USAP FTC Lawsuit

[ucladoc2b]

FTC Sues Large Private-Equity-Backed Anesthesia Provider

The lawsuit against U.S. Anesthesia Partners is one of the first challenges of a private-equity strategy known as a roll-up.

www.wsj.com

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[Arantius]

Whoa. Lawyers what does this mean

 

[gasdoc77]

 

[ambiturner]

Are they going to sue Pitt, Northwestern, Mt Sinai, etc and all the other giant healthcare machines that have swallowed up private physician groups? If not, I don’t see this reversing any trends or decreasing Americans’ healthcare expenditures.

 

[anbuitachi]

Are they going to sue Pitt, Northwestern, Mt Sinai, etc and all the other giant healthcare machines that have swallowed up private physician groups? If not, I don’t see this reversing any trends or decreasing Americans’ healthcare expenditures.

I don't know about other areas but in NYC , mt Sinai isn't even close to a monopoly. There are so many anesthesia practices here

 

[anbuitachi]

FTC Sues Large Private-Equity-Backed Anesthesia Provider

The lawsuit against U.S. Anesthesia Partners is one of the first challenges of a private-equity strategy known as a roll-up.

www.wsj.com

U guys all have wsj subscriptions??? Can't read but I can probably imagine the content

 

[GassYous]

Retaliation for going against united

 

[Burned_Out]

View attachment 377018

That USAP stock was already worthless before this FTC lawsuit. They were redeeming stock only at their discretion.

 

[Arch Guillotti]

That USAP stock was already worthless before this FTC lawsuit. They were redeeming stock only at their discretion.

Yeah but they are partners in the place and hold "equity".

 

[DirtDocMD]

FTC Challenges Private Equity Firm’s Scheme to Suppress Competition in Anesthesiology Practices Across Texas

The Federal Trade Commission today sued U.S. Anesthesia Partners, Inc.

www.ftc.gov

 

[DirtDocMD]

Whoa. Lawyers what does this mean

That means the Docs will be sharing dividends with the legal team, for the foreseeable future….

 

[DirtDocMD]

Any idea about the “large anesthesia provider” that USAP had an agreement with, to “stay out of our territory”???

 

[linkin06]

WASHINGTON—The Biden administration’s antitrust cops sued one of the country’s biggest anesthesiology providers on Thursday, launching a novel assault on Wall Street ownership of healthcare companies.

The Federal Trade Commission’s lawsuit against U.S. Anesthesia Partners is one of the first challenges of a private-equity strategy known as a roll-up, in which smaller companies in the same industry are bought up and combined to create a more powerful competitor.

​

USAP and Welsh Carson also violated antitrust laws by fixing prices with remaining independent anesthesiologists and reaching a deal to keep a competitor out of USAP’s turf, the FTC said. The Wall Street Journal reported exclusively in October that the FTC was investigating USAP.
The Biden administration has ramped up enforcement of antitrust law, challenging mergers at a higher clip and suing
Alphabet
-owned Google to break up its dominant ad-tech business. Healthcare has been a focus, with the administration directing regulators to challenge consolidation in hospitals and health insurers.

“Private-equity firm Welsh Carson spearheaded a roll-up strategy and created USAP to buy out nearly every large anesthesiology practice in Texas,” FTC Chair Lina Khan said. “Along with a set of unlawful agreements to set prices and allocate markets, these tactics enabled USAP and Welsh Carson to raise prices for anesthesia services—raking in tens of millions of extra dollars for these executives at the expense of Texas patients and businesses.”
Rollups are often used in fragmented markets that have many different, and smaller, competitors. Buying up and combining companies can yield a larger one that earns more revenue and realizes cost savings by consolidating duplicative functions and achieving greater leverage with suppliers.
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The FTC filed its lawsuit against USAP and Welsh Carson in Houston federal court.
USAP said in a statement that it would fight the FTC lawsuit and that its rates are reasonable and in line with industry practice. “The FTC’s civil complaint is based on flawed legal theories and a lack of medical understanding about anesthesia, our patient-oriented business model, and our level of care for patients in Texas,” said Derek Schoppa, a USAP board member.
A Welsh Carson representative said the firm was disappointed that the FTC decided to file the lawsuit, which ignores that USAP’s rates haven’t exceeded medical-cost inflation. “The FTC’s decision to pursue a civil action against a minority investor of a physician-owned company is unprecedented and disregards well-settled principles of law,” the representative said.

