The Hazards of Private Equity
Summary: Dr. Glaucomflecken efficiently & amusingly skewers private equity. Plus a technical report …
How to Ace Your Private Equity Interview
(2-minute YouTube video)
Dr. Glaucomflecken
“rapid maximal extraction of wealth by any means necessary”
Comment by: Jim Kahn
Dr. Glaucomflecken, in his usual concise, elegant, and entertaining style, precisely captures how private equity ownership of provider practices threatens physician autonomy, evidence-based medicine, and patient welfare.
For those craving a more technical read today on the rapid expansion of private equity, market distortions, and higher costs, see a detailed report here.
Editor's Note -
Here are two links to the You-Tube video and research report cited in the preceding newsletter:
https://www.antitrustinstitute.org/wp-content/uploads/2023/07/AAI-UCB-EG_Private-Equity-I-Physician-Practice-Report_FINAL.pdf
https://www.youtube.com/watch?v=a7-6zfg1PS4
Health care for thousands of Mainers at risk as deadline looms in insurance fight
On the eve of their deadline for a new contract, a Catholic health care system with hospitals in Maine and a major insurer have not reached an agreement, which for months has left about 14,000 patients in limbo.
The contract between Covenant Health, a family of Catholic health care organizations in New England and part of Pennsylvania, and insurer Anthem Blue Cross and Blue Shield expires Tuesday. As of Monday, differences had not been resolved, according to the insurer.
Starting Wednesday, Covenant Health’s physicians, such as those at St. Joseph Healthcare in Bangor and St. Mary’s Health System in Lewiston, will leave the insurer’s network, said Stephanie DuBois, spokesperson for Anthem Blue Cross and Blue Shield in Maine.
Failure to settle the dispute means Maine patients will face hard decisions. There are about 14,000 whose access to services is at risk.
A patient wishing to stick with their longtime family medicine doctor, for instance, will likely see an increase in co-payments and other costs. Some cannot afford the increases, so they’ll be forced to find new providers and health care facilities, or they may decide to switch insurance companies.
Anthem has encouraged its members to schedule appointments with other providers in their area, including Northern Light Health facilities in Bangor and Central Maine Healthcare facilities in Lewiston. In its latest update, the insurer warned that costs “can go up dramatically” if Covenant leaves its network.
There are exceptions for Anthem members with complex conditions who are receiving care at Covenant Health facilities, DuBois said. Patients who are pregnant or terminally ill, among others, can apply to continue care at a location where their doctor is no longer in the insurer’s network, though this is for a limited time, typically 90 days, she said.
The contract expiration will have no effect on emergency care, according to both companies.
In a statement released about 5:30 p.m. Monday, Covenant Health wrote to patients it was disappointed to not have come to a resolution with Anthem ahead of the contract expiration, and it is likely that the insurer will remove from its network Covenant’s 225 affiliated providers in Bangor and Lewiston.
“This is not the outcome that we wanted or anticipated when we began conversations with Anthem Maine last October,” read the statement, provided by spokesperson Karen Sullivan, noting it does not reflect hours of negotiations and compromises offered.
In its June 1 update, Covenant Health claimed that it was a low-cost, high-quality provider in Maine asking Anthem to pay it consistent with market rates paid to other facilities and providers for similar services.
Anthem has extended offers to Covenant Health to keep the company in its network, including increases in line with current and historical inflation, but those were refused, DuBois said.
Covenant Health “continues to insist on double-digit rate increases that are more than three times the rate of inflation,” she said, which would place a burden on Maine employers and members.
Sullivan disputed the claim, saying that Covenant Health has asked Anthem to “increase our rates by a modest percentage in recognition of overwhelming increases in workforce costs and inflationary pressures.”
Covenant Health wrote in an earlier update that it was disappointed with the terms and rates that Anthem has offered, pointing out that the insurer’s parent company, Elevance Health, reported a first quarter profit of nearly $2 billion this year.
Anthem advised patients with questions to call the member services phone number on the back of their ID card. Covenant Health directed them to the Maine Bureau of Insurance website. Patients with questions specific to their circumstances should call 207-907-1682 in Bangor or 207-753-4995 in Lewiston.
Editor's Note -
As for the following clipping - Res Ipsa Loquitur!
-SPC
Financiers bought up anesthesia practices, then raised prices
Private-equity firms are merging doctor groups to create firms that critics say are big enough to wield excessive power over prices
by Peter Whoriskey - Washington Post - June 29, 2023
The multibillion-dollar private equity firm Welsh, Carson, Anderson & Stowe took less than a year to create, from scratch, Colorado’s biggest and most prominent anesthesiology practice.
The financiers created a company, U.S. Anesthesia Partners, which in 2015 bought the largest anesthesiology group in the Denver region. Then it bought the next largest. Then it bought a few more. The company employed 330 anesthesiologists in Colorado at one point, according to its website, making it the state’s largest practice by far. It obtained contracts at 10 of the region’s 15 largest hospitals, according to the hospitals.
The Federal Trade Commission, which is supposed to prevent unfair business practices, questioned the company’s growth but did not stop it.
The company raised prices for its services — one by nearly 30 percent in its first year in Colorado — and continued raising them for several years, according to interviews and confidential company documents obtained by The Washington Post. The price hikes boosted patient bills and pushed up insurance rates, former company physicians and managers said. Eventually, some of the company’s own doctors became disillusioned, physicians said, with about 1 in 3 leaving the company over a three-year period.
“The company became big enough to influence pricing and raised prices because it could,” said Matt Bigalk, who worked as director of operations at USAP’s Colorado branch from 2015 to 2017 and who previously handled negotiations with insurers for one of the merged firms. He now works at another Denver anesthesia practice.
A spokesman for U.S. Anesthesia Partners denied that it wielded monopoly power. The company said the firm faces plenty of competition and pressure from insurance companies.
