US Anesthesia Cuts Ties With 5 Colorado Hospitals

In a negotiated arrangement with the state of Colorado, a group of anesthesiology providers backed by private equity that had been under scrutiny from federal authorities has agreed to sever links with five hospitals, ending its claims of anticompetitive behavior.

In 2015, U.S. Anesthesia Partners (USAP) of Colorado started buying up practices in the Denver metro area. By 2021, they had taken over the two biggest hospital systems in the Denver region, and they were responsible for 70% of the health plan refunds, per the report of Colorado Attorney General Phil Weiser.

According to the attorney general, this approach caused patients to experience medical delays or cancellations, noncompete clauses that were “onerous,” and reimbursement rates that were 30% to 40% higher than those of competing companies.

These allegations are similar to those leveled by the FTC against USAP in September last year in Texas, where the company is based. Weiser and the FTC both claimed that the purported roll-ups, increased charges, and employment limitations were driven by Welsh, Carson, Anderson & Stowe, USAP’s private equity investor.

“When private equity gets involved in healthcare with a focus on raising prices to make a quick buck, bad things happen for consumers,” Weiser stated in a Tuesday release. “USAP’s overall business model focused less on serving patients, and more on increasing profits through acquisitions and anticompetitive tactics.”

In a statement about the arrangement, USAP referred to the investigation that the attorney general had started as “misguided” and asserted that terminating the investigation would be a better use of agency funds than covering legal costs.

In the statement, Henri Acosta, M.D., representative of USAP-Colorado, expressed strong disagreement with the accusations and assertions made by the Attorney General. He emphasized the proud history of USAP Colorado’s provision of exceptional patient care and outstanding anesthesia services to the facilities under their purview. 

Dr. Acosta stated that their preference had been to maintain relationships with the hospitals affected by the settlement, and their objective is to collaborate with colleagues serving those sites to facilitate a smooth transition. 

The following five CommonSpirit facilities will have their exclusive contracts with USAP cancelled: St. Anthony North Hospital, St. Anthony Hospital, OrthoColorado Hospital, Mercy Hospital and Longmont United Hospital. Importantly, this agreement in no way indicates that either party is admitting guilt or culpability. Noncompetes will be waived for USAP doctors employed at these facilities. To avoid any disruption to hospital services, USAP-Colorado will work with the clinicians to determine a mutually agreeable termination date.

On a broader note, the attorney general’s office announced that USAP-Colorado will be updating its physicians’ noncompete contracts to make them more specific and less burdensome, and that the organization will entirely discontinue the use of noncompete agreements inside 18 months.

The state of Colorado has made several modifications to its standards and laws in recent years, and USAP-Colorado has stated that the agreed-upon improvements have been in the company’s plans for some time. The state will also receive $200,000 in reimbursement for attorney’s fees by USAP.