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Founded in 2012, USAP has grown by acquiring smaller anesthesiology groups and rolling them up into a consolidated entity that manages hospital contracts, billing, insurance agreements and other functions. Welsh Carson, which created the company by acquiring a large Houston practice, today owns about 23% of USAP, whose other investors include Boston private-equity investor Berkshire Partners and Singapore sovereign-wealth fund GIC.
Private-equity firms have acquired specialty healthcare providers and smaller groups that can be combined to form larger networks that have more leverage with hospitals and insurers. The anesthesiology industry’s profit margin was estimated at 12.5% in 2021, down from 14% before the pandemic, which reduced elective surgeries, according to market-research provider IBISWorld.
The FTC said USAP and Welsh Carson merged over a dozen anesthesiology practices with an eye toward eliminating competition and being able to raise prices. USAP was by far the biggest provider of anesthesia services in Houston and Dallas and charged double the median rate in Texas, according to the FTC’s lawsuit.
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Following one acquisition that would allow USAP to bill higher rates, one executive characterized the outcome as “Awesome! Cha-ching!” according to the FTC’s court complaint.
Welsh Carson has installed members of USAP’s board of directors and hired most of its original management team, the FTC said. The private-equity firm was involved in strategic decisions that led USAP to consolidate local market share and violate antitrust laws, the FTC alleged.
The FTC’s lawsuit accused Welsh Carson of employing a similar strategy to consolidate other healthcare markets such as emergency medicine and radiology. The agency’s lawsuit seeks structural remedies, such as selling off prior acquisitions.
Antitrust enforcers could in the future challenge more roll up transactions. The FTC and the Justice Department, which share antitrust authority, in July issued new merger guidelines that say private-equity firms needing approval for buyouts must disclose details on their past mergers going back a decade. The data would give the enforcers a better view into roll-up strategies.

 

[kidthor]

I do think the government should crack down on PE acquisitions in healthcare, but I'm wary of USAP as a the sole target. The insurance companies vertically integrating with PBMs and pharmacies seems like an even worse sin to me, yet they screw over patients without any repercussions.

It's also troubled by the news articles that just mention USAP in their headlines without also mentioning the PE overload, Welsh Carson (who is also being sued).

IMO they should be simultaneously going after all private equity acquisitions that seek to monopolize, pump and dump, and/or surprise bill / drive patients into medical bankruptcy - not just USAP/WC. That, and they need to go after the insurance companies.

One thing that we could do is have ASA issue a statement opposing corporate practice of medicine an PE managed practices (ACEP actually recently issued such a statement). But sadly ASA is in bed with them.

And, this lawsuit will quickly become a "blame anesthesia" situation.

 

[linkin06]

I doubt the uASAp is going to do anything to their big corporate donor. They’re busy being irrelevant and playing nice with nurse anesthetists.

 

[Shimmy8]

Yea but they won't do **** to United and BCBS who are gouging us.

I fail to understand how "price-fixing" can go on in anesthesia when everything is negotiated with hospitals and insurance companies?

 

[nimbus]

As others have said, I’m waiting for the FTC to start going after Mayo, Cleveland Clinic, United Healthcare, Aetna, Northwell, etc etc etc. These entities literally invented roll ups. Kaiser did it their own more integrated way.

USAP came into existence because small anesthesia groups were trying to survive in a world of giants.

 

[GravelRider]

I’m interested to find out more about:

• Forming a market allocation arrangement:USAP and Welsh Carson secured a promise from another large anesthesia services provider to stay out of USAP’s territory.

I know there are a lot of other offenders, but when you have limited resources, you go after the easier targets. It’ll be interesting to see how this all plays out.

 

[nimbus]

Any idea about the “large anesthesia provider” that USAP had an agreement with, to “stay out of our territory”???

Unfortunately their identity is redacted in this document.


Price setting/billing deals with competitors starts on page 52. Market allocation agreement starts on page 59 but is largely redacted.

https://www.ftc.gov/system/files/ftc_gov/pdf/2010031usapcomplaintpublic.pdf

 

[BLADEMDA]

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

The FTC asked a federal judge in Houston, Texas, to break up U.S. Anesthesia Partners’ alleged monopoly power and permanently bar the company from engaging in anti-competitive practices.

