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FTC Chief Gears Up for a Showdown With Private Equity

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Harris Meyer
Thu, 30 Nov 2023 10:00:00 +0000

A recent Federal Trade Commission civil lawsuit accusing one of the nation's largest anesthesiology groups of monopolistic practices that sharply drove up prices is a warning to private equity investors that could temper their big push to snap up physician groups.

Over the past three years, FTC and Department of Justice officials have signaled they would apply more scrutiny to private equity acquisitions in , including roll-up deals in which larger provider groups buy smaller groups in a local market.

Nothing happened until September, when the FTC sued U.S. Anesthesia Partners and the private equity firm Welsh, Carson, Anderson & Stowe in federal court in Houston, alleging they had rolled up nearly all large anesthesiology practices in Texas. In the first FTC legal challenge against a private equity purchase of medical practices, the federal agency targeted one of the most aggressive private equity firms involved in building large, market-dominating medical groups.

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In an interview, FTC Chair Lina Khan confirmed that her agency wants to send a message with this suit. Welsh Carson and USAP “bought up the largest anesthesiology practices, then jacked up prices and entered into price-setting and market-allocation schemes,” said Khan, who was appointed by President Joe Biden in 2021 to head the antitrust enforcement agency, with a mandate to combat health care consolidation. “This action puts the market on notice that we will scrutinize roll-up schemes.”

The large and growing volume of private equity acquisitions of physician groups in recent years has raised mounting concerns about the impact on health costs, quality of care, and providers' clinical autonomy. A JAMA Internal Medicine study published last year found that prices charged by anesthesiology groups increased 26% after they were acquired by private equity firms.

“Now we're seeing that scrutiny with this suit,” said Ambar La Forgia, an assistant professor of business management at the of California-Berkeley, who co-authored the JAMA article. “This suit will cause companies to be more careful not to create too much local market power.”

The FTC's lawsuit alleges that USAP and Welsh Carson engaged in an anti-competitive scheme to gain market power and up prices for hospital anesthesiology services. The FTC also accuses USAP and Welsh Carson — which established the medical group in 2012 and has expanded it to eight states — of cutting deals with competing anesthesiology groups to raise prices and stay out of one another's markets.

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USAP now controls 60% of Texas' hospital anesthesia market, and its prices are double the median rates of other anesthesia providers in the , according to the lawsuit. Learning that USAP would boost rates one acquisition, a USAP executive wrote, “Awesome! Cha-ching,” the civil complaint said.

In a written statement, Welsh Carson, which also holds sizable ownership shares in radiology, orthopedic, and primary care groups, called the FTC lawsuit “without merit in fact or law.” It said USAP's commercial rates “have not exceeded the rate of medical cost inflation for close to 10 years.”

The New York firm also said its investment in USAP “has independent anesthesiologists to deliver superior clinical outcomes to underserved populations” and that the FTC's action will harm clinicians and patients. Welsh Carson declined a request for interviews with its executives.

“This is a pretty common roll-up strategy, and some of the big private equity companies must be wondering if more FTC complaints are coming,” said Loren Adler, associate director of the Brookings Schaeffer Initiative on Health Policy. “If the FTC is successful in court, it will have a chilling effect.”

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Since the FTC filed the USAP lawsuit, Khan said, the agency has received information from people in other health fields about roll-ups it should scrutinize. “We have limited resources, but it's an area we are interested in,” she said. “We want to focus on where we see the most significant harm.”

In physician acquisition deals, PE firms typically use mostly borrowed money to acquire a controlling interest in a large medical group, pay the physician owners a substantial upfront sum in exchange for sharply cutting their future compensation, and install a management team. Then they seek to acquire smaller groups in the same geographic market and bolt them onto the original medical group for more bargaining clout and operating efficiencies.

The PE firm's goal is to garner at least 20% dividends a year and then sell the group to another investor for at least three times the purchase price in three to seven years. Critics say this short-term investment model spurs the investors and medical groups to boost prices and cut staffing to generate large profits as fast as possible.

“Private equity is to extract value quickly and sell the company for a profit, so there's a lot more incentive to increase prices quickly and extract higher revenue,” La Forgia said.

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In the two years after a sale, PE-owned practices in dermatology, gastroenterology, and ophthalmology charged insurers 20% more per claim on average than did practices not owned by private equity, according to a JAMA study published last year.

