequence of unregulated so-called " free market". UPS workers just negotiated a 160k/yr compensation. UAW workers are asking for 40% raise plus a 30hr-work week.

Very soon the math for becoming a doctor won't make sense anymore. 12yrs of school/training + 400k debt.....for a 200k salary for entry level PCP? No thanks.

 

[Mount Asclepius]

Time for us as EPs to negotiate a 40% pay raise, 3 day work week, and the same number of nights as UPS. If only.

 

[VA Hopeful Dr]

This is the consequence of unregulated so-called " free market". UPS workers just negotiated a 160k/yr compensation. UAW workers are asking for 40% raise plus a 30hr-work week.

Very soon the math for becoming a doctor won't make sense anymore. 12yrs of school/training + 400k debt.....for a 200k salary for entry level PCP? No thanks.

Yeah the debt is, to my mind, the biggest issue.

 

[ScepticSkeksis]

Time for us as EPs to negotiate a 40% pay raise, 3 day work week, and the same number of nights as UPS. If only.

EPs will never negotiate because we are terrible at business, and we back down when people threaten us over "the good of the patient". USACS, TeamHealth, and Envision were all gambling that the physician salary would drop quickly enough that they could cover their debt obligations. I've actually seen it stabilize or increase a bit in the past few months in my market.

 

[Kryptocoin]

Time for us as EPs to negotiate a 40% pay raise, 3 day work week, and the same number of nights as UPS. If only.

Tell me when and where. I already have my picket sign drawn up.

 

[Janders]

I disagree and think the pendulum is swinging the other way. The CMGs are dying. TH just had to borrow another $1B. Usacs we are discussing. I Envision is broke, APP is dead. I cant speak to SCP.

Vituity is being discussed elsewhere but if what i have heard is true then they are just a very large DG.

To me the race is their debt/interest/NSA/insurance company/medicare financial stress vs the rapid growth in EM docs and the drop in our pay that is coming.

The SDGs that remain seem to have started to optimize their business. Hard to see the stress that private groups face when compared to the CMGs. I see the disparity growing. As the feds sort out the needs of the CMGs the SDGs will benefit, the revenue and profit will go up or stabilize while the workforce issues we see will cause a steady drop in EM pay for the CMG employees.

I have some similar feelings.

The actual “profitability” of EM professional fees via staffing and billing aren’t THAT high, when you need to pay the docs, cover the schedule, all the overhead.

I mean, absolutely, you could snake 5% off the top and make money as CMGs have done for a generation. But if you add a ton of high interest leveraged debt and need to start snaking 20% just to keep afloat… eh. i don’t think it’s the best industry for VC to make profitable. Now can they gut companies, make paper profit, resell and bankrupt and spin off? Sure thing

 

[Mount Asclepius]

EPs will never negotiate because we are terrible at business, and we back down when people threaten us over "the good of the patient". USACS, TeamHealth, and Envision were all gambling that the physician salary would drop quickly enough that they could cover their debt obligations. I've actually seen it stabilize or increase a bit in the past few months in my market.

Tongue and cheek my friend.

 

[BoardingDoc]

Tongue and cheek my friend.

*Tongue in cheek

 

[Mount Asclepius]

*Tongue in cheek

Exactly

 

[GassYous]

*Tongue in cheek

*between cheeks

 

[alpinism]

US Acute Care Solutions Clinical Leadership Directory

Our leaders are owners and innovators who are constantly looking for ways to improve acute care. Browse our talented leaders at USACS.com.

www.usacs.com

Most of these 50+ leaders at USACS probably make somewhere between 3K - 30K/month, depending on their role. How are these 50+ people helping the regular ER doc in the PIT with their hourly and daily tasks? That admin team probably costs somewhere between 250K - 500K/month.

How many dollars/chart does USUCKS take to pay just the interest on that loan? The interest is 6M/month.

I'm fairly certain it's even higher for those USACS senior level admin docs.

I've spoken with a couple of them and they openly claim to make 500K salaries.

 

[alpinism]

I mean there's a reason why all these guys have been all over EM DOCS the last month trying to defend their company.

They literally get paid from duping new grads into paying them 50% of their professional collections each month.