 

[HemeOncHopeful19]

As others have said, I’m waiting for the FTC to start going after Mayo, Cleveland Clinic, United Healthcare, Aetna, Northwell, etc etc etc. These entities literally invented roll ups. Kaiser did it their own more integrated way.

USAP came into existence because small anesthesia groups were trying to survive in a world of giants.

Isn’t the FTC chair married to an Academic Cardiologist?

I don’t see them going after Mayo/CCF anytime soon but maybe I’m misremembering

 

[abolt18]

Isn’t the FTC chair married to an Academic Cardiologist?

I don’t see them going after Mayo/CCF anytime soon but maybe I’m misremembering

I'd imagine some FTC higher-ups have very good relationships with a handful of insurance higher-ups...

 

[DoctwoB]

I'm also all for breaking up PE backed CMGs, but agree it seems odd to focus on physician group and leave regional healthcare system monopolies alone.

It's probably for PR reasons. If you go after Mayo you'll get all these stories about how Mayo saved patients lives and the feds are socializing healthcare. Don't think anyone will shed a tear for PE backed CMGs

 

[ucladoc2b]

I'm also all for breaking up PE backed CMGs, but agree it seems odd to focus on physician group and leave regional healthcare system monopolies alone.

It's probably for PR reasons. If you go after Mayo you'll get all these stories about how Mayo saved patients lives and the feds are socializing healthcare. Don't think anyone will shed a tear for PE backed CMGs

It’s all political. Those health systems are often the major employers in a region. While they are for sure engaging in the same economic tactics, they are a more difficult target.

 

[DirtDocMD]

Yea but they won't do **** to United and BCBS who are gouging us.

I fail to understand how "price-fixing" can go on in anesthesia when everything is negotiated with hospitals and insurance companies?

A case could certainly be made that the 3-4 BIG insurance companies essentially CREATED this monster, by often refusing to negotiate with small private groups. They wouldn’t budge on their pay, if you were a small group. Meanwhile, they were more than happy to give 50-100% more to USAP and their ilk, for the same work at the same hospital in the same city (well, they were happy to do it until they forced most of the small private groups out of business, then they went screaming to the Govt about the large AMC’s that resulted from it).

 

[linkin06]

United health care is the 12th largest company in the world by market cap. Something is very wrong with the system.

 

[Arch Guillotti]

A case could certainly be made that the 3-4 BIG insurance companies essentially CREATED this monster, by often refusing to negotiate with small private groups. They wouldn’t budge on their pay, if you were a small group. Meanwhile, they were more than happy to give 50-100% more to USAP and their ilk, for the same work at the same hospital in the same city (well, they were happy to do it until they forced most of the small private groups out of business, then they went screaming to the Govt about the large AMC’s that resulted from it).

Exactly!

 

[Arantius]

So I read the actual document today during a plastics flap case... there's nothing about non- competes in the FTC's "prayer" for relief. So does that mean this doesn't affect non-competes? Or do we think the FTC didn't include it because there's a separate process over non-competes?

 

[kidthor]

So I read the actual document today during a plastics flap case... there's nothing about non- competes in the FTC's "prayer" for relief. So does that mean this doesn't affect non-competes? Or do we think the FTC didn't include it because there's a separate process over non-competes?

This case has nothing to do with their proposed rule on noncompetes.

 

[aneftp]

Are they going to sue Pitt, Northwestern, Mt Sinai, etc and all the other giant healthcare machines that have swallowed up private physician groups? If not, I don’t see this reversing any trends or decreasing Americans’ healthcare expenditures.

Correct. FTC needs to go after big hospital systems. And the outrageous prices they charge.

But I think insurance carriers feel like it’s easier to pickup on Usap

 

[BLADEMDA]

A case could certainly be made that the 3-4 BIG insurance companies essentially CREATED this monster, by often refusing to negotiate with small private groups. They wouldn’t budge on their pay, if you were a small group. Meanwhile, they were more than happy to give 50-100% more to USAP and their ilk, for the same work at the same hospital in the same city (well, they were happy to do it until they forced most of the small private groups out of business, then they went screaming to the Govt about the large AMC’s that resulted from it).