There are similar concerns about hospital systems acquiring physician practices, which also have raised prices. “The evidence shows that both private equity and hospital acquisitions of physician practices are bad for consumers, and scrutiny should be applied to all acquirers,” Adler said.

Critics warn that private equity roll-ups of medical groups can jeopardize quality of care, too. Chris Strouse, a Denver anesthesiologist who served on USAP's national board of directors but left the company's Colorado group out of disapproval in 2020, cited patient safety issues arising from short staffing and mismanagement. He said USAP would schedule shifts so that three or four providers would hand off to each other a single surgical procedure, which he said is risky. In addition, USAP frequently asked anesthesiologists to work the day after working a 24-hour on-call shift, he said. “The literature shows that's outside the safety range,” he said. As a result, many providers have left USAP, he added.

The FTC has long been lax in monitoring roll-ups of physician groups, in part because federal law does not require public reporting of these deals unless they exceed $111.4 million in value, a threshold adjusted over time. Lowering the threshold would require congressional action. As a result, regulators may be unaware of many deals that to gradual market concentration, which allows providers to demand higher prices from insurers and employer health plans.

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Recognizing that problem, the FTC proposed in June to beef up its reporting requirements for companies planning mergers, in hopes of spotting previous acquisitions of smaller groups that could lead to excessive market power and higher prices. In addition, in a draft of their merger review guidelines, issued in July, the FTC and the Department of Justice said they would consider the cumulative effect of a series of smaller acquisitions.

“The ways PE firms are making serial acquisitions, each individual acquisition is under the radar, but in aggregate they roll up the whole market,” Khan said. “Between the merger reporting form and the new merger guidelines, we want to be able to better catch unlawful roll-up schemes. … This would enable us to stop roll-ups earlier.”

But Brian Concklin, a lawyer with the law firm Clifford , whose clients include private equity firms, said the FTC's proposed reporting requirements would hamper many legitimate mergers. “The notion that they need all that information to catch deals that lessen competition seems overblown and false, given that the vast majority of these deals do not lessen competition,” he said. “It will be a substantial burden on most if not all clients to comply.”

Researchers and employer groups, however, were encouraged by the FTC's action, though they fear it's too little, too late, because consolidation already has reduced competition sharply. Some even say the market has failed and price regulation is needed.

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“Providers have been able to extort higher prices on services with no improvement in quality or value or access,” said Mike Thompson, CEO of the National Alliance of Healthcare Purchaser Coalitions. “The FTC stepping up its game is a good thing. But this horse is out of the barn. If we don't have better enforcement, we won't have a marketplace.”

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By: Harris Meyer
Title: FTC Chief Gears Up for a Showdown With Private Equity
Sourced From: kffhealthnews.org//article/ftc-chair-lina-khan-private-equity-regulation/
Published Date: Thu, 30 Nov 2023 10:00:00 +0000

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The Lure of Specialty Medicine Pulls Nurse Practitioners From Primary Care

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Michelle Andrews
Fri, 17 May 2024 09:00:00 +0000

For many patients, seeing a nurse practitioner has become a routine part of primary care, in which these “NPs” often perform the same tasks that patients have relied on doctors for.

But NPs in specialty care? That's not routine, at least not yet. Increasingly, though, nurse practitioners and physician assistants are joining cardiology, dermatology, and other specialty practices, broadening their skills and increasing their income.

This worries some people who track the workforce, because current trends suggest primary care, which has counted on nurse practitioners to backstop physician shortages, soon might not be able to rely on them to the same extent.

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“They're succumbing to the same challenges that we have with physicians,” said Atul Grover, executive director of the Research and Action Institute at the Association of American Medical Colleges. The rates NPs can command in a specialty practice “are quite a bit higher” than practice salaries in primary care, he said.

When nurse practitioner programs began to proliferate in the 1970s, “at first it looked great, producing all these nurse practitioners that go to work with primary care physicians,” said Yalda Jabbarpour, director of the American Academy of Family Physicians' Robert Graham Center for Policy Studies. “But now only 30% are going into primary care.”

Jabbarpour was referring to the 2024 primary care scorecard by the Milbank Memorial Fund, which found that from 2016 to 2021 the proportion of nurse practitioners who worked in primary care practices hovered between 32% and 34%, even though their numbers grew rapidly. The proportion of physician assistants, also known as physician associates, in primary care ranged from 27% to 30%, the study found.