As the United States struggles to control medical costs, however, private-equity firms like Welsh Carson have become critical players in health-care economics, with private-equity funds acquiring hundreds of physician practices across America and, according to multiple academic studies, raising prices while returning billions to investors.
A 2022 study published in JAMA Internal Medicine based on six years of data, for example, found that when anesthesia companies backed by private-equity investors took over at a hospital outpatient or surgery center, they raised prices by an average of 26 percent more than facilities served by independent anesthesia practices.
Since its founding in 2012, USAP has built a staff of more than 4,500 clinicians and spread to nine states, typically following the same approach it took in Denver: acquiring the largest anesthesiology firm in a city and growing its reach from there, company officials said. It has issued more than $1.3 billion in dividends to its shareholders.
Information about private-equity acquisitions of doctor groups is scarce because private-equity firms are not required to make the same financial disclosures that public companies do. Because of confidentiality agreements, the academic analyses of the industry do not name the companies raising prices.
Internal USAP documents shared with The Post, however, offer a rare glimpse into one such private-equity venture into physician services, describing both the price hikes and how the company dealt with federal regulators reviewing whether USAP was accumulating monopoly power. The Post also interviewed or reviewed legal documents from a dozen former USAP anesthesiologists.
USAP executives declined an interview on the record but provided some answers in written statements. Their public relations representative, Jeff Birnbaum, provided others.
“USAP faces significant competition in Colorado, from a variety of groups and health care organizations,” said a statement from Robert Coward, the company’s chief executive. “USAP’s average annual net rate increases from major insurers in Colorado are modest and in line with national benchmarks.”
The company’s clinical governance board in Colorado, composed of 10 physicians, also sent a statement: “USAP-Colorado is a physician-run, patient-focused anesthesia practice that is proud of the quality of care that we provide,” the board members said. “A few disgruntled former USAP physicians here have apparently complained to you about us, but they are providing you with provably false information. USAP does not exercise market power in Colorado … We are pleased with the way physicians are scheduled and compensated.”
Company officials did not share annual price increases on contracts but said the company’s negotiated rates with insurers in Colorado rose at the rate of 3.7 percent annually from 2014 to 2019. That's a total increase of 20 percent over the five-year period, meaning USAP's prices rose twice as fast as median prices measured by a national survey by the American Society of Anesthesiologists.
The company called that survey unreliable, saying its sample size is too small; the ASA collects voluntary information from about 200 or more practices annually. The company also objected to comparing its five-year price increase to the national median price increase, saying the average increase would be a more appropriate comparison. While the median increase was about 9 percent for that period, the average increase was about 10 percent, according to ASA survey publications. By either measure, USAP’s prices rose about twice as fast as prices nationally.
Eventually the company raised prices so high that in 2020, United Health, the nation’s largest health insurer, terminated its contract with USAP, saying the anesthesia company had pushed its rate demands too far. The insurer said it had singled out the USAP contract for termination because the company wanted to charge 70 percent more than competitors in Colorado and twice as much as competitors in Texas. USAP blamed the cancellation on a national strategy by the insurer to push down prices. The two sides later reached an agreement.
Antitrust reviewers have looked into USAP’s acquisitions at least three separate times, according to company accounts, physicians and media reports. None of the inquiries has ended with enforcement action. The earliest of the known inquiries was in September 2016, shortly after USAP moved into Colorado, when company officials faced questions from the FTC. In response, two company representatives flew to Washington to assure FTC officials that there was still plenty of competition in the region, according to interviews and the company documents obtained by The Post.
One of the company representatives was Peter Harkness, an anesthesiologist who was then chairman of the clinical governance board of USAP’s Colorado branch.
Today, he believes that USAP’s presentation to the FTC was misleading though he believed it to be accurate at the time.
“I was given talking points [for the FTC meeting], but I’m a doctor not a businessman,” Harkness said. “What USAP led us to believe would happen is that we were going to be the premier practice in Denver. Patients and quality would be the first priority. ”
It didn’t turn out that way, Harkness and other USAP physicians said.
Harkness sued USAP with four colleagues in 2020 to extract themselves from their employment contracts, arguing that they contained an unreasonably restrictive noncompete clause that required them to pay damages to USAP to practice elsewhere in Denver. The heart of the case was settled with the doctors paying undisclosed amounts to USAP and the company terminating restrictions on where they could work in Denver.
The Colorado attorney general also has reviewed the company’s practices, former physicians said, and the FTC was investigating again as recently as last year, the Wall Street Journal reported. Neither of the agencies has pursued antitrust enforcement against USAP. The agencies declined to comment.
Officials with USAP declined to comment on the investigations other than to point out that the FTC 2016 inquiry ended without enforcement action.
“We cannot comment on any inquiries other than to say that USAP cooperates fully with information requests from government agencies and regulators,” a USAP spokesman said. As for patients, the company said they are satisfied and quality has improved under its management.
Origins of U.S. Anesthesia Partners
The private-equity firm that created USAP, Welsh, Carson, Anderson & Stowe, is a New York outfit that specializes in buying and managing health-care and technology firms. Since its founding in 1979, the firm has invested more than $31 billion on behalf of its clients.
Funds raised by Welsh Carson have invested in, among other things, doctor groups in radiology, emergency medicine and outpatient surgery.
Its venture in anesthesiology was financed from a $3.9 billion fund Welsh Carson raised in 2009.
The anesthesia company created by Welsh Carson began in 2013 when it purchased Greater Houston Anesthesiology, that city’s largest practice. It then bought the largest practice in Dallas, and then the largest in Orlando. It then added other firms in those regions, creating even bigger doctor groups in those markets.
