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Interesting read from the Washington Post
Anesthesia Private Equity News Article
- Thread starter ProPropofol
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Good article, and quite informative. One of the other sad/interesting parts is how much the insurance companies contributed to this. They were paying PEANUTS to many local groups. They wouldn’t negotiate rates or offer any kind of increase to local groups, virtually NECESSITATING that they “partner up/sell out” or get replaced by AMC’s, who would show up, and almost IMMEDIATELY get huge concessions out of the insurance companies (thus, lowering stipends that hospitals had to pay groups).
If many of the insurance companies simply would have agreed to “reasonable” increases in reimbursement to the already existing LOCAL groups, many of these buyouts or handovers to AMC’s would never have happened.
If many of the insurance companies simply would have agreed to “reasonable” increases in reimbursement to the already existing LOCAL groups, many of these buyouts or handovers to AMC’s would never have happened.
What’s worse is that these excesses that would have been completely preventable and they are now used as political fodder to further strangle and regulate the system
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Private equity ruining the country
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Article reads like a United exec hit piece.
World is changing. Salaries going up. Someone is going to pay. This article is backed by insurance companies trying to use any PR they can for future negotiating. Hospitals will be the losers in this with stipends being the norm to keep groups solvent.
World is changing. Salaries going up. Someone is going to pay. This article is backed by insurance companies trying to use any PR they can for future negotiating. Hospitals will be the losers in this with stipends being the norm to keep groups solvent.
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Ouch. As expected the anesthesiologists who worked for USAP didn’t get the profits. $1.3 billion in dividends to its shareholders.
“Turnover at USAP climbed to 8 percent in 2020, 17 percent in 2021 and 11 percent in 2022, according to company figures. By comparison, the median rate of physician turnover nationally was 7 percent annually in 2020 and 2021, according to a survey by the Association for Advancing Physician and Provider Recruitment. A national figure for 2022 is not yet available. While the company had once employed 330 anesthesiologists in the state, according to its website, the figure has dropped to 275, the company said.
In interviews, 12 former USAP anesthesiologists cited an array of reasons for leaving.
For starters, their pay declined more than they expected, they said. The company more often required them to work shifts of more than 24 hours, physicians said. Some said they were asked to take on more than 80 hours in a week. Several said that under USAP management, they felt like interchangeable “widgets” with less control over the practice than they previously had.
“It became very corporate, very impersonal — like the Walmart of anesthesia,” Manchon said, explaining why he left the firm. “It went from ‘patients first’ to ‘we want to make it bigger, we want to make it more profitable.
“Their doctors were overworked and paid below market rate for what they do,” Manchon said. “That’s why their doctors were leaving.”
Under the contracts many signed,physicians who left USAP to work elsewhere in Denver could be required to pay “damages” amounting to $200,000 or more, physicians said. The “damages” provision applied to physicians who took jobs within 15 miles of a facility that USAP served. The prior firm had a similar provision. Because USAP served more than 65 Colorado hospitals and surgery centers, according to its website, the clause meant that much of the region was off-limits to USAP anesthesiologists who wanted to switch jobs without having to pay “damages.”
Some anesthesiologists who left USAP said they ultimately found work out of state because they wanted to avoid legal complications from the noncompete clause.
“There were no consistent places to work in Denver — so my only choice was to go out of state,” said Bridget Bailey, who worked for USAP in Denver from 2015 to 2020.
“It was one of the biggest mistakes I ever made in my professional career,” said Chris Strouse, one of the Denver anesthesiologists who worked for the company for five years before suing to release himself from the USAP contract.
“We took a very forward-thinking group that was focused on quality and turned it into a private-equity-backed money machine that sends profits to the East Coast by making patients pay more for their insurance benefits. That’s what’s gross about the whole scenario.”
“Turnover at USAP climbed to 8 percent in 2020, 17 percent in 2021 and 11 percent in 2022, according to company figures. By comparison, the median rate of physician turnover nationally was 7 percent annually in 2020 and 2021, according to a survey by the Association for Advancing Physician and Provider Recruitment. A national figure for 2022 is not yet available. While the company had once employed 330 anesthesiologists in the state, according to its website, the figure has dropped to 275, the company said.