Both nurse practitioners and physician assistants are advanced practice clinicians who, in addition to graduate degrees, must complete distinct education, training, and certification steps. NPs can practice without a doctor's supervision in more than two dozen states, while PAs have similar independence in only a handful of states.

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About 88% of nurse practitioners are certified in an area of primary care, according to the American Association of Nurse Practitioners. But it is difficult to track exactly how many work in primary care or in specialty practices. Unlike physicians, they're generally not required to be endorsed by a national standard-setting body to practice in specialties like oncology or cardiology, for example. The AANP declined to answer questions about its annual workforce survey or the extent to which primary care NPs are moving toward specialties.

Though data tracking the change is sparse, specialty practices are adding these advanced practice clinicians at almost the same rate as primary care practices, according to frequently cited research published in 2018.

The clearest evidence of the shift: From 2008 to 2016, there was a 22% increase in the number of specialty practices that employed nurse practitioners and physician assistants, according to that study. The increase in the number of primary care practices that employed these professionals was 24%.

Once more, the most recent projections by the Association of American Medical Colleges predict a dearth of at least 20,200 primary care physicians by 2036. There will also be a shortfall of non-primary care specialists, a deficiency of at least 10,100 surgical physicians and up to 25,000 physicians in other specialties.

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When it to the actual work performed, the lines between primary and specialty care are often blurred, said Candice Chen, associate professor of health policy and management at George Washington .

“You might be a nurse practitioner working in a gastroenterology clinic or cardiology clinic, but the scope of what you do is starting to overlap with primary care,” she said.

Nurse practitioners' salaries vary widely by location, type of facility, and experience. Still, according to data from recruiter AMN Healthcare Physician Solutions, formerly known as Merritt Hawkins, the total annual average starting compensation, including signing bonus, for nurse practitioners and physician assistants in specialty practice was $172,544 in the year that ended March 31, slightly higher than the $166,544 for those in primary care.

According to forecasts from the federal Bureau of Labor Statistics, nurse practitioner will increase faster than jobs in almost any other occupation in the decade leading up to 2032, growing by 123,600 jobs or 45%. (Wind turbine service technician is the only other occupation projected to grow as fast.) The growth rate for physician assistants is also much faster than average, at 27%. There are more than twice as many nurse practitioners as physician assistants, however: 323,900 versus 148,000, in 2022.

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To Grover, of the AAMC, numbers like this signal that there will probably be enough NPs, PAs, and physicians to meet primary care needs. At the same time, “expect more NPs and PAs to also flow out into other specialties,” he said.

When Pamela Ograbisz started working as a registered nurse 27 years ago, she worked in a cardiothoracic intensive care unit. After she became a family nurse practitioner a few years later, she found a job with a similar specialty practice, which trained her to take on a bigger role, first running their outpatient clinic, then working on the floor, and later in the intensive care unit.

If nurse practitioners want to specialize, often “the doctors mentor them just like they would with a physician residency,” said Ograbisz, now vice president of clinical operations at temporary placement recruiter LocumTenens.com.

If physician assistants want to specialize, they also can do so through mentoring, or they can “certificates of added qualifications” in 10 specialties to demonstrate their expertise. Most employers don't “encourage or require” these certificates, however, said Jennifer Orozco, chief medical officer at the American Academy of Physician Associates.

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There are a number of training programs for family nurse practitioners who want to develop skills in other .

Raina Hoebelheinrich, 40, a family nurse practitioner at a regional medical center in Yankton, South Dakota, recently enrolled in a three-semester post-master's endocrinology training program at Mount Marty University. She lives on a farm in nearby northeastern Nebraska with her husband and five sons.

Hoebelheinrich's new skills could be helpful in her current hospital job, in which she sees a lot of patients with acute diabetes, or in a clinic setting like the one in Sioux Falls, South Dakota, where she is doing her clinical endocrinology training.

Lack of access to endocrinology care in rural areas is a real problem, and many people may travel hundreds of miles to see a specialist.

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“There aren't a lot of options,” she said.

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By: Michelle Andrews
Title: The Lure of Specialty Medicine Pulls Nurse Practitioners From Primary Care
Sourced From: kffhealthnews.org//article/nurse-practitioners-trend-primary-care-specialties/
Published Date: Fri, 17 May 2024 09:00:00 +0000

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Clean Needles Save Lives. In Some States, They Might Not Be Legal.