 

[emergentmd]

I disagree and think the pendulum is swinging the other way. The CMGs are dying. TH just had to borrow another $1B. Usacs we are discussing. I Envision is broke, APP is dead. I cant speak to SCP.

Vituity is being discussed elsewhere but if what i have heard is true then they are just a very large DG.

To me the race is their debt/interest/NSA/insurance company/medicare financial stress vs the rapid growth in EM docs and the drop in our pay that is coming.

The SDGs that remain seem to have started to optimize their business. Hard to see the stress that private groups face when compared to the CMGs. I see the disparity growing. As the feds sort out the needs of the CMGs the SDGs will benefit, the revenue and profit will go up or stabilize while the workforce issues we see will cause a steady drop in EM pay for the CMG employees.

I am not talking about EM but medicine in General. I get why SDGs are selling out to corporate. Trying to run a successful practice keeps getting harder. Income/Insurance reimbursement has gone down with longer waits to get paid BUT

1. Staff Costs/rent/supplies, Everything with running the business keeps going up
2. Fighting with insurance costs alot of time and $$
3. Need compliant EMRs
4. Pts becoming unreasonable

I can go on and on, but the margins keeps getting tighter. If someone is offering FIRE money, it is hard to say no.

 

[southerndoc]

FTC sues Texas anesthesiology provider to bust monopoly

The Federal Trade Commission sued U.S. Anesthesia Partners, alleging the company has established monopoly power in key Texas health-care markets.

www.cnbc.com

 

[bravotwozero]

FTC sues Texas anesthesiology provider to bust monopoly

The Federal Trade Commission sued U.S. Anesthesia Partners, alleging the company has established monopoly power in key Texas health-care markets.

www.cnbc.com

More dirty games by United healthcare

 

[bravotwozero]

From the president of the Texas Medical Association who took the government to court over the NSA, and was testifying in DC today:

Ghost networks is when an insurance company determines a qpa using data from an unused CPT code. For example, they go to a pain doctor who is an Anesthesiologist, and say I'll give you x rates for your pain codes, I may bump them up a bit, but I'll give you Medicare rates for your Anesthesia conversion factor. Those Anesthesia Codes will never be used, but goes into the calculation of the median rate artificially lowering it. No one using the codes would ever agree to it, but if you're not using the codes, you could care less.

United was using ghost codes, which they made up, and which nobody actually uses, to say USAP was overcharging them.

 

[southerndoc]

From the president of the Texas Medical Association who took the government to court over the NSA, and was testifying in DC today:

Ghost networks is when an insurance company determines a qpa using data from an unused CPT code. For example, they go to a pain doctor who is an Anesthesiologist, and say I'll give you x rates for your pain codes, I may bump them up a bit, but I'll give you Medicare rates for your Anesthesia conversion factor. Those Anesthesia Codes will never be used, but goes into the calculation of the median rate artificially lowering it. No one using the codes would ever agree to it, but if you're not using the codes, you could care less.

United was using ghost codes, which they made up, and which nobody actually uses, to say USAP was overcharging them.

Family practice or internal medicine docs may agree to take $1 for an LP because they could care less -- they never perform them. These ghost codes affect reimbursement from those that do LPs though. That anesthesia pain doc may never do a central venous catheter and takes a $1 rate on it during their contracts. It affects any specialty that does a CVC (as some of the insurers weren't using specialty specific rates).

I'm hoping the EM groups form class action lawsuits against the insurers who do this. The FTC or preferably the DOJ should sue the insurance companies for collusion, but we all know how well the insurance companies pad the pockets of politicians to get their way without consequences.

 

[deleted206819]

I don’t think that this is an either / or situation to being sued. The CMGs and the insurance companies should both have antitrust actions brought against them.

There are no good guys in this fight except for the physicians who are abused by both.

 

[bravotwozero]

From the American Academy of Emergency Medicine:

On September 21, 2023, The Federal Trade Commission (FTC) announced that they filled suit against private-equity backed, physician-staffing company U.S. Anesthesia Partners, Inc. (USAP) in Texas.