In interviews, 12 former USAP anesthesiologists cited an array of reasons for leaving.
For starters, their pay declined more than they expected, they said. The company more often required them to work shifts of more than 24 hours, physicians said. Some said they were asked to take on more than 80 hours in a week. Several said that under USAP management, they felt like interchangeable “widgets” with less control over the practice than they previously had.
“It became very corporate, very impersonal — like the Walmart of anesthesia,” Manchon said, explaining why he left the firm. “It went from ‘patients first’ to ‘we want to make it bigger, we want to make it more profitable.
“Their doctors were overworked and paid below market rate for what they do,” Manchon said. “That’s why their doctors were leaving.”
Under the contracts many signed,physicians who left USAP to work elsewhere in Denver could be required to pay “damages” amounting to $200,000 or more, physicians said. The “damages” provision applied to physicians who took jobs within 15 miles of a facility that USAP served. The prior firm had a similar provision. Because USAP served more than 65 Colorado hospitals and surgery centers, according to its website, the clause meant that much of the region was off-limits to USAP anesthesiologists who wanted to switch jobs without having to pay “damages.”
Some anesthesiologists who left USAP said they ultimately found work out of state because they wanted to avoid legal complications from the noncompete clause.
“There were no consistent places to work in Denver — so my only choice was to go out of state,” said Bridget Bailey, who worked for USAP in Denver from 2015 to 2020.
“It was one of the biggest mistakes I ever made in my professional career,” said Chris Strouse, one of the Denver anesthesiologists who worked for the company for five years before suing to release himself from the USAP contract.
“We took a very forward-thinking group that was focused on quality and turned it into a private-equity-backed money machine that sends profits to the East Coast by making patients pay more for their insurance benefits. That’s what’s gross about the whole scenario.”
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Wow, can you believe United was paying as much as $128.50 per unit?!
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11% in 2022 when they were actively preventing people from leaving and had a waitlist to leave
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Damn….all that for a $1mil buyout.
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I’m a United patient. According to my EOB, the state employed anesthesiologist who took care of me was reimbursed significantly more than that for her services. Of course she is a salaried Univ of CA employee so the state of California is making out like bandits with UHC.
Private equity ruining the country
Plunder: Private Equity's Plan to Pillage America
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Ruining the country and also running the country. Life is good.
Not all hospitals have a good payor mix. Some groups require high stipends from the hospital. In some areas, big insurance like United/BCBS/etc, were barely paying 50% of some of those “USAP rates” quoted in that article, to the PRIVATE groups.
Now, pretend you’re in a PRIVATE group. The hospital CEO is breathing down your neck, basically telling you that you will NOT be getting a contract renewal, unless you LOWER the stipend (which couldn’t be done with a crappy payor mix/low insurance company reimbursement), OR you will have to “PARTNER” with some AMC…
Do you “partner” with Northstar et al, and get NOTHING, or do you “partner” with USAP and get $1 million??
THOSE are your choices. Yes, a few groups truly DID “sell out” (so USAP could get their foot in the door, in certain markets), but many groups went with USAP because it was the “least worst” option, available (vs. drastically cutting staff/salaries or partnering with another AMC that offered NOTHING). Insurance companies completely blocked the small private groups from negotiating reasonable increases in rates, but were giving these huge AMC’s MASSIVE increases. The small groups, in many instances, simply COULD NOT compete.
Do you pick a crappy AMC job PLUS $1 million, or a crappy AMC job with NO extra money??
(Not arguing with you, simply pointing out that not ALL of these decisions were ONLY done to get a quick $1 million in hand). (And, no, I don’t work for them!)
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Physicians finally do something to somewhat start to level the playing field, and start to bring insurance payments up to the level they should be, had unit value kept up with inflation in the economy, and with other medical specialties, and then insurance companies have the gall to complain about possible monopoly powers. F them
USAP's actions toward physicians can't be condoned, but I kind of sit back and laugh at physicians who sold out to corporate interests, and now complain about working in a corporate environment. Going into the deal, everyone knows what it's going to be like working for a USAP, and they are one of the least egregious. If that isn't an environment you want to work in, then selling to them is nothing more than extending the time you have before you have to leave, and should be used to secure other work. Signing a post-termination non-compete is insane, if you know you don't want to work for USAP, and you know you want to remain in the area.