The company’s growth strategy involved “identifying the most attractive geographies and establishing a presence within them by partnering with the leading groups of anesthesiologists,” the company’s chief executive at the time, Kris Bratberg, said in a press release.
In presentations to the doctor groups it wanted to buy, executives from Welsh Carson and USAP presented a vision of an anesthesiology firm that would be more efficient and more profitable: back office operations would be combined; the larger firm would have the money to invest in technology for monitoring quality.
The expanded doctor groups would also have more negotiating power to command higher prices from commercial insurers. A USAP presentation at the time described the economic incentives of the larger firm as “Better contracts … Lower overhead.”
Asked for comment on the story, Welsh Carson responded with a statement through a public relations firm, Goldin Solutions.
“We are proud of the dedicated clinicians at USAP who have created a practice group that provides enhanced care to the patients they serve,” the statement said. “It also seems clear that the information provided to The Washington Post by competitors during the reporting of this story is both misleading and untrue.”
Asked what information was misleading and untrue, the company did not answer.
“Size creates negotiating power,” said Ambar LaForgia, a business professor at University of California at Berkeley, who has studied medical pricing and co-wrote the paper on anesthesia pricing that was published in JAMA Internal Medicine.
The price hikes that doctor groups negotiate with insurers might seem irrelevant to most Americans, but they affect everyone because the insurers pass on the higher costs, health economists said, and much of the burden falls on patients and their families.
About 60 percent of working age U.S. adults ages 19 to 64 receive health insurance through an employer, according to statistics from the KFF. When insurers pay more for medical care, they typically pass the increases along to employers and employees through higher premiums and deductibles. If employers take on the increased costs, employees may receive lower wages.
“Rising costs of health care ultimately hurt workers and their families,” said Cathy Schoen, an economist and former senior vice president of research and policy at the Commonwealth Fund, a health-care foundation. “For decades, this has been one of the reasons U.S. wages have been so depressed.”
Though their prices have risen, the company said, hospitals and patients have saved because USAP’s patients spend fewer days in the hospital. Company officials pointed to a peer-reviewed study showing USAP patients in some Texas hospitals had significantly shorter hospital stays. Seven of the eight authors of the study have been affiliated with USAP or Welsh Carson, according to the disclosures included in the paper. The eighth author also has worked for USAP, according to his LinkedIn page.
The company also said that in 600,000 completed patient surveys, 95 percent of patients rated their care from USAP-Colorado as “good” or “great.”
“As a practicing USAP physician, I can attest to the focus myself and my fellow clinicians have on providing the highest quality patient care and serving the communities where we live and work,” Matthew Maloney, USAP’s chief clinical officer, said in a statement.
USAP comes to Denver
In 2014, a year before selling to USAP, Harkness and other partners in Greater Colorado Anesthesia began looking for ways to keep up with the rapidly changing health-care market.
The firm itself had been created just two years before as a combination of three practices, and it stood as Denver’s largest, with more than 90 board-certified anesthesiologists.
Even so, with hospitals and insurers merging, the doctors felt pressure to keep growing, too, and they hired a law firm, Sheppard Mullin, for advice about possible expansion. If the medical group did nothing, the law firm advised in a slide presentation, the doctors would be “unlikely” to get insurers to pay significantly more for services in the short term because “rates are relatively high, compared to historical levels.”
Joining with other large firms would also enable the doctor group to invest in enhanced quality control and a more efficient back office system.
By January 2015, the doctors of Greater Colorado Anesthesia voted to sell to USAP for $94 million, giving the private-equity start-up its first foothold in Colorado. The firm’s anesthesiologist partners each received, on average, about $1 million in cash and company stock, according to physicians and contract documents.
Within a year, USAP acquired the next largest practice in the region, South Denver Anesthesiologists, which was almost as large as Greater Colorado. More acquisitions would follow.
“By sharing resources across a larger group, the Denver community will receive higher quality and more efficient anesthesia services,” USAP chief Bratberg said in a public statement at the time.
USAP raises rates
With its acquisitions, USAP had become the region’s preeminent anesthesiology practice, and it quickly sought to raise rates, according to documents.
One page of an internal USAP company presentation labeled “Guiding Strategies” at the time listed 11 points.
“Accelerate rate increases,” said one. “Pricing +/-5% range, for market’s lead insurers,” said another.
While prices were already “relatively high,” according to the law firm advising Greater Colorado Anesthesia, USAP was able to negotiate significant price hikes with insurers.
For patients insured under the Cofinity network, effective payment to USAP jumped 29 percent, according to the internal company documents.
For patients covered by another insurer, Anthem, USAP rates would rise 17.5 percent in the first year the contract was up for renewal, according to the documents.
For patients covered by United Health, USAP prices began to climb more rapidly, too. The United contract was particularly important because of its size.
Anesthesiologists are paid based on how many “units” of work a procedure requires, with units reflecting the time needed for a procedure and its difficulty.
The documents show how the rates for United patients accelerated after July 2015, just months after USAP bought Greater Colorado Anesthesia.
In the 2½ years before then, the group’s price for United patients rose about 4 percent, from about $101 per unit, to $105 per unit, according to documents and interviews. In the 2½ years afterward, rates increased about 13 percent, or about three times as fast, from $105 per unit in 2015 to $119 per unit in 2017, according to company documents.
By September 2020, the price reached $128.50 per unit, according to an economist’s report filed in Harkness’s court case. After the pressure from United, the report noted, the price fell to $110 per unit.
The expansion of USAP also raised rates another way: When anesthesiologists from smaller firms came under the USAP umbrella, their prices were bumped up to USAP prices.
For example, when South Denver Anesthesiologists was acquired by USAP in 2016, its rates for Anthem patients climbed from $65 per unit to about $79 per unit, a 21 percent increase, according to the documents.