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Mahon, PA and Sarah Boden, WESA
Fri, 17 May 2024 09:00:00 +0000

Kim Botteicher hardly thinks of herself as a criminal.

On the main floor of a former Catholic church in Bolivar, Pennsylvania, Botteicher runs a flower and cafe.

In the former church's basement, she also operates a nonprofit organization focused on helping people caught up in the drug epidemic get back on their feet.

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The nonprofit, FAVOR ~ Western PA, sits in a rural pocket of the Allegheny Mountains east of Pittsburgh. Her organization's home county of Westmoreland has seen roughly 100 or more drug overdose deaths each year for the past several years, the majority involving fentanyl.

Thousands more residents in the region have been touched by the scourge of addiction, which is where Botteicher in.

She helps people find housing, jobs, and health care, and works with families by running support groups and explaining that substance use disorder is a disease, not a moral failing.

But she has also talked publicly about how she has made sterile syringes available to people who use drugs.

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“When that person comes in the door,” she said, “if they are covered with abscesses because they have been using needles that are dirty, or they've been sharing needles — maybe they've got hep C — we see that as, ‘OK, this is our first step.'”

Studies have identified public health benefits associated with syringe exchange services. The Centers for Disease Control and Prevention says these programs reduce HIV and hepatitis C infections, and that new users of the programs are more likely to enter drug treatment and more likely to stop using drugs than nonparticipants.

This harm-reduction strategy is supported by leading health groups, such as the American Medical Association, the World Health Organization, and the International AIDS Society.

But providing clean syringes could put Botteicher in legal danger. Under Pennsylvania law, it's a misdemeanor to distribute drug paraphernalia. The state's definition includes hypodermic syringes, needles, and other objects used for injecting banned drugs. Pennsylvania is one of 12 states that do not implicitly or explicitly authorize syringe services programs through statute or regulation, according to a 2023 analysis. A few of those states, but not Pennsylvania, either don't have a state drug paraphernalia law or don't include syringes in it.

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Those working on the front lines of the opioid epidemic, like Botteicher, say a reexamination of Pennsylvania's law is long overdue.

There's an urgency to the issue as well: Billions of dollars have begun flowing into Pennsylvania and other states from legal settlements with companies over their role in the opioid epidemic, and syringe services are among the eligible interventions that could be supported by that money.

The opioid settlements reached between drug companies and distributors and a coalition of state attorneys general included a list of recommendations for spending the money. Expanding syringe services is listed as one of the core strategies.

But in Pennsylvania, where 5,158 people died from a drug overdose in 2022, the state's drug paraphernalia law stands in the way.

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Concerns over Botteicher's work with syringe services recently led Westmoreland County officials to cancel an allocation of $150,000 in opioid settlement funds they had previously approved for her organization. County Commissioner Douglas Chew defended the decision by saying the county “is very risk averse.”

Botteicher said her organization had planned to use the money to hire additional recovery specialists, not on syringes. Supporters of syringe services point to the cancellation of funding as evidence of the need to change state law, especially given the recommendations of settlement documents.

“It's just a huge inconsistency,” said Zoe Soslow, who leads overdose prevention work in Pennsylvania for the public health organization Vital Strategies. “It's causing a lot of confusion.”

Though sterile syringes can be purchased from pharmacies without a prescription, handing out free ones to make drug use safer is generally considered illegal — or at least in a legal gray area — in most of the state. In Pennsylvania's two largest , Philadelphia and Pittsburgh, officials have used local health powers to provide legal protection to people who operate syringe services programs.

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Even so, in Philadelphia, Mayor Cherelle Parker, who took office in January, has made it clear she opposes using opioid settlement money, or any city funds, to pay for the distribution of clean needles, The Philadelphia Inquirer has reported. Parker's position signals a major shift in that city's approach to the opioid epidemic.

On the other side of the state, opioid settlement funds have had a big effect for Prevention Point Pittsburgh, a harm reduction organization. Allegheny County reported spending or committing $325,000 in settlement money as of the end of last year to support the organization's work with sterile syringes and other supplies for safer drug use.

“It was absolutely incredible to not have to fundraise every single dollar for the supplies that go out,” said Prevention Point's executive director, Aaron Arnold. “It takes a lot of energy. It pulls away from actual delivery of services when you're constantly to find out, ‘Do we have enough money to even purchase the supplies that we want to distribute?'”

In parts of Pennsylvania that lack these legal protections, people sometimes operate underground syringe programs.