And while I'm at it, F the FTC for punting the non-compete decision to next year.
USAP's actions toward physicians can't be condoned, but I kind of sit back and laugh at physicians who sold out to corporate interests, and now complain about working in a corporate environment. Going into the deal, everyone knows what it's going to be like working for a USAP, and they are one of the least egregious. If that isn't an environment you want to work in, then selling to them is nothing more than extending the time you have before you have to leave, and should be used to secure other work. Signing a post-termination non-compete is insane, if you know you don't want to work for USAP, and you know you want to remain in the area.
And while I'm at it, F the FTC for punting the non-compete decision to next year.
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Of interest, a few years ago I tried to get the ASA to study noncompete usage in anesthesia. Their response was that it wasn’t an important issue and that ASA members wouldn’t care. So they refused to study this topic.
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Genuinely curious. Would dividends to "shareholders" not also mean the physician owners/those with equity got a share of that? According to article it's 45% physician stock ownership (thought it was a little bit higher than that).
I read that as $1.3B was paid out to equity/stock holders, which included a large number of physicians. Could be wrong.
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ASA doesn’t represent the best interest of anesthesiologists. It represents the best interest of employers of Anesthesiologists.
I strongly suspect that Eliminating non competes would be favored by a large majority of ASA members. However, employers of Anesthesiologists would disagree. Hence ASA’s waffling on the issue.
1 million cash buyout (normal for mainly all MD groups. If CRNA heavy supervision ratio ) buyout were close to 2 million.
But they were counting on Usap ipo in 2018 which never occurred and it was hard to sell the fake infernal Usap stock. That’s why Usap Ponzi scheme requires new grads to buy more fake Usap stock at even higher internal stock price If less new grads/new employees. The model fails. And all they (the original partners) left is to work more and for less (because 20% is always going back to welsh Carson) and find a way out but they have established family ties to the community so hard to leave the community
Usap will end up like mednax American anesthesiology division. Mednax took probably the best practices from 2007-2014. We all know they stopped growing by 2015 when Usap started expanding.
Usap has stopped expanding/lucrative buyout since 2019/2020. There are only a few pockets of true private practices left in many majors areas.
For compelling it has to be at least 2 million buyout for Md only practice with a 20% reduction in pay for 3 years.
Many of the Usap buyouts for Md only practices were less than 1 million. Some as little as 500k. Plus fake Usap stock.
I do not know of any Usap buyout in the past 2-3 years. People can correct me if I’m wrong. But Usap only area of expansion is taking over practices private groups have abandon. Or even another amc has abandoned.
Usap has stopped expanding/lucrative buyout since 2019/2020. There are only a few pockets of true private practices left in many majors areas.
For compelling it has to be at least 2 million buyout for Md only practice with a 20% reduction in pay for 3 years.
Many of the Usap buyouts for Md only practices were less than 1 million. Some as little as 500k. Plus fake Usap stock.
I do not know of any Usap buyout in the past 2-3 years. People can correct me if I’m wrong. But Usap only area of expansion is taking over practices private groups have abandon. Or even another amc has abandoned.
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Right, but it says USAP grew by buying the most successful practices in a region. They weren’t buying the small, podunk practices that were drowning in Medicare patients. Those practices weren’t being bought by private equity and if they were, they weren’t getting huge buyouts either. Those crummy payer mix practices tend to get absorbed into the hospital.
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Can you explain the “fake stock” thing? How does that work?
They gave (or in some cases, required folks to buy) “stock”. Technically, that made you a partial owner of the company. Problem is/was, the stock was not publicly traded, so the only way to get rid of it was to sell it to another member/“partner”. Any value it had was based on fellow partners thinking it was going up in value, and actually being able to find one of them to take it off your hands. This was all done internally, there was NO public market for it. They have apparently been limiting sales of the stock, now that the company is not doing as well.
It was usually $100k-$250k in “stock” given as part of the buyout to each partner (and additions to the group after the buyout had to BUY this amount of stock as a “buy-in”).
This info comes from me as an outsider. An “insider” can tell you more, or correct any inaccuracies.