Similarly, another doctor group in Denver, Guardian Anesthesia, was charging United, a major insurer, about $75 per unit in 2020; when USAP won the contract at the hospital where Guardian had been operating, it charged about $125 per unit, or 66 percent more for services provided by the same anesthesiologists, according to the documents.
“The prices are not connected at all to quality,” said Tanya Argo, an anesthesiologist who founded Guardian Anesthesia and has retired.
In a statement to The Post, USAP said that in general, by using clinical data and best practices, “we provide superior clinical care.”
Citing the journal study, Maloney, the company’s chief clinical officer, said the company’s “clinical initiatives have been shown to increase the quality of care and patient satisfaction relative to national benchmarks.” He attributed this to “the significant investment we made in our systems and processes that allows the capture and use of meaningful clinical data.”
As for the price hikes cited by The Post, the company said those “selective statements … do not accurately represent our results … USAP’s average annual net rate increases from major payers are modest and in line with national benchmarks, and, in certain cases, rates have actually declined.”
Moreover, the company said, some of the prices that were raised had been substantially below market rates.
However, the company’s rates for three of the state’s largest insurers — Aetna, Cigna and United — were much higher than some industry averages. At the end of 2016, about two years after USAP entered the market, USAP set prices for all three of the insurers at $110 per unit or more, according to the company documents. By contrast, the median price in the Rocky Mountain region was $71 per unit, according to the annual survey by the American Society of Anesthesiologists, and no other region in the United States had a median exceeding $80 per unit
In response, USAP said the ASA Rocky Mountain region is not a valid comparison because it includes states such as Montana and Wyoming with less expensive and more rural markets.
Company executives also said anesthesiologists face overwhelming price pressure from large insurance companies, and USAP was merely standing up for the physicians. They said USAP has agreed to substantial rate reductions in some of its recent contracts — including cuts of 35 and 42 percent — but said they would not identify the parties or give other specifics because of confidentiality provisions in the agreements.
Aetna, Cigna, Cofinity and United declined to comment for this story.
The FTC meeting
A year after USAP began buying up Colorado anesthesiology practices, the FTC began to ask questions about the potential for USAP to wield monopoly power.
The FTC inquiry appears to have been spurred by USAP’s acquisition of the largest and the next largest anesthesiology firms in the Denver area.
FTC officials have declined to comment on the matter, but two aspects of the company’s conduct appear to have drawn regulators’ interest, documents provided by USAP to the agency show. The first is whether the company dominated the market enough to artificially raise prices. The second is whether the company’s contracts with physicians, which included noncompete provisions, unfairly restricted the supply of doctors.
Girding for the FTC inquiry, the firm drafted multiple sets of talking points and, as many companies do, coached its main witnesses — Harkness and an executive at the firm — to answer questions. A meeting between the FTC and the company was set for September 2016.
The talking points included: “USAP faces significant local, regional and national competition.”
Contrary to hurting the economy, USAP said, its size “will result in more efficient and cost-effective service for hospitals, payers and patients.”
Harkness and the other executive met with attorneys at Ropes & Gray for a day and a half to prepare for the FTC meeting, he said.
“They would ask me questions that the FTC was likely to ask and then they would say, ‘How about you say it this way?’” Harkness recalled.
“We went down to Washington to tell the FTC that consolidation would be great for health care in Colorado,” he said.
He believed that at the time. Today he believes the bigger firm reduced competition among anesthesiology practices in Denver and that the firm’s relentless drive to grow burned out physicians which, he said, detracted from quality.
“At the time, I believed what I was saying,” he said. “But then we kept adding practices, we kept taking on more and more business and getting stretched thinner and thinner and that’s when I realized something had really gone wrong.”
Harkness currently practices with another doctor group in Denver and USAP called him a competitor.
The company said it isn’t big enough to wield monopoly power in Colorado, asserting that as of December it employed less than 21 percent of the state’s anesthesiologists. It said it hasn’t acquired any new practices in the state since 2019 and has no acquisitions planned. In addition, it cited a 2022 American Medical Association study indicating that through consolidation, insurers may have gained an unfair advantage in setting prices for physician services.
Anesthesiologists leave
USAP officials often tout that the company is “physician-owned,” with doctors owning about 45 percent of company stock. Many physicians own USAP stock because when USAP bought doctor practices, it often paid the doctors partly in stock.
Several physicians said that they have been unable to redeem their shares, which they valued at hundreds of thousands of dollars. They asked that their names not be used because they are still seeking to sell their shares back and fear retaliation.
In a statement, USAP acknowledged that some share redemptions “did not occur.” The statement attributed this to the pandemic, saying “we were cautious about how we deployed our capital and used our cash.”
Five years after USAP began its foray into Colorado, physicians began to leave in larger numbers than before. Many had signed employment agreements when USAP acquired the medical groups, and those were expiring. The pandemic had begun.
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.
“Like many organizations, including other physician practices across the country, USAP-Colorado’s turnover increased during the pandemic,” Coward said. The company attributed part of its turnover to the contract dispute with United Health. It said the 2022 figures show that turnover has begun to decline.
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.
One of those who wanted out was Adam Manchon, who with his partner Steven Milo, also went to court to extract themselves from the employment contract and set up their own practice.
“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.”
Manchon and Milo settled with USAP, agreeing to pay damages while USAP agreed to terminate a noncompete provision in their contracts.
The Harkness lawsuit revolved around similar issues. In that case, the judge threw out two of the physicians’ four claims and then the case was settled. USAP required that the agreement ending the case include a judgment against the plaintiff’s claims.
Such “noncompete” clauses, which have been common in physician contracts, can stifle competition by making it harder for competitors to hire employees and, in 2016, the FTC wanted to know more about the employment contracts.
In a draft letter to FTC officials, attorneys for USAP wrote that the noncompete clause had little effect on doctors’ ability to leave USAP and join a competitor.