Which is why many small groups across the USA no longer exist today. Even if the partners didn't want to sell out to AMCs the playing field wasn't level. Insurance companies paid AMCS 50% more than small groups forcing them to either merge, sell out or go out of business. With today's costs being the highest ever in terms of salaries/benefits, the pressure on independent groups has never been greater. Hospitals need to provide stipends to the vast majority of anesthesiology departments.

The FTC is acting as an agent of the insurance companies because the "break-up" of USAP will force the newly created groups to once again be paid less by insurance companies forcing hospitals to increase stipends. These small groups will need to band together to create 3 (?) new mega groups sort of like the break-up of Bell South.

I am no fan of USAP but the root cause of this problem isn't going away.

 

[triggermaster]

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

The FTC asked a federal judge in Houston, Texas, to break up U.S. Anesthesia Partners’ alleged monopoly power and permanently bar the company from engaging in anti-competitive practices.

A case could certainly be made that the 3-4 BIG insurance companies essentially CREATED this monster, by often refusing to negotiate with small private groups. They wouldn’t budge on their pay, if you were a small group. Meanwhile, they were more than happy to give 50-100% more to USAP and their ilk, for the same work at the same hospital in the same city (well, they were happy to do it until they forced most of the small private groups out of business, then they went screaming to the Govt about the large AMC’s that resulted from it).

Bribery is too expensive for small groups.

 

[GassYous]

With the no surprises act, insurance companies are unilaterally decreasing reimbursement without even pretending to negotiate. Medicare is constantly decreasing reimbursements in the name of balanced budgets while they allow for pharmaceuticals to charge unreasonable amounts of money without pretending to negotiate. Smaller groups do not have the resources to take the insurance companies to court and litigate successfully. Consolidation is the only way to maintain a spot at the table. Otherwise your group has no future as an independent entity, you're either hospital employed, bought out or getting an increasingly smaller section of the pie as an independent contractor. The locums game will only last for so long

 

[Shimmy8]

Honestly these are awful times for this field. Make money while you can. Locums looking better and better.

 

[aneftp]

I doubt the ftc can succeed. Like any monopoly. They would have to prove Usap owns 80-90% of anesthesia share in each community.

It’s a very dangerous game as hospitals based systems account for a fairly large number of w2 specialists in many fields.

 

[HemeOncHopeful19]

I doubt the ftc can succeed. Like any monopoly. They would have to prove Usap owns 80-90% of anesthesia share in each community.

It’s a very dangerous game as hospitals based systems account for a fairly large number of w2 specialists in many fields.

It’s particularly funny when the FTC steps in to fight for United Healthcare when United is the single largest employer of physicians in the entire country 🤔🤔

 

[GravelRider]

I doubt the ftc can succeed. Like any monopoly. They would have to prove Usap owns 80-90% of anesthesia share in each community.

It’s a very dangerous game as hospitals based systems account for a fairly large number of w2 specialists in many fields.

I don’t get the impression that the FTC is suing because USAP is a monopoly. I think they are suing because of the anti-competitive tactics they were using for expansion. USAP is almost definitely not a monopoly, but their tactics for expansion probably were anti-competitive and illegal.

 

[Ezekiel2517]

Even if not successful, stuff like this can have an effect as a deterrent when it comes to future transactions. No one wants to attract or go thru one of these investigations.

 

[Deanmonster]

I doubt the ftc can succeed. Like any monopoly. They would have to prove Usap owns 80-90% of anesthesia share in each community.

It’s a very dangerous game as hospitals based systems account for a fairly large number of w2 specialists in many fields.

All they have to prove is 80% anesthesia in any community and anti-competitive behavior. This will be easy for them. The question is, what is the FTC goal here? Do they want to break-up the AMCs, starting with USAP, or is this just racketeering and going for a big fine?

 

[deleted1162863]

Are they going to sue Pitt, Northwestern, Mt Sinai, etc and all the other giant healthcare machines that have swallowed up private physician groups? If not, I don’t see this reversing any trends or decreasing Americans’ healthcare expenditures.

No they're not, because they're more interested in going after corporations.

 

[deleted1162863]

I doubt the ftc can succeed. Like any monopoly. They would have to prove Usap owns 80-90% of anesthesia share in each community.

It’s a very dangerous game as hospitals based systems account for a fairly large number of w2 specialists in many fields.

The government doesn't lose a lot, but you may be right. Possibly there will be some sort of settlement agreed upon.