The FTC’s complaint alleges that USAP and Welsh Carson’s “multi-year anticompetitive
scheme to consolidate anesthesia practices in Texas, drive up the price of anesthesia services provided to Texas patients, and increase their own profits.” Welsh Carson is the same firm which funded US Acute Care Solutions (USACS) and now staffs over 200 emergency departments.

The complaint also cites “In other words, thanks to its anticompetitive conduct, USAP has been able to extract monopoly profits while simultaneously growing its monopoly power. Defendants’ scheme was so successful that Welsh Carson has already begun ‘deploying a similar strategy to consolidate’ multiple other physician practice specialties.”

The FTC has been meeting with leaders of AAEM and they are well aware of the corporate practice of medicine in emergency medicine. AAEM is the EM organization that speaks and acts against the harmful influences of the corporate practice of medicine.

The American Academy of Emergency Medicine Physician Group (AAEM-PG) similarly filed a suit on December 20, 2021 against Envision Healthcare Corporation, a private-equity physician staffing company. AAEM-PG alleges that Envision, as a lay entity owned by the private equity firm Kravis, Kohlberg and Roberts, was in violation of the CA prohibitions on lay ownership of medical practices as embodied in the Business and Professions Code §§ 2400 and 2052.

Issues at stake include lay influence over the patient-physician relationship, as well as control of the fees charged, prohibited remuneration for referrals, and unfair restraint of the practice of a profession. AAEM-PG and its parent organization, the American Academy of Emergency Medicine, believes this arrangement is not in the public interest.
“A physician’s first duty is to the patient,” says AAEM-PG Chief Medical Officer, Robert McNamara, MD. “This duty is heightened in the emergency department where physicians care for society’s most vulnerable patients. Corporations who owe their first duty to the investors have no place at the bedside. Doctors must be free to treat each patient without the pressure to maximize profits.”

AAEM, AAEM/RSA, and AAEM-PG have been advocating against the corporate practice of medicine since inception and will not stop until the unlawful practice of private equity backed staffing firms is eliminated.

Private equity is bad for medicine, each and every specialty. It is bad for patients. We know it and it is clear the FTC knows it. The Academy is proud to support the FTC in this mission.

 

[FlaminHotER]

Lina Khan and the Federal Trade Commission issued a bombshell lawsuit against US Anesthesia Partners (USAP) and its founding private equity owner - Welsh, Carson, Anderson & Stowe (Welsh Carson) - on 9/21/2023. The FTC alleges that USAP and Welsh Carson “engaged in a three-part strategy to consolidate and monopolize the anesthesiology market in Texas. First, they executed a roll-up scheme, systematically buying up nearly every large anesthesia practice in Texas to create a single dominant provider with the power to demand higher prices. Second, USAP and Welsh Carson further drove up anesthesia prices through price-setting agreements with remaining independent practices. Third, USAP sidelined a significant competitor by striking a deal to keep it out of USAP’s territory.”

Welsh, Carson, Anderson & Stowe is the same private equity company that funded the creation of US Acute Care Solutions in 2015 (three years after Welsh Carson created USAP), along with the EM group Emergency Medicine Physicians (EMP). The same WCAS partner - Brian Regan - was in charge of both the USAP and USACS deals. On USACS’ formation, Regan wrote, “EMP really fits all of our criteria for a partner.”

In its 106-page suit, the FTC explains: “Welsh Carson entered the emergency medicine market and engaged in a similar roll-up strategy to the one it deployed with USAP… a similar strategy to consolidate the market.” The suit quotes Brian Regan that Welsh Carson’s strategy is “to build a platform with national scale by consolidating practices with high market share in a few key markets.” USAP’s sizeable market share would give it “[n]egotiating leverage with commercial payors.”

Like USAP, US Acute Care Solutions has acquired many emergency medicine contracts within lucrative geographic regions such as the DC suburbs and Denver. USACS currently staffs 296 EDs. Unlike American Physician Partners, Brian Regan’s plan was not to go out of network with insurers and send large bills directly to patients. Instead, the Welsh Carson strategy was to increase in-network payment rates.

