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Concern in the US for Private equity firms buying up medical practices and raising prices

As first reported by The Washington Post, there is concern in the US that private equity firms have been buying up medical practices in recent year and – reportedly – raising prices which impacts patients.

In reported by The Washington Post, USAP Anesthesia Partners, a private equity-owned company that bought up several anesthesiology practices in Colorado and then after the acquisition, USAP raised prices for its services by an average of 29%.

The Acquisition

In 2018, USAP Anesthesia Partners acquired several anesthesiology practices in Colorado. The practices were previously owned by independent physicians, and they provided anesthesia services to hospitals and other healthcare providers in the state.

After the acquisition, USAP reportedly raised prices for its services by an average of 29%. This increase was met with criticism from some patients and healthcare providers, who argued that it was unfair and would lead to higher healthcare costs.

In response to this USAP PR Rep Jeff Birnbaum, responded with their perpective as follows;

“USAP faces significant competition in Colorado, from a variety of groups and health care organizations,” – Robert Coward, the company’s chief executive. “USAP’s average annual net rate increases from major insurers in Colorado are modest and in line with national benchmarks.”

The company’s clinical governance board in Colorado also made a statement: “USAP-Colorado is a physician-run, patient-focused anesthesia practice that is proud of the quality of care that we provide,” the board members argued. “A few disgruntled former USAP physicians here have apparently complained to you about us, but they are providing you with provably false information. USAP does not exercise market power in Colorado … We are pleased with the way physicians are scheduled and compensated.” – as reported to The Washington Post

The Impact on Patients

If this is true he price increase by any medical practise controled by PE or not has a significant impact on patients. In some cases, patients would have to pay hundreds or even thousands of dollars more for anesthesia services and this has been especially difficult for patients who are already struggling to afford healthcare.

Any price increase under this practise or not will lead to some patients delaying or canceling necessary medical procedures because they cannot afford to pay the higher prices for anesthesia services.

The Impact on Healthcare Providers

Any price increase by any provider has an negative impact on healthcare providers.

Hospitals and other healthcare providers have had to pass on the higher costs to patients, which has led to increased healthcare costs overall.

This in turn makes it more difficult for healthcare providers to provide affordable care to their patients and can make it more difficult for healthcare providers to compete with other providers who are not owned by private equity firms.

Conclusion

If proven, in the case of USAP Anesthesia Partners it is a reminder of the potential impact of private equity on healthcare when private equity firms buy up medical practices, they often raise prices in order to generate profits.

One of the reasons for this is that private equity firms are not in the US slash almost everywhere subject to the same regulations as hospitals and other healthcare providers which means that they have more freedom to raise prices without oversight.

This can and will lead to higher healthcare costs for patients and can make it more difficult for healthcare providers to provide affordable care and so it is important to monitor the impact of private equity on healthcare and to take steps to protect patients from rising healthcare costs.

This may include regulating private equity firms or requiring them to disclose more information about their pricing practices and any other safeguards to rightly protect the healthcare access and quality for patients

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Takeouts

  • Private equity firms have been buying up medical practices for several years.
  • The trend has accelerated in recent years, as private equity firms have sought to profit from the growing healthcare industry.
  • Some critics argue that private equity firms are more interested in profits than in providing quality care.
  • They say that private equity firms may be more likely to raise prices and cut costs, which could lead to lower quality care for patients.


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