 

[Dr. Rude]

The government doesn't lose a lot, but you may be right. Possibly there will be some sort of settlement agreed upon.

Most likely divest some sites in communities that they have too large a market share.

 

[aneftp]

I don’t get the impression that the FTC is suing because USAP is a monopoly. I think they are suing because of the anti-competitive tactics they were using for expansion. USAP is almost definitely not a monopoly, but their tactics for expansion probably were anti-competitive and illegal.

It’s dangerous in that in many communities like mine where there are literally 2 major hospital systems that control 80% of the area. And it’s not a small place I live in. And those two hospitals have played hard ball with united healthcare also in that commercials have been aired to the local communities why the hospitals aren’t covering united healthcare in network.

So there is no difference when united healthcare has issues with Usap vs big hospital systems.

My best guess is someone (within the insurance lobbbying community) is close to someone within the ftc to bring this lawsuit. That’s how lobbying works.

The same with the non compete laws the ftc tried to eliminate hospitals desperately trying to keep. Hospitals argued they need to keep their anti competitive behavior lol. That’s the irony of all this.

 

[mmag]

Another article that includes EM as well. Heads They ‘Cha-Ching!’; Tails They Take Away Your Malpractice Insurance

Would be cool if the ASA had Lina Khan speak at the annual meeting.

 

[GravelRider]

Another article that includes EM as well. Heads They ‘Cha-Ching!’; Tails They Take Away Your Malpractice Insurance

Would be cool if the ASA had Lina Khan speak at the annual meeting.

ANESTHESIOLOGY the ASA Annual Meeting

Explore in-depth content across 12 clinical tracks, including 32 hands-on workshops, 400 eAbstracts, and hundreds of sessions on the big issues facing us today.

www.asahq.org

Scroll to the bottom and look at the ASA meeting sponsors. I wonder if USAP would pull their sponsorship if the chairperson of the FTC spoke at the ASA.

EM has been battered into submission, so the ACEP’s sudden interest in ridding themselves of private equity is purely reactionary. Although, I do commend them for it even if it is a little too late. Hopefully enough people can get the ASA to wake up, though I wouldn’t count on it.

 

[amyl]

I believe that Lina khans desire is to see USAP broken up into smaller groups.
With the no surprises act in place I’m not sure how anyone can leverage their position into better rates. This is 100% motivated by insurance companies. Doctors, even those with PE resources behind them, cannot compete with the lobby dollars if the big insurance carriers.
Lina khan has filed a bunch of these lawsuits and she looses most of the time… it’s done for the press.

Pretty much everyone is trying to destroy our profession.

Zero politicians are willing to take on the insurance companies…. Until we find some that are anesthesia as we know it is being destroyed

 

[GassYous]

ANESTHESIOLOGY the ASA Annual Meeting

Explore in-depth content across 12 clinical tracks, including 32 hands-on workshops, 400 eAbstracts, and hundreds of sessions on the big issues facing us today.

www.asahq.org

Scroll to the bottom and look at the ASA meeting sponsors. I wonder if USAP would pull their sponsorship if the chairperson of the FTC spoke at the ASA.

EM has been battered into submission, so the ACEP’s sudden interest in ridding themselves of private equity is purely reactionary. Although, I do commend them for it even if it is a little too late. Hopefully enough people can get the ASA to wake up, though I wouldn’t count on it.

The only reason why acep is reacting to private equity after feeding at their trough for years is that they are finally noticing the drop in membership and dues paid. But they were more than happy to close their eyes to the takeover and collapse of their field as long as the checks kept rolling in

 

[kidthor]

The only reason why acep is reacting to private equity after feeding at their trough for years is that they are finally noticing the drop in membership and dues paid. But they were more than happy to close their eyes to the takeover and collapse of their field as long as the checks kept rolling in

Absolutely. In fact they had a whole faction of people leave ACEP and create AAEM, which has a direct focus on opposing corporate medicine and midlevel nonsense. Maybe we need an AAEM equivalent…

 

[dchz]

Lina khan has filed a bunch of these lawsuits and she LOSES most of the time… it’s done for the press.

Really felt like the lawsuit had no bite, all bark.

Why haven't they filed the same lawsuit vs united healthcare?

 

[amyl]

Payor lobby >>>>>>>> USAP lobby