“Non-compete provisions do not reduce anesthesiologists’ mobility,” the draft letter said.
The letter acknowledged the contract could require a physician to pay “damages” to USAP to work elsewhere, but not how much the damages would amount to. In the margins of USAP’s draft letter to the FTC, a note indicated that physicians who leave might be obliged to pay more than $200,000 in damages and said: “Not mentioning that here.”
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.
After leaving USAP, she took temporary work in Detroit, Portland, Ore., Nebraska and Montana. After the noncompete clause expired two years after she left USAP, she returned to Denver.
“The travel was good at first but in the end, it was emotionally and physically exhausting,” said Bailey, who had two middle-school children during that time. “It was terrible.”
USAP also sought to enforce a noncompete contract against another physician, Michael A. Crocker, who had signed the contract with the previous firm and left the firm before the merger. He said the contract essentially required him to move.
“Based on the concentric circles [around USAP facilities] in the contract, I would have had to move to another city, either to Boulder or Colorado Springs,” Crocker said. Otherwise, he said, the contract required him to pay more than $200,000.
He sued his previous firm to undo the restriction and won on the noncompete issue. The merged firm appealed this win, and Crocker prevailed again in 2018 in appeals court. USAP said it hasn’t imposed the noncompete provision in new contracts for years.
Maloney, USAP’s chief clinical officer, said that the noncompete provisions were “compliant with local laws and industry customs, and are reasonable for the purpose of protecting our physicians’ legitimate business interests. Our agreements do not force departing physicians to relocate.”
As a result of the turmoil, several anesthesiologists who worked at Greater Colorado Anesthesia who voted back in 2015 to be bought out by USAP now regret it, and say the entry of USAP has profoundly changed the anesthesiology business.
“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.”
https://www.washingtonpost.com/business/2023/06/29/private-equity-medical-practices-raise-prices/
Letter to the editor: Single-payer system would eliminate need for nurse-staffing laws
There’s been much commentary recently on the increasing stress that nurses are suffering. A number of remedies have been suggested, including legislation mandating nurse-patient ratios in hospitals in 32 specific clinical scenarios. How, I’ve wondered, would this issue be dealt with in a publicly funded universal health care system (“single-payer”)?
One example of such a system is the Medicare for All Act of 2023, which specifies that individual institutions, like hospitals, would annually negotiate with the Secretary of Health and Human Services a global budget to cover their operating expenses.
These operating expenses would include “wages and salary costs for physicians, nurses … including mandatory minimum safe registered nurse-to-patient staffing ratios.” Along with hospital administrators and other professionals, nurses would no doubt be involved in these negotiations, which would arrive at pay and staffing ratio figures appropriate for the particular hospital, its patients and its nursing staff.
Modifications would be made if there were “unanticipated increases in complex or high-cost patients or care needs.” Capital expenses, such as for building projects, would be negotiated separately and not affect the nursing staff. In addition, to deal with the problem of limited numbers of nurses, “the director of the Office of Primary Health Care shall … develop, coordinate, and promote policies that expand the number of … registered nurses.”
That sounds like a more comprehensive approach. Indeed, though the Maine State Nurses Association does support the legislation setting nurse-patient ratios, the website of their parent union, National Nurses United, states: “It’s time we have a Medicare for all, single-payer health care system.”
Daniel Bryant
Cape Elizabeth
Pregnancy-associated deaths in U.S. more than doubled over 2 decades
Black mothers died at the nation’s highest rates, while the largest increases in deaths were found in American Indian and Native Alaskan mothers.
Maternal deaths across the U.S. more than doubled over the course of two decades, and the tragedy unfolded unequally.
Black mothers died at the nation’s highest rates, while the largest increases in deaths were found in American Indian and Native Alaskan mothers. And some states – and racial or ethnic groups within them – fared worse than others.
The findings were laid out in a new study published Monday in the Journal of the American Medical Association. Researchers looked at maternal deaths between 1999 and 2019 – but not the pandemic spike – for every state and five racial and ethnic groups.
“It’s a call to action to all of us to understand the root causes – to understand that some of it is about health care and access to health care, but a lot of it is about structural racism and the policies and procedures and things that we have in place that may keep people from being healthy,” said Dr. Allison Bryant, one of the study’s authors and a senior medical director for health equity at Mass General Brigham.
Medicare Advantage Plans Offer Few Psychiatrists
A new study finds that people have a very difficult time finding doctors in their networks under the private-sector policies.
by Reed Abelson - NYT - July 5, 2023
People with private Medicare coverage may not be getting the mental health services they need because they cannot find a psychiatrist within their plan’s network, according to a new study.
More than half of the counties the researchers studied did not have a single psychiatrist participating in a Medicare Advantage plan, the private-sector counterpart to traditional Medicare. Some 30 million people, just over half of all participants in the federal program, are enrolled in these private plans.
The researchers, in an article published on Wednesday in the journal Health Affairs, found that of the plans reviewed, nearly two-thirds were narrow, with fewer than a quarter of available psychiatrists in a plan’s network. The networks offered under either an Obamacare plan or Medicaid managed care were not as restrictive and included about 40 percent of the available psychiatrists, according to the study.
The more limited “networks present a frustrating additional barrier in mental health services even when, on paper, there are a sufficient number of providers in a geographic region,” the researchers wrote.
The pandemic helped expose a widespread need for mental health services among older Americans, many of whom are struggling with loneliness, the loss of a loved one or their own deteriorating health. While roughly one in four people enrolled in Medicare has a mental illness like depression, anxiety or schizophrenia, an estimated half or fewer receive treatment, according to a recent analysis of mental health coverage by the Commonwealth Fund, a nonprofit group.
“We need systems in place so people can easily find and afford the care they need,” said Gretchen Jacobson, vice president of Medicare at Commonwealth. “It’s not clear people are able to do so.”
