From anonymous in response to when private equity buys anesthesia practices
I wanted to share my own experience as a member of a group that was acquired by private equity. The chronology of that acquisition, and the "natural history" of the group after acquisition, is perhaps illustrative. As you point out, PE groups have been avidly acquiring practices in the last decade, fueled in large part by low interest rates creating an "era of free money" (https://fortune.com/2023/04/13/inflation-interest-rates-fed-era-of-free-mone/ - "The era of free money may finally be ending) and the lure of cash-generating physician practices. My group was acquired by a major national player as part of this trend.
I joined that practice straight out of training and was congratulated by members of my department on learning I had landed a job with the group - it had a stellar reputation in the area. Compensation was as equitable as possible - a group blended unit with a negligible proportion added for base units. Essentially, we were compensated for the time we spent in the OR - plus call stipends. At the time, I thought little of the fact that a large number of hires were being brought into the group. Fast forward a year later, and, with the acquisition, I was given a two-week window in which to stay with the group or leave. On offer: fixed unit compensation amounting to approximately a ~30% reduction, plus a 50% reduction in stipends. Overnight, I was being paid far less for the exact same work. Their upfront cost: monies paid to the group shareholders to buy the practice.
Where did that excess money go? Obviously, the private equity group "sweeps" that cash. The theory being that low-end market rates for the actual anesthesia care plus increased insurer reimbursements equals profit. So what are the problems? Let's enumerate some of them:
Employee Morale: In the deal I was part of, about 30% of the workforce was excluded from the financial benefits of the transaction. This included some people who were denied partnership in the year they ought to have been, for what ended up being very tenuous reasons. The main reason: not to dilute the share value of a deal in progress. This exclusion had a predictable effect of plummeting morale and a strong sense of us vs. them in terms of junior members versus former partners. Many junior hires, in quick succession, hit the eject button. This in turn gives rise to...
Reductions in the Quality of Care: As a formerly premier group now offering below market rates, the group was not able to maintain it's workforce and indeed was not able to attract the talent that it formerly was able to. Certainly, the group was able to tread water for some time. However, surgeons and hospital leadership will eventually notice. This results in...
Negative Impact on Reputation and Contractual Relations: Several years after the deal, the anesthesia group was implicated in a very public, very tragic death - the culmination of the mentioned reductions in quality of care. In short order, the group's contracts were terminated. As of writing, this group is no longer in existence. However, let's not forget about...
Moral Hazard: When private equity firms take control of medical care, they introduce a moral hazard, as they prioritize profit which may lead to compromised patient care. There are numerous documented examples of private equity groups pressuring physicians to prioritize billing over appropriate medical care, raising the costs for all of us and potentially leading to poor medical decision-making: taking back that kid with a URI, instead of cancelling the procedure, for example. The contributes to...
Devaluation of the Medical Profession: Lawyers are actually prohibited by the American Bar Association from fee sharing (https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_4_professional_independence_of_a_lawyer/). On the other hand, when a physician works for a private group owned by publicly traded company, some of the value of their work is distributed as dividends. These rules are in place for attorneys for a reason, including those outlined above: ethical conflicts and devaluation of the profession.
My experience probably represents an extreme end of how wrong things can go. Regardless, when private equity and medicine mix, there is certainly a lot of room for things to go wrong.
From Dr. Mark Schreiner (retired) on Methadone pricing…in the July 18th PAAD, Myron and Rita asked the readers if they knew the unit price of IV or oral methadone in their hospitals. Using the on-line website Drugs.com (accessed July 19, 2023):
IV Methadone 10 mg/mL =: $366.58/20 mL vial or $18.33/mL or $1.83/mg (typical dose is 0.1 mg/kg)
Oral Tablet 5 mg = $15.31/100 tablets or $0.15/ tablet or $0.03/mg (typical dose is 0.1 mg/kg)
The Oral solution comes in 2 concentrations:
5mg/5mL (1 mg/mL) = $21.38/150 mL or $0.14/mL or $0.14/mg (typical dose is 0.1 mg/kg)
10mg/5mL (2mg/mL) = $68.21/500 mL or $0.14/mL or $0.07/mg (typical dose is 0.1/mg/kg)
PS from Myron: Hospital costs will vary greatly and the prices above do not include the myriad pharmacy costs in preparing single unit dosing. Nevertheless, regardless of route of administration and prep, the cost is low and on par or cheaper than other opioids.
From Dr. David Polaner Seattle Children’s Hospital and leader of the Pediatric Regional Anesthesia Network (PRAN) on epinephrine and test dosing
I enjoyed reading Quentin’s PAAD about test doses. I want to add an additional twist to his report and observations, which are, I believe, especially pertinent in this age of increased usage of TIVA anesthetics, and also add some additional anecdotal and data based information about test doses in pediatric regional anesthesia.
1. Whereas the the data regarding the use of ECG criteria to detect intravascular injection during inhalation anesthesia is very strong, it appears that it is not as useful during propofol/ remifentanil anesthesia. We performed a prospective study looking at this question (Polaner DM, Zuk J, Luong, K, Pan Z. Positive Intravascular Test Dose Criteria in Children During Total Intravenous Anesthesia with Propofol and Remifentanil Are Different than During Inhaled Anesthesia. Anesthesia & Analgesia (2010) 110:41-45 DOI: 10.1213/ANE.0b013e3181c5f2dc) using simulated intravascular test doses and found that t-wave criteria was unreliable- the response of our subjects were evenly divided into thirds- one third had t-wave elevation, one third t-wave depression, and one third had no change at all! The best and only consistent indicator was blood pressure, which was elevated uniformly among subjects. The peak occurred at one minute after injection and persisted for at least another 60 seconds.
2. A number of years ago I gave a lecture at the APAGBI meeting in Cambridge, England on test doses, in which I presented these data and the data from PRAN on test doses. During the Q&A session afterwards I asked the audience how many people used test doses routinely for epidural or caudal anesthesia and was very surprised that fewer than half did, citing a belief that they were not reliable. I don’t believe that this is true. Certainly there might be false negatives, but a positive test dose is undoubtedly positive, assuming a stable depth of general anesthesia during the injection.
3. In the PRAN dataset nearly all positive test doses occur during neuraxial anesthesia, with none reported during peripheral nerve blockade, but test dosing is infrequent (<25%) when ultrasound guidance is used. Single injection caudal blocks were actually the block with the most frequent positive test doses (0.16% of nearly 20,000 test-dosed blocks). For any block, of course, fractionated intermittent injection should be used.