Colorado anesthesia provider to pay $200K, change practices after investigation
DENVER (KDVR) — A healthcare company owned partly by a private equity firm agreed this month to end exclusive contracts and change company practices, in addition to paying the state $200,000 in relief.
The agreement was the ultimate resolution to a Colorado Department of Law investigation into the company’s anticompetitive business practices, which Colorado Attorney General Phil Weiser said in a release Tuesday “drove up prices for consumers receiving surgical anesthesia services.”
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According to the Colorado attorney general’s office, U.S. Anesthesia Partners of Colorado began purchasing Denver metro area anesthesia practices in 2015, and within six years had bought out all major competitors.
By 2021, the AG said, USAP had control of surgical anesthesia at the two largest independent hospital systems in Denver. The AG said USAP accounted for more than 70% of health plan reimbursements to Centura and HCA/HealthOne in the Denver Metro statistical area.
Surgical anesthesia monopoly caused higher costs
The result was higher costs for consumers and their employer-provided health insurance plans, “onerous” non-compete restrictions on healthcare professionals, and either delays or outright cancellations of surgeries, according to court documents.
“At the same time, USAP charged reimbursement rates at 30-40% higher than competing groups in the Denver Metro Area, creating a financial windfall for USAP and its private equity ownership,” the AG’s Office wrote in a release.
The Colorado AG said in a release that USAP pressured insurers to charge higher rates than their remaining competitors, but they encountered difficulties staffing surgeries.
“Doctor attrition, lack of health professional recruitment, and the lingering effects of the COVID-19 pandemic all contributed to these shortages,” the AG’s Office release stated. “Even before COVID-19 overwhelmed hospitals, however, USAP was beginning to feel the effects of a growing national shortage of anesthesia professionals.”
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The AG Office said this impacted USAP’s ability to respond to hospital demand for higher surgical capacity to make up for lost profits during the pandemic. This led to hospitals complaining about surgeries being delayed, postponed or canceled.
“Despite these problems, and in the absence of choice and competition in the marketplace, hospitals continued to contract with USAP, even as the company demanded subsidy increases as high as 1,200%,” the office release stated.
USAP settlement provisions with the Colorado AG Office
The settlement announced Tuesday includes multiple provisions to restore competition to the Denver-area anesthesia market. Included in these, USAP will end its exclusive contracts at five Colorado hospitals—St. Anthony Hospital, St. Anthony North Hospital, OrthoColorado Hospital, and Longmont United Hospital in the Denver-Boulder market, in addition to Mercy Hospital in Durango.
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The agreement stipulated that USAP clinicians serving in those facilities are allowed to leave the company and continue to work at those hospitals to ensure continuity of care. The agreement has stipulations aimed at reducing disruptions to patient care at those facilities, too.
Lastly, USAP will have to release and modify its clinician non-compete agreements, in addition to completely ending the practice of non-competes within 18 months of the agreement.
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