The difficulty in finding a psychiatrist is not unique to Medicare Advantage policyholders, in part because of increased demand. The scarcity of psychiatrists, particularly those willing to accept insurance, makes it difficult for plans to find providers. Many psychiatrists have also opted out of seeing patients under traditional Medicare, according to a recent report.
“Part of what is going on is we have this big problem of a shortage of psychiatrists and mental health providers writ large,” said Beth McGinty, the chief of the division of health policy and economics at Weill Cornell Medicine and the author of the Commonwealth report. “It is exacerbated here.”
Because going out of network is costly, many people will delay or skip treatment, said Dr. Jane M. Zhu, one of the study’s authors and a primary care physician at Oregon Health and Science University. She said her own patients often had difficulty finding help.
“I was referring them out, but they could just not get access to any mental health providers,” Dr. Zhu said. One of her patients called more than a dozen providers before getting an appointment, she said.
Insurers say their goal is to provide a wide array of mental health services. “Everyone deserves access to effective, affordable and equitable mental health support,” Kristine Grow, a spokeswoman for AHIP, a trade group representing the insurers, said in an email.
But Ms. Grow criticized the Health Affairs study for not comparing the plans with traditional Medicare and for not examining other types of mental health services available to patients that would be provided by other clinicians or via telehealth. “In essence, this study uses a very narrow definition of mental health clinician to prove a pre-existing thesis about Medicare Advantage,” she said.
More broadly, regulators and lawmakers have voiced concerns that people in the private Medicare plans may not be getting the services they are entitled to under the federal program. Critics have long complained about inadequate access to mental health services.
Senator Ron Wyden, the Oregon Democrat who leads the Senate Finance Committee, held a hearing in May about so-called “ghost networks” of mental health providers, in which many of the clinicians listed in the Medicare Advantage plans’ directories are not, in fact, accepting patients. His staff conducted a secret shopper survey and could only obtain an appointment 18 percent of the time.
The Health Affairs study may have overstated the availability of psychiatrists because it only looked at which providers were listed in the plan’s directory, Dr. Zhu said. “It likely paints a rosier picture,” she said.
Doctors may be unwilling to participate in Medicare Advantage plans because of the low payments paid by the insurers, coupled with all of the required paperwork, said Dr. Robert Trestman, who is the chairman of the council on health care systems and financing for the American Psychiatric Association and testified at the Senate hearing. “Many of the challenges and frustrations are emphasized in the Medicare Advantage plans,” he said.
Some insurers pay psychiatrists less under their Medicare Advantage plans than traditional Medicare pays for the same services, the researchers said. The plans may also have an incentive to contract with a smaller group of doctors to have more control over the cost and care being delivered, the researchers said.
Reed Abelson covers the business of health care, focusing on health insurance and how financial incentives affect the delivery of medical care. She has been a reporter for The Times since 1995. More about Reed Abelson
Maine hospital operator settles contract dispute with Anthem
Covenant Health, which operates hospitals in Lewiston and Bangor, signs a 2-year deal with the insurance company, preserving in-network care for patients.
by Joe Lawlor - Portland Press Herald - July 5, 2023
Covenant Health reached a contract agreement with Anthem on Wednesday just as a dispute between the two companies was about to force patients to pay significantly higher costs at hospitals in Lewiston and Bangor.
Had the agreement not been signed Wednesday, patients with Anthem insurance would have been forced to begin paying expensive out-of-network costs for non-emergency care at St. Mary’s Regional Medical Center in Lewiston, St. Joseph Hospital in Bangor, and other Covenant providers. But because of the last-minute settlement, Anthem members will continue paying standard in-network charges for care provided by Covenant.
“We appreciate the patience Anthem members throughout Maine have shown during this process,” Stephen J. Grubbs, president, and CEO of Covenant Health said in a statement. “We are confident the extra time we spent in discussions with Anthem helped ensure we have the resources necessary to provide Mainers with the highest quality care and best patient experience possible.”
Failure to reach an agreement Wednesday would have had a widespread impact because patients would have faced a choice between paying the higher out-of-pocket costs or switching care providers or insurance carriers. Anthem Blue Cross and Blue Shield is the largest private insurer in the state, with 300,000 people covered. Covenant Health had 377,000 patient visits in its network in 2021, according to its latest annual report.
The dispute centered on the cost of services, with the two sides trading barbs during the extended holiday weekend, although no details were made public.
The two-year contract will maintain Covenant’s in-network status through at least 2025. A joint statement said streamlining the claims process and reducing paperwork will help keep costs under control.
“Our members remained our No. 1 priority as we worked hard to come to an agreement that protects access to high-quality care for Mainers that is also affordable,” said Denise McDonough, president of Anthem Blue Cross and Blue Shield in Maine. “We’re pleased to continue our partnership and ensure Anthem members have access to Covenant Health providers for the next years to come.”
Covenant Health also includes St. Mary’s d’Youville Pavilion nursing home in Lewiston, Home Health and Hospice of St. Joseph in Bangor, St. Joseph Infusion Center in Bangor, and other health care services such as primary care and specialty services.
MEDICAL BILLING PROBLEMS INCREASING
The dispute between Anthem and Covenant follows a months-long clash last year between Anthem, the state’s largest health insurer, and MaineHealth, the state’s largest health care provider. That battle erupted into public view in April 2022 when Maine Medical Center threatened to leave the Anthem network over payment practices and unpaid claims. The impasse was resolved in August with a two-year deal, and no Anthem patients were out-of-network during the controversy.
In an unusual move during that contract dispute, Anthem officials detailed what they said was overcharging by MaineHealth, especially for medications, while hospital officials contended that Anthem was unfairly denying full payments for services.