Yes, we listened to the USAP “pitch”. It started with a relatively decent offer, and by the time they were done, the offer was basically stock plus enough money to cover the taxes on the stock (at the value THEY assigned to it).
We were under pressure by the hospital (they tried to push an AMC on us, which we refused). We then talked to USAP, and after watching how bad the offer got so quickly, plus the possibility of being under a “clinical governance board” with the group next door (that has NEVER gotten along, is bigger than us, and has always had staffing issues-which we figured they would make OUR staffing issues) we backed away quickly.
I won’t give anything more detailed than that, but I think you get the idea.
We luckily found an IPN “integrated provider network”, which upped our reimbursement in a major way, by piggybacking on their rates, and allowed us to basically remain a private group.
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Ya I should have specified the ones who got screwed were post-buyout
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Lmao pyramid scheme-ing. The bitcoin of medicine baby.
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Have people been able to sell USAP stock recently when they leave or retire? Who buys it? Besides new USAP partners, is there a market for the stock? Any other investors?
And do the sellers make money, lose money, or break even?
And do the sellers make money, lose money, or break even?
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No one to buy it except the next conned new “partner”
I remember a USAP guy bragged on this forum he’d rather buy USAP stock than AAPL and he was happy to get more shares 😑
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I remember that. Just wondering if anyone has personal or 2nd hand experience and are able to provide insight.
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Can any of the current USAP partners/members weigh in on this article?
We have done quite well recruiting, lately (haven’t been losing people, just older folks going part-time, and thus, opening up space for new ones).
If we’d have done USAP, our salaries would be locked in so low (especially when you add in inflation over the last 2 years), that we would have had a heckuva time getting new folks, not to mention that being a “private group” makes the job so much more appealing than working for an AMC/Private Equity…..
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We have known about the article for months. The former partners cited authored the very non-competes when they were on the board in the original Denver practices that they now complain about as they work for direct competitors in the same geographic region.
WaPo finally releasing the article on a Friday leading into a holiday weekend as it got buried by three Supreme Court decisions tells you all you need to know about how compelling they believe the material to be.
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Regardless of how bitter the former partners are, it appears to be factually correct, does it not? Did rates charged to patients and insurers increase? It would seem so.
I would have a hard time believing these former partners knew that USAP would be grabbing every practice in Denver to basically make the entire city a non-compete area.
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They were on the boards of the original practices and USAP platform, so yes they were acutely aware and actively participated in just that
The non compete radius is subject to interpretation in many states. It’s ridiculous not to be affiliated with x hospital USAP covers 20 miles away and Usap claims it’s within the Usap non compete
Now if the contract says non compete with every affiliated Usap facility even ones not credentialed with. I would never sign it. It’s a no go.
Only non compete I signed was hospital far away from my home. No no biggie if I leave. But I also have text message saved from super head chief saying I can work next door if I want at surgery center. They don’t enforce non competes where I’ve worked.
I know in Florida a practice non compete radius for stricken down on lawsuit. The judge ruled it too large covering large county and was “unreasonable”
Notice the FTC has been quiet on the non compete rulings lately. The hospitals that employ docs are exerting their lobbyist money to try to keep non compete in place to keep salary low for docs.
Usap, not unlike many other national conglomerates (eg northstar, etc), have the same MO: promise the moon and the sun, jack up rates to astronomical figures, all the while leaving a bad taste in everyone’s mouth (the public, politicians, patients, honest PP groups, those (potentially) suckered into joining the chain group, etc etc etc).
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So what's the story with the stock?
Has anyone ever been able to sell it, or is it as worthless as it appears?
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It’s a share of equity in a privately held company. The valuation is performed annually by an objective third party.
Shareholders have received dividends previously and there have been opportunities to buy and sell shares.
You can’t freely trade it like you can companies listed on public exchanges… like, say, Envision or Mednax.
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Thanks.
The phrase "there have been opportunities to buy and sell" seems like a careful way of saying "you can't sell it now and you may not ever be able to."
Sorry to harp on this, but if a current shareholder wanted to sell, would they be able to right now? Would they likely be able to in the next year?
