United States Anesthesia Partners (USAP), a national anesthesiology practice backed by private equity, is under fire in Colorado for allegedly creating a monopoly that drove up healthcare costs. The Colorado Attorney General has compelled USAP to terminate contracts with five hospitals across the state, responding to concerns that the company’s market dominance in Denver and Durango inflated prices for patients requiring anesthesia during medical procedures.
A settlement, formalized in Denver District Court between the Attorney General’s office and United States Anesthesia Partners, aims to dismantle the company’s grip on the Colorado anesthesiology market. This agreement not only requires USAP to relinquish its exclusive contracts with the specified hospitals but also to dissolve non-compete agreements that restricted the professional mobility of its physicians. Furthermore, United States Anesthesia Partners is mandated to pay a $200,000 penalty to the state, marking the conclusion of a two-year antitrust investigation. These funds are earmarked for restitution and bolstering consumer protection initiatives within Colorado.
The five hospitals impacted by the contract terminations are St. Anthony Hospital in Lakewood, St. Anthony North Hospital in Westminster, Longmont United Hospital, Mercy Hospital in Durango, and OrthoColorado Hospital in Lakewood. Each of these facilities is part of CommonSpirit Health, a major nonprofit health system in the United States. According to Lawrence Pacheco, spokesperson for Attorney General Phil Weiser, these particular hospitals were selected due to their significant profitability for United States Anesthesia Partners, making their separation crucial for reinstating market competitiveness.
Alt text: Close-up of anesthesiologist carefully preparing and calibrating advanced anesthesia equipment for an upcoming surgical procedure.
Attorney General Weiser, in a statement to The Denver Post, characterized United States Anesthesia Partners’ approach as a “nefarious business model.” He explained that the company’s strategy involved aggressively acquiring Colorado-based anesthesiology practices, binding doctors with non-compete clauses, and securing exclusive hospital contracts. This, according to Weiser, was a deliberate “domination strategy” aimed at maximizing market share and control. “How do I build up a market share? How do I dominate the market share?” Weiser questioned, highlighting the anti-competitive nature of USAP’s expansion.
Dr. Henri Acosta, representing USAP’s Colorado leadership, offered a different perspective in an emailed statement to The Post. He stated that United States Anesthesia Partners chose to settle with the Colorado Attorney General’s Office to prioritize its core healthcare operations. “We felt that it was in the best interest of our patients, health system partners and the communities we support to resolve the inquiry, regardless of its merits,” Acosta commented. He emphasized that USAP’s resources are better allocated to patient care rather than protracted legal battles. Despite the settlement, Acosta affirmed United States Anesthesia Partners’ dedication to delivering high-quality care to Coloradans.
The settlement agreement requires United States Anesthesia Partners to devise a transition plan for the five hospitals within 60 days. This includes working collaboratively to ensure a smooth contract dissolution within a reasonable timeframe or providing a 180-day termination notice. Crucially, the agreement protects healthcare professionals, allowing doctors, physician assistants, and nurses at these hospitals to leave USAP without jeopardizing their positions, ensuring uninterrupted patient care. Furthermore, all physicians within USAP’s Colorado network will have the option to void their non-compete agreements.
Lindsay Radford, a spokesperson for CommonSpirit, indicated that anesthesiologists previously contracted through United States Anesthesia Partners will have the opportunity to become direct employees of CommonSpirit. “We look forward to investing in these caregivers,” Radford stated, underscoring CommonSpirit’s commitment to patient care throughout this transition.
Alt text: Exterior view of a hospital emergency entrance with an ambulance parked outside, symbolizing urgent healthcare services and accessibility for patients.
The lawsuit against United States Anesthesia Partners brings to the forefront the broader concerns surrounding private equity involvement in healthcare. The Colorado Attorney General’s complaint explicitly addresses the potential risks when private equity firms acquire medical practices. It argues that the “incessant drive for returns on investment” inherent in private equity models can stifle competition, which is essential for innovation, efficiency, quality improvement, and cost reduction in healthcare.
This Colorado action is part of a wider scrutiny of United States Anesthesia Partners. In September, the Federal Trade Commission (FTC) initiated an antitrust lawsuit against USAP concerning its practices in Texas. The FTC alleges that USAP’s acquisition strategy in Texas led to suppressed competition and inflated service prices. This federal lawsuit followed a Washington Post investigation that specifically examined USAP’s business tactics in Colorado, indicating a pattern of behavior across different states.
Attorney General Weiser asserted that United States Anesthesia Partners replicated its Texas strategy in Colorado to achieve market dominance. While the Colorado settlement is significant, it does not extend to USAP’s operations in Texas or other states, suggesting ongoing regulatory and legal challenges for the company in multiple regions.
USAP entered the Colorado market in 2015 and rapidly acquired anesthesiology practices in the Denver metropolitan area. Within six years, the company had absorbed major competitors, gaining control over surgical anesthesia services within Denver’s two largest hospital systems. This dominance encompassed over 70% of health plan reimbursements in the market, according to court filings. Weiser stated that USAP’s acquisitions were followed by substantial rate increases, reportedly between 20% and 30%. Hospitals found themselves with limited alternatives due to USAP’s extensive market control.
Alt text: Doctor in a white coat reviewing a patient’s medical chart, symbolizing healthcare expertise and attention to patient records.
By 2021, United States Anesthesia Partners had established exclusive or semi-exclusive contracts with 16 out of 21 hospitals in metro Denver, and exclusive contracts with both hospitals in Durango. Notably, by July 2020, USAP secured exclusive contracts with all of CommonSpirit’s Colorado hospitals, then operating under the name Centura Health. Currently, United States Anesthesia Partners continues to hold exclusive contracts with HCA and SCL Health hospitals in the Denver area. In contrast, some healthcare systems like Denver Health, UC Health, Children’s Hospital Colorado, and National Jewish Health maintain independent anesthesiology departments with employed physicians.
According to Attorney General Weiser, United States Anesthesia Partners’ exclusive contracts left insurers with “no choice but to accept those prices.” The AG’s settlement details how USAP leveraged its market position to pressure insurance companies, threatening contract terminations as they neared expiration. This tactic forced commercial health plans and employer-funded plans to absorb significantly higher out-of-network billing costs, amounting to millions for surgical anesthesia services.
Despite its aggressive pricing strategies, United States Anesthesia Partners faced staffing challenges. Factors such as doctor attrition, recruitment difficulties, a national anesthesiologist shortage, and the COVID-19 pandemic contributed to these shortages. By 2021, hospitals began reporting surgery delays, postponements, and cancellations due to staffing issues, yet their contracts with USAP restricted them from seeking temporary or supplemental staffing solutions. Physician dissatisfaction with USAP’s business model and restrictive non-compete agreements also became apparent, according to Weiser.
The settlement aims to rectify these issues by releasing doctors from non-compete obligations, allowing them to pursue other opportunities or form new practices. However, the agreement is structured to ensure a gradual transition, avoiding disruptions to surgical schedules at the affected hospitals. Despite the settlement, USAP maintains its disagreement with the Attorney General’s characterization of its business practices, as stated by Dr. Acosta. Nevertheless, Acosta emphasized that “this agreement preserves USAP’s physician-owned, clinician-led model and our ability to continue serving most of the same Colorado patients and hospital systems we do today.” He concluded by highlighting USAP’s record of providing care to over one million Colorado patients in the past eight years, irrespective of insurance status or ability to pay.