The MaineHealth/Anthem dustup prompted an investigation by the Press Herald/Maine Sunday Telegram into medical billing practices. The July 2022 article included stories from many patients who received bloated bills filled with hidden charges and often difficult to understand explanations. Some shared stories about insurance companies denying payment for eligible services and passing along costs that should have been paid.
Medical billing problems are increasing because more patients have high-deductible plans compared to decades ago when most services were covered and patients were only paying a small fraction of their bills. Now when insurers refuse to pay or if there are incorrect charges in bills that go unnoticed, patients end up bearing more of the financial burden.
Disputes like those between Maine hospital operators and Anthem are common in the industry when the health care giants negotiate new contracts that govern rates for in-network coverage. Contract disputes between hospital networks and Elevance Health – Anthem’s parent company – also have played out in recent years in Indiana, Georgia, California, Virginia, Colorado, New York, Nevada, Ohio, and Connecticut.
https://www.pressherald.com/2023/07/05/maine-hospital-operator-settles-contract-dispute-with-anthem/
There’s One Hard Question My Fellow Doctors and I Will Need to Answer Soon
by Daniela J. Lamas - NYT - July 6, 2023
When faced with a particularly tough question on rounds during my intern year, I would run straight to the bathroom. There, I would flip through the medical reference book I carried in my pocket, find the answer and return to the group, ready to respond.
At the time, I believed that my job was to memorize, to know the most arcane of medical eponyms by heart. Surely an excellent clinician would not need to consult a book or a computer to diagnose a patient. Or so I thought then.
Not even two decades later, we find ourselves at the dawn of what many believe to be a new era in medicine, one in which artificial intelligence promises to write our notes, to communicate with patients, to offer diagnoses. The potential is dazzling. But as these systems improve and are integrated into our practice in the coming years, we will face complicated questions: Where does specialized expertise live? If the thought process to arrive at a diagnosis can be done by a computer “co-pilot,” how does that change the practice of medicine, for doctors and for patients?
Though medicine is a field where breakthrough innovation saves lives, doctors are — ironically — relatively slow to adopt new technology. We still use the fax machine to send and receive information from other hospitals. When the electronic medical record warns me that my patient’s combination of vital signs and lab abnormalities could point to an infection, I find the input to be intrusive rather than helpful. A part of this hesitation is the need for any technology to be tested before it can be trusted. But there is also the romanticized notion of the diagnostician whose mind contains more than any textbook.
Still, the idea of a computer diagnostician has long been compelling. Doctors have tried to make machines that can “think” like a doctor and diagnose patients for decades, like a Dr. House-style program that can take in a set of disparate symptoms and suggest a unifying diagnosis. But early models were time-consuming to employ and ultimately not particularly useful in practice. They were limited in their utility until advances in natural language processing made generative A.I. — in which a computer can actually create new content in the style of a human — a reality. This is not the same as looking up a set of symptoms on Google; instead, these programs have the ability to synthesize data and “think” much like an expert.
To date, we have not integrated generative A.I. into our work in the intensive care unit. But it seems clear that we inevitably will. One of the easiest ways to imagine using A.I. is when it comes to work that requires pattern recognition, such as reading X-rays. Even the best doctor may be less adept than a machine when it comes to recognizing complex patterns without bias. There is also a good deal of excitement about the possibility for A.I. programs to write our daily patient notes for us as a sort of electronic scribe, saving considerable time. As Dr. Eric Topol, a cardiologist who has written about the promise of A.I. in medicine, says, this technology could foster the relationship between patients and doctors. “We’ve got a path to restore the humanity in medicine,” he told me.
Beyond saving us time, the intelligence in A.I. — if used well — could make us better at our jobs. Dr. Francisco Lopez-Jimenez, the co-director of A.I. in cardiology at the Mayo Clinic, has been studying the use of A.I. to read electrocardiograms, or ECGs, which are a simple recording of the heart’s electrical activity. An expert cardiologist can glean all sorts of information from an ECG, but a computer can glean more, including an assessment of how well the heart is functioning — which could help determine who would benefit from further testing.
Even more remarkably, Dr. Lopez-Jimenez and his team found that when asked to predict age based on an ECG, the A.I. program would from time to time give an entirely incorrect response. At first, the researchers thought the machine simply wasn’t great at age prediction based on the ECG — until they realized that the machine was offering the “biological” rather than chronological age, explained Dr. Lopez-Jimenez. Based on the patterns of the ECG alone, the A.I. program knew more about a patient’s aging than a clinician ever could.
And this is just the start. Some studies are using A.I. to try to diagnose a patient’s condition based on voice alone. Researchers promote the possibility of A.I. to speed drug discovery. But as an intensive care unit doctor, I find that what is most compelling is the ability of generative A.I. programs to diagnose a patient. Imagine it: a pocket expert on rounds with the ability to plumb the depth of existing knowledge in seconds.
What proof do we need to use any of this? The bar is higher for diagnostic programs than it is for programs that write our notes. But the way we typically test advances in medicine — a rigorously designed randomized clinical trial that takes years — won’t work here. After all, by the time the trial were complete, the technology would have changed. Besides, the reality is that these technologies are going to find their way into our daily practice whether they are tested or not.
Dr. Adam Rodman, an internist at Beth Israel Deaconess Hospital in Boston and a historian, found that the majority of his medical students are using Chat GPT already, to help them on rounds or even to help predict test questions. Curious about how A.I. would perform on tough medical cases, Dr. Rodman gave the notoriously challenging New England Journal of Medicine weekly case — and found that the program offered the correct diagnosis in a list of possible diagnoses just over 60 percent of the time. This performance is most likely better than any individual could accomplish.