I'm merely an idly interested outside party. But it sure looks like a terrible investment, and the fact that new "partners" are forced to buy a bunch of it seems terrible to me. The defenses offered of the stock by USAP physicians on this forum are consistently weak, and carefully phrased. It honestly seems so terrible, that if I was looking for a job, I'd rule out USAP for that reason alone.
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Also, do the dividends happen with regularity? say, every year or every quarter? Or is it whenever they feel like it?
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You couldn’t necessarily unload your shares at will, but I submit that you could say the same for most private practices where equity is involved.
While I can’t speak for every USAP platform, as they operate independently of each other, I would also submit that we are more transparent about our partnership and the path to get there than many, if not most, private practices. It’s fair to be skeptical about USAP. But we also realize that we are held accountable to far more people and entities than the mom and pop practices and true corporate employment model practices, so we have to act accordingly. Each platform operates largely according to their legacy practice so YMMV
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When a new partner joins, are they getting diluted shares? Or someone within the group is selling (cashing out)?
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In private practice you unload your share when you retire. The stock itself is only worth about as much as the paper it is printed on.
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The float is defined, but a new partner’s shares are not predicated on another partner in one of numerous platforms across multiple states selling his or her shares
Usap partnership is still Probably the best money maker for the individual. Like the poster said. It varies from each legacy practice and all operate independently within the larger usap umbrella.
But it’s highly dependent on shifting money from employees and partner ship track people to the partners. The goal is to abuse the partnership track people as much as possible till they make it to partner. The more the partnership track people work. The bigger the pot to share with the partners.
It’s this cat and mouse game. It works for some. It doesn’t work for others. I’ve known people leave Usap after 1-2 years. Others become new partners I’ve know the original sell out partners to form Usap. The only truly happy people are the original sellout partners who barely work these days on the golf course almost all weekends and rarely take calls. And work closer to 50% of the time. They got their bag. They are close to done.
But it’s highly dependent on shifting money from employees and partner ship track people to the partners. The goal is to abuse the partnership track people as much as possible till they make it to partner. The more the partnership track people work. The bigger the pot to share with the partners.
It’s this cat and mouse game. It works for some. It doesn’t work for others. I’ve known people leave Usap after 1-2 years. Others become new partners I’ve know the original sell out partners to form Usap. The only truly happy people are the original sellout partners who barely work these days on the golf course almost all weekends and rarely take calls. And work closer to 50% of the time. They got their bag. They are close to done.
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In Houston the partner track docs work the same schedule (daily and call) as the partners
They can cut back and take less money. (The partners) I mean.
I’ve never heard any practice where EVERYONE including partners work the exact same schedule and calls divided equally among all the hospitals and surgery centers they cover. Never unless it’s a super small practice.
I call BS on that. People eventually age out (whether it’s age 50 or 60) or they shift to easier hospitals with less acuity/beeper calls. And leave the more acuity hospital to the younger docs.
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There are options to decrease work schedule, but we have senior partners working just as hard as junior partners and partner track docs. No BS.
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No definitive timeline on making partner though right?
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Eligible to go on partner track after one year of working call schedule (1 per week) then partner track begins January 1 each year. The track lasts 2 years from that point. So there is no definitive guarantee, but there is a timeline that is transparent for all involved.
Keep in mind this is for Houston. Each platform has their own path to partnership.
Look. I understand every practice is different. Every partnership track is different even within the same metro area.
But why would anyone get involved in a track with no guarantees these days giving up 30-40-% of their billing rights for 3 plus years.
Partners eventually age out. They do. And partners give up calls a lot. That’s why I said I don’t believe equal calls scheduled. Partners actually prefer employees or partnership track employees take their calls for extra money because it’s an uneven trade. And the employees are dumb even to do it. Because a partner call earned doesn’t go into the pot with most Usap practices. The employees call earn percentage goes into the pot for the partners to split. But partners will always find someone to work cause everyone does need some extra money.
Just the cycle of life.
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'eligible' meaning it could be one year, or three years before you are even on the partner track, correct?
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Potentially, yes. But our stated goal is to make partners. We do have partners slowing down and retiring, and we have significant growth that requires new partners for the health of the practice. We also have a stated goal that, absent significant issues, those who go on the partner track become partners according to the track schedule. We don’t drag people along with the dangling carrot or cut bait just before their anticipated partnership… which does happen in private practices.