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The Pennsylvania law banning drug paraphernalia was never intended to apply to syringe services, according to Scott Burris, director of the Center for Public Health Law Research at Temple University. But there have not been court cases in Pennsylvania to clarify the issue, and the failure of the to act creates a chilling effect, he said.

Carla Sofronski, executive director of the Pennsylvania Harm Reduction Network, said she was not aware of anyone having faced criminal charges for operating syringe services in the state, but she noted the threat hangs over people who do and that they are taking a “great risk.”

In 2016, the CDC flagged three Pennsylvania counties — Cambria, Crawford, and Luzerne — among 220 counties nationwide in an assessment of communities potentially vulnerable to the rapid spread of HIV and to new or continuing high rates of hepatitis C infections among people who inject drugs.

Kate Favata, a resident of Luzerne County, said she started using heroin in her late and wouldn't be alive if it weren't for the support and community she found at a syringe services program in Philadelphia.

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“It kind of just made me feel like I was in a safe space. And I don't really know if there was like a come-to-God moment or come-to-Jesus moment,” she said. “I just wanted better.”

Favata is now in long-term recovery and works for a medication-assisted treatment program.

At clinics in Cambria and Somerset Counties, Highlands Health provides free or low-cost medical care. Despite the legal risk, the organization has operated a syringe program for several years, while also testing patients for infectious diseases, distributing overdose reversal medication, and offering recovery options.

Rosalie Danchanko, Highlands Health's executive director, said she hopes opioid settlement money can eventually support her organization.

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“Why shouldn't that wealth be spread around for all organizations that are working with people affected by the opioid problem?” she asked.

In February, legislation to legalize syringe services in Pennsylvania was approved by a committee and has moved forward. The administration of Gov. Josh Shapiro, a Democrat, supports the legislation. But it faces an uncertain future in the full legislature, in which Democrats have a narrow majority in the House and Republicans control the Senate.

One of the bill's lead sponsors, state Rep. Jim Struzzi, hasn't always supported syringe services. But the Republican from western Pennsylvania said that since his brother died from a drug overdose in 2014, he has come to better understand the nature of addiction.

In the committee vote, nearly all of Struzzi's Republican colleagues opposed the bill. State Rep. Paul Schemel said authorizing the “very instrumentality of abuse” crossed a line for him and “would be enabling an evil.”

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After the vote, Struzzi said he wanted to build more bipartisan support. He noted that some of his own skepticism about the programs eased only after he visited Prevention Point Pittsburgh and saw how workers do more than just hand out syringes. These types of programs connect people to resources — overdose reversal medication, wound care, substance use treatment — that can save lives and lead to recovery.

“A lot of these people are … desperate. They're alone. They're afraid. And these programs bring them into someone who cares,” Struzzi said. “And that, to me, is a step in the right direction.”

At her nonprofit in western Pennsylvania, Botteicher is hoping lawmakers take action.

“If it's something that's going to help someone, then why is it illegal?” she said. “It just doesn't make any sense to me.”

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This story was co-reported by WESA Public Radio and Spotlight PA, an independent, nonpartisan, and nonprofit newsroom producing investigative and public-service journalism that holds power to account and drives positive change in Pennsylvania.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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This story can be republished for free (details).

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By: Ed Mahon, Spotlight PA and Sarah Boden, WESA
Title: Clean Needles Save Lives. In Some States, They Might Not Be Legal.
Sourced From: kffhealthnews.org//article/clean-needles-syringe-services-programs-legal-gray-area-risk-pennsylvania/
Published Date: Fri, 17 May 2024 09:00:00 +0000

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Watch: John Oliver Dishes on KFF Health News’ Opioid Settlements Series

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Fri, 17 May 2024 09:00:00 +0000

Opioid manufacturers, distributors, and retailers are paying tens of billions of dollars in restitution to settle lawsuits related to their role in the nation's overdose epidemic. A recent of “Last Tonight With John Oliver” examined how that money is being spent by and local governments across the United States.

The segment from the KFF Health “Payback: Tracking the Opioid Settlement Cash.” You can learn more about the issue and read our collection of articles by Aneri Pattani here.

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Title: Watch: John Oliver Dishes on KFF News' Opioid Settlements Series
Sourced From: kffhealthnews.org/news/article/watch-john-oliver-kff-health-news-payback-opioid-settlements-series/
Published Date: Fri, 17 May 2024 09:00:00 +0000

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