Warren, Blumenthal Call on Private Equity-Backed U.S. Anesthesia Partners to Answer for its Anticompetitive Tactics and Impacts on Prices, Patients, and Providers
“USAP is emblematic of the long-standing problems associated with private equity’s involvement in our health care system. … USAP has used anticompetitive practices to build up monopoly power, which it has leveraged to decrease quality of care, increase costs for patients, and reduce physician autonomy."
Washington, D.C. — U.S. Senators Elizabeth Warren (D-Mass.) and Richard Blumenthal (D-Conn.) sent a letter to Robert Coward, Chief Executive Officer of U.S. Anesthesia Partners (USAP), investigating USAP’s monopolistic business model and use of restrictive non-compete agreements that have reduced patients’ quality of care, increased prices, and suppressed workers’ wages. The letter follows a June 2023 Washington Post investigative report that detailed the excessive power wielded by USAP and its multibillion-dollar private-equity (PE) parent company, Welsh, Carson, Anderson & Stowe, and the Federal Trade Commission’s (FTC) recent suit against USAP for suppressing competition and driving up prices in Texas.
Since 2012, USAP has “built a staff of more than 4,500 clinicians and spread to nine states,” using the same playbook in cities across the U.S. and providing a blueprint for further consolidation. Starting in 2015, USAP bought up the largest anesthesiology groups in the Denver area and quickly became Colorado’s largest anesthesiology practice. Following this aggressive “roll-up” strategy, USAP began raising costs on patients and the payers, at times charging 70 percent more than competitors. USAP also used non-compete agreements to keep providers locked in and prevent them from practicing elsewhere. Under the terms of their non-compete agreements, physicians who attempted to leave USAP and work elsewhere in the area could have been required to pay “damages” amounting to more than $200,000.
“We have frequently raised the alarm about the deleterious impact of PE on patient care. PE’s involvement in health care markets has exacerbated problems like surprise medical billing, inadequate training, and a lack of oversight and due process,” wrote the Senators. “One study found that ‘patient costs rose by 26% after anesthesiology practices were taken over by PE firms,’ and PE-backed anesthesiology groups have faced allegations of short-staffing that put patients at risk.”
On July 9, 2021, President Biden issued the Executive Order on Promoting Competition in the American Economy, directing his Administration to “combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony . . . in healthcare markets,” and specifically encouraged the FTC and Department of Justice (DOJ) to review existing merger guidelines.
Proposed updated guidelines from the FTC and DOJ would vigorously enforce antitrust laws and clarify that the agencies may examine “the whole series” of mergers by a company to determine the cumulative effect of multiple transactions that are part of an overall pattern or strategy, providing insight into future potential enforcement against USAP’s anticompetitive serial roll-ups or attempts to gain market power. And in September of this year, the FTC filed a suit in federal court against USAP and its parent company Welsh, Carson, Anderson & Stowe for orchestrating, from its Park Avenue offices in Midtown Manhattan, a “multi-year anticompetitive scheme to consolidate anesthesiology practices in Texas” and “drive up the price of anesthesia services” for patients.
“We have long argued against the use of restrictive non-compete agreements, and supported efforts by the FTC to prohibit their use. Non-compete clauses in the health care industry reduce patient access to care, increase health care costs, limit a physician’s ability to negotiate, stifle competition, contribute to labor shortages, and limit the ability of workers to speak out about unfair or dangerous practices,” the Senators continued. “USAP’s use of these clauses, as the company rolled up more and more anesthesiology practices in the area, appears to have caused damage to patients and physicians, while helping the company amass greater market power and continue raising prices.”
Senators Warren and Blumenthal have requested that USAP respond to a set of questions concerning USAP’s troubling use of monopoly power to drive up prices for patients and insurers and its treatment of its physicians no later than December 11, 2023.
Senator Warren has led the fight against non-compete agreements and the influence of private equity in the health care industry:
- On November 16, 2023, Senators Warren, Bernie Sanders (I-Vt.), and Richard Blumenthal released a new report: Residents at Risk: Quality of Care Problems in Understaffed Nursing Homes and the Need for a New Federal Nursing Home Staffing Standard, revealing that, across a broad range of health outcomes, nursing homes with higher staffing levels that meet the requirements in the Centers for Medicare and Medicaid Services’ (CMS) proposed rule provide higher quality care than homes with lower staffing levels.
- In May 2023, Senator Warren called out corporate owners of nursing homes, including private equity firms and Real Estate Investment Trusts (REITs), for their failures to protect patient safety and use of complex legal arrangements to avoid regulatory scrutiny.
- In April 2023, Senators Warren and Richard Blumenthal and Representatives Pramila Jayapal (D-Wash.), Annie Kuster (D-N.H.), Ilhan Omar (D-Minn.), and Don Beyer (D-Va.) led over 60 of their colleagues in a letter to FTC Chair Lina Khan, urging the agency to move forward with their proposed rule banning non-compete agreements to give approximately 30 million Americans the opportunity to change jobs and create new businesses.
- In May 2022, Senator Warren and lawmakers sent a letter to private equity giant KKR regarding the grossly substandard care and unsafe living conditions in group homes it owned for people with intellectual and developmental disabilities.
- In February 2022, testifying before the Senate Budget Committee, Senator Warren called out private equity firms’ predatory practices of buying up distressed companies; stripping workers of benefits, fair pay, and safe working conditions, and reaping billions in profits. She noted that research shows that private equity ownership of nursing homes led to a 10% jump in short-term mortality rates.
- In October 2021, Senator Warren and lawmakers reintroduced the Stop Wall Street Looting Act, a comprehensive bill to fundamentally reform the private equity industry and level the playing field by forcing private investment firms to take responsibility for the outcomes of companies they take over, empowering workers, and protecting investors.
- In October 2021, chairing a hearing of the Senate Banking, Housing, and Urban Affairs Subcommittee on Economic Policy, Senator Warren spoke about the need to protect companies and communities from destructive private equity practices as the industry’s growth continues to explode.
- In August 2021, Senator Warren and lawmakers launched an investigation into private equity ownership of for-profit hospice companies and subsequent reductions in the quality of care.
- In November 2019, Senators Warren and Sherrod Brown (D-Ohio), and Representative Mark Pocan (D-Wisc.) wrote to four private equity firms that invested in companies providing nursing home care and other long-term care services, citing reports that show private equity investment has played a role in the declining quality of care in nursing homes and requesting information about each firms' management of this sector.
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