How those abilities translate to the real world remains to be seen. But even as he prepares to embrace new technology, Dr. Rodman wonders if something will be lost. After all, the training of doctors has long followed a clear process — we see patients, we struggle with their care in a supervised environment and we do it over again until we finish our training. But with A.I., there is the real possibility that doctors in training could lean on these programs to do the hard work of generating a diagnosis, rather than learn to do it themselves. If you have never sorted through the mess of seemingly unrelated symptoms to arrive at a potential diagnosis, but instead relied on a computer, how do you learn the thought processes required for excellence as a doctor?
“In the very near future, we’re looking at a time where the new generation coming up are not going to be developing these skills in the same way we did,” Dr. Rodman said. Even when it comes to A.I. writing our notes for us, Dr. Rodman sees a trade-off. After all, notes are not simply drudgery; they also represent a time to take stock, to review the data and reflect on what comes next for our patients. If we offload that work, we surely gain time, but maybe we lose something too.
But there is a balance here. Maybe the diagnoses offered by A.I. will become an adjunct to our own thought processes, not replacing us but allowing us all the tools to become better. Particularly for those working in settings with limited specialists for consultation, A.I. could bring everyone up to the same standard. At the same time, patients will be using these technologies, asking questions and coming to us with potential answers. This democratizing of information is already happening and will only increase.
Perhaps being an expert doesn’t mean being a fount of information but synthesizing and communicating and using judgment to make hard decisions. A.I. can be part of that process, just one more tool that we use, but it will never replace a hand at the bedside, eye contact, understanding — what it is to be a doctor.
A few weeks ago, I downloaded the Chat GPT app. I’ve asked it all sorts of questions, from the medical to the personal. And when I am next working in the intensive care unit, when faced with a question on rounds, I just might open the app and see what A.I. has to say.
Opinion Biden is quietly reversing Trump’s sabotage of Obamacare
Slowly but surely, President Biden is repairing the U.S. health-care system, reversing Trump-era sabotage and ensuring millions more Americans get access to affordable coverage.
The latest of these efforts came on Friday, in a little-noticed but significant decision to protect Americans from junk health insurance.
In 2017, Congress repeatedly tried and failed to repeal the Affordable Care Act. To casual observers, it might have looked like the end of the Republican fight to kill this lifesaving, inequality-fighting, newly popular law. It wasn’t. Over the next few years, President Donald Trump found new ways to sabotage the health-care system and its protections for the most vulnerable Americans.
Among the most insidious of these backdoor repeal measures: expanding “short-term, limited duration” health plans — i.e., attempting to trick Americans into plans that looked cheap but basically covered nothing.
Short-term plans are theoretically intended as brief, stopgap coverage — say, to tide over a new college grad whose job didn’t start until the fall.
They’re relatively unregulated; they don’t have to cover minimum care benefits guaranteed by Obamacare and other major legislation, for example. A 2018 analysis found that most don’t cover maternity services, substance-abuse care or prescription drugs.
These plans can also deny coverage for care of preexisting conditions, even if the preexisting condition in question hadn’t yet been diagnosed at the time the person enrolled.
People often don’t realize they’ve bought a worthless product until it’s too late. When they get hit by a bus, say, or are diagnosed with a brain tumor.
Such loopholes might seem like no big deal until you find yourself falling through one. The Trump administration made sure more people did, by allowing these allegedly short-term plans to last as long as 364 days, rather than the three-month max that had been in place, and to be renewed for up to three years.
This made them look a whole lot like regular plans. Plus, because short-term plans are mega-profitable for insurers, brokers can get much larger commissions for steering hapless customers into them. So, many did.
Exactly how many were lured by this policy change is unclear; the data is lousy, precisely because these products are so unregulated. A recent estimate from the Urban Institute ballparked the number of people enrolled in individual plans that are noncompliant with Obamacare protections at 2.5 million.
The proliferation of short-term junk plans affects even consumers who don’t get duped by them. That’s because these cheaper plans disproportionately siphon healthier (i.e., lower-cost) people out of the broader individual insurance marketplaces. People who have chronic conditions or otherwise know they will need more substantial coverage are more likely to stay in the regular marketplace pool, driving premiums there ever higher.
Last week, however, the Biden administration announced a rollback of this Trump-era expansion of short-term health plans.
In a proposed rule, Biden officials said those already in these skimpy Trump-blessed plans can continue in them, if they so choose. (“There were some hard lessons learned from the ‘if you like your plan you can keep it’ blowback a decade ago,” surmises Georgetown University health scholar Sabrina Corlette.) But going forward, any new “short-term, limited duration” plans would need to be truly short-term (up to three months) and truly limited duration (renewed for up to one additional month only).
Critically, short-term plans must also provide clearer language about what care they do and don’t cover, and under what circumstances. People who choose to buy junk must know upfront that they’re buying junk.
The White House has marketed this rule as part of “Bidenomics,” though it might be more easily understood as simply pro-consumer. It also dovetails nicely with other actions the administration has taken to expand access to coverage, including outreach to encourage eligible Americans to enroll in marketplace plans and patching the so-called family glitch (a regulatory accident that had blocked a lot of families from accessing subsidized health coverage).
Most important, through last summer’s Inflation Reduction Act, Biden extended the enhanced premium tax credits available for plans on the individual marketplace.
This has meant that millions more Americans can get solid health-care coverage that’s not only affordable but also, in many cases, has an out-of-pocket premium of zero dollars. And unlike with those junk insurance plans, the low price tag here isn’t a red flag; these plans actually do provide comprehensive coverage, including for people with preexisting conditions.
It’s not a bait-and-switch. It’s a real subsidy — and one that will likely drive down premiums overall, on average, by drawing more healthy people into the broader marketplace risk pool.
Our health-care system is still kludgy. It still allows too many Americans to fall through the cracks. But small unsung fixes such as this are achievements worth celebrating.
https://www.blogger.com/blog/post/edit/3936036848977011940/9210719338175549191
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