FTC Chair Lina Khan is getting more aggressive, targeting individual Amazon executives, and seeking to stop a brazen scheme to monopolize health care in Texas. Private equity is big mad.
This hits close to me, as I was an executive in an anesthesia company that went head-to-head against USAP in contract bidding. USAP’s success in strong arming BCBS for higher reimbursement rates left everyone at a disadvantage. After complaining to BCBS for years, they finally agreed to raise our reimbursement rate. Any time we were in direct competition with USAP (instead of lowering USAPs to market level). In the end, patients are the losers because cost have to go up to ensure private equity receives their returns.
It's not just Texas. They bought up Anesthesia Medical Group in Nashville. Already a behemoth in the local market, it's now part of US Anesthesia Partners. Love how USAP articulates its funding on its website "...capital partners are Welsh, Carson, Anderson & Stowe, Berkshire Partners, and GIC—all of whom have significant experience investing in and building leading healthcare companies."
Welsh Carson has been involved in Nashville healthcare companies for decades. Wishing Ms. Khan and her team the best of luck to improve healthcare and lower costs.
Terrific piece. This is the best newsletter subscription I have. Keep up the good work.
The story about anesthesiology being rolled up in Texas, sounds very familiar here in Kansas City. A few years ago hospital conglomerate HCA rolled up many of the individual internal medicine practices with the same result, decreased access to physicians with increased fees.
Punishing executives directly when they steer companies in illegal directions is the way to go. Its a better deterrent. Executives will think twice if their personal wealth is at risk or they stand the chance of jail time. The worst case scenario of just getting fired is not severe enough to deter. Its also more fair. When companies get fined or sanctioned in a big way, inevitably, workers, non-managing shareholders, and customers.. those not involved in the decision making.. will suffer.
Maybe the best news of the YEAR. Private equity and big companies taking over ownership of medical care is making care unaffordable and is a violation of principals of antitrust laws. Bravo.
What are some examples of prices before and after consolidation? Talking about "millions" feels amorphous. Explaining that the price of anesthesia services for a standard appendectomy went from $200 to $750 will help me really feel the rage!
I feel like I need some Lina Khan swag. It's a shame she gets no public recognition for the good work she's doing. If it weren't for Matt I probably wouldn't know who she is.
The problem is that there is no consideration here as to why this is happening--there is a long history of government interference in health care markets and this interference has only multiplied during the past 20 years or so. Notice that BC/BS is really who is controlling prices, but Medicare and Medicaid reimbursement rules also affect price. The government interference in health care markets increases fixed cost, so that larger operators have a cost advantage. Since insurance companies from the point of view of a small business control price, the only way to have any negotiating leverage is to be large. So you have a government attacking businesses for rationally responding to an environment created by the government.
Great article. Why do all PE guys have the same entitled douches look.
This hits close to me, as I was an executive in an anesthesia company that went head-to-head against USAP in contract bidding. USAP’s success in strong arming BCBS for higher reimbursement rates left everyone at a disadvantage. After complaining to BCBS for years, they finally agreed to raise our reimbursement rate. Any time we were in direct competition with USAP (instead of lowering USAPs to market level). In the end, patients are the losers because cost have to go up to ensure private equity receives their returns.
It's not just Texas. They bought up Anesthesia Medical Group in Nashville. Already a behemoth in the local market, it's now part of US Anesthesia Partners. Love how USAP articulates its funding on its website "...capital partners are Welsh, Carson, Anderson & Stowe, Berkshire Partners, and GIC—all of whom have significant experience investing in and building leading healthcare companies."
Welsh Carson has been involved in Nashville healthcare companies for decades. Wishing Ms. Khan and her team the best of luck to improve healthcare and lower costs.
Tbh the Biden administration should message around this instead of “Bidenomics”, way easier to understand the story here
Terrific piece. This is the best newsletter subscription I have. Keep up the good work.
The story about anesthesiology being rolled up in Texas, sounds very familiar here in Kansas City. A few years ago hospital conglomerate HCA rolled up many of the individual internal medicine practices with the same result, decreased access to physicians with increased fees.
Great article as always Matt.
Punishing executives directly when they steer companies in illegal directions is the way to go. Its a better deterrent. Executives will think twice if their personal wealth is at risk or they stand the chance of jail time. The worst case scenario of just getting fired is not severe enough to deter. Its also more fair. When companies get fined or sanctioned in a big way, inevitably, workers, non-managing shareholders, and customers.. those not involved in the decision making.. will suffer.
Maybe the best news of the YEAR. Private equity and big companies taking over ownership of medical care is making care unaffordable and is a violation of principals of antitrust laws. Bravo.
What are some examples of prices before and after consolidation? Talking about "millions" feels amorphous. Explaining that the price of anesthesia services for a standard appendectomy went from $200 to $750 will help me really feel the rage!
I feel like I need some Lina Khan swag. It's a shame she gets no public recognition for the good work she's doing. If it weren't for Matt I probably wouldn't know who she is.
So the real question is, will they find another idiot judge to let them off the hook?
Somehow "Wall Street" went from cautionary tale to how-to guide.
“He went to Yale and you can trust him.” I’m sure we can. He was probably Kavanaugh’s bestie!
I think it excellent that you post names and faces of the people that have chosen human misery as their occupation.
Let them be afraid to show their faces.
The problem is that there is no consideration here as to why this is happening--there is a long history of government interference in health care markets and this interference has only multiplied during the past 20 years or so. Notice that BC/BS is really who is controlling prices, but Medicare and Medicaid reimbursement rules also affect price. The government interference in health care markets increases fixed cost, so that larger operators have a cost advantage. Since insurance companies from the point of view of a small business control price, the only way to have any negotiating leverage is to be large. So you have a government attacking businesses for rationally responding to an environment created by the government.
Radical is what we need.