The FTC lawsuit details how the “roll-up” & “tuck-in” consolidation strategy led to higher payment from insurers in the anesthesiology market. “Insurers prefer to have anesthesia groups in network—especially those that practice at in-network hospitals. Otherwise, their members may be treated by out-of-network anesthesiologists, who will charge much more. Certain ASO [self-insured employer] clients pay a significant portion of these bills, which can result in their dissatisfaction. And historically, out-of-network anesthesiologists billed patients directly. These ‘surprise bills’ can upset patients—who mistakenly assume that because they went to an in-network hospital, they saw an in-network anesthesiologist—and result in them complaining to their hospitals or employers. Insurers can thus be pressured to return out-of-network anesthesia providers to their network by as many as four parties: patients, hospitals, existing ASO clients (who may take their business elsewhere), and potential ASO clients (who may keep their business elsewhere).”

Welsh Carson’s strategy worked. “Blue Cross reported that USAP ‘[a]ccounted for . . . 69% of cases and 83% of cost in Houston’ and that it ‘leverag[ed] market share’ into a reimbursement rate more than double that of other Houston anesthesiologists.” Also, “United reported that it reimbursed USAP at rates 95% higher than its in-network median for Texas and 65% higher than the Houston average, which was calculated including USAP.” Welsh Carson extracted $350 million in dividends from USAP between 2012 and 2020.

The No Surprises Act, which passed the US Congress on December 21, 2020, outlaws out-of-network balance billing of patients. Without the threat of billing patients out of network, Welsh Carson’s consolidation-based negotiation strategy lost much of its leverage in the emergency medicine market. Per the NSA, the arbitration for out-of-network acute care billing is based on the following six factors: a) the QPA (“median of the contracted rates recognized by the plan for the same or similar item or service that is provided by a provider in the same or similar specialty and provided in the same geographic region in which the item or service under dispute was furnished, increased by inflation”), b) the level of training of the physician or other health professional, c) the acuity of the person receiving the health service, d) the provider's market share, e) the quality and outcome measures of the provider, f) The complexity of furnishing the service.

As John Maynard Keynes said, “When the facts change, I change my mind - what do you do, sir?” It is no surprise that two months after the NSA’s passage, Welsh, Carson, Anderson & Stowe sold its stake in US Acute Care Solutions to USACS’ physicians in February 2021. The transaction left USACS with at least $725 million in debt.

Last week’s US House of Representatives Ways & Means Committee hearing about the No Surprises Act showed how insurers use the NSA to depress reimbursement rates for geographically consolidated emergency medicine groups like USACS.

Seth Blier, MD, Vice President of Finance for Wake Emergency Physicians (WEPPA), testified that “soon after the No Surprises Act became law, his practice and others in the area received a letter from one insurer demanding significant cuts to contracted rates. If they refused, the insurer threatened to force the practices out of network. While WEPPA ultimately kept that contract, two other payers terminated contracts with his practice.”

WEPPA’s positioning in Raleigh and Wake County (North Carolina’s wealthiest county) is comparable to USACS’ in Denver, Northern Virginia, and other affluent communities. WEPPA staffs six out of Wake County’s nine emergency departments.

Per Fierce Healthcare: “Rep. Richard Neal, D-Massachusetts, the committee’s ranking member, was adamant that federal agencies had undermined ‘one of the greatest consumer protection reforms in our country’s history.’

Much of the ‘disappointment’ has come from how the agencies had chosen to hinge the IDR process on the qualifying payment amount (QPA)—a focal point in industry debate that the courts agreed tilted in the favor of payers—rather than following the path laid out in the bill, he said. ‘When drafting the law, we worked to ensure fairness involved in the payment disputes and we carefully specified factors that should be considered during the independent dispute resolution process,’ he said. ‘As written, this law carefully avoids any one single factor unduly influencing the dispute resolution process. Despite this consideration, the Final Rule for the No Surprises Act strays from the law as written in favor of an alternate approach that overwhelmingly favors one factor instead of the more balanced consideration this committee and Congress fully intended.’”

If insurers continue the playbook used against WEPPA, payments to consolidated emergency practices in affluent areas would decrease - and US Acute Care Solutions' solvency will be tested. And if USACS’ revenues drop, how will that impact the company’s largest expense - physician compensation?

 

[JacobMcCandles]

Hopefully this will start the unraveling. It’ll take time but it’s a good step.