Capital investment to sustain independent anesthesia practices across the country is critical for meeting the increasing complexity of the current U.S. health care landscape. Three of the U.S. health care system’s major players are becoming bigger and more complex, requiring more resources and capital for independent practices to operate effectively:

  1. Government: Federal and state governments are the largest funders of health care in this country. The U.S. Department of Health and Human Services proposed $1.8 trillion in budget authority for FY 2024 (asamonitor.pub/3zhLyOn).
  2. Commercial payers. UnitedHealth Group alone is illustrative of how much an impact one payer has, with 2023 revenues of $371.6 billion, up 15% year over year (asamonitor.pub/3VHmlo3). UnitedHealth’s revenue is larger than the GDP of 132 countries. It is also the largest employer of physicians in the country, with 90,000, or one in 10 employed there (asamonitor.pub/45YDvSV). Becker’s recently reported that Optum, a UnitedHealth subsidiary, spent $31 billion in the last two years on acquisitions (asamonitor.pub/3VJCjhv).
  3. Hospitals and health care facilities. In early 2024, there was a significant uptick in merger and acquisition activity, as many community health systems sought larger partners and large health systems continued to realign their portfolios (asamonitor.pub/3L1GL64). Becker’s Hospital CFO Report recently shared an analysis with evidence that 40% of U.S. hospitals continue to lose money from operations into 2024 (asamonitor.pub/3xAUAW4). The pressure on systems to grow translates to fewer independent anesthesia practices, as smaller groups are forced to consolidate with system-based practices.

The growth of these three entities forces anesthesia practices to grow as well, to address quality, scale, efficiency, adequate clinician staffing, and revenue cycle management. Often, this requires capital investment. In the midst of a dire clinician shortage, our health care facilities demand more complex procedures and cases to remain financially viable. Capital investment by anesthesiologists in their practices is a crucial necessity – for example, to staff growth areas such as new sites of service (e.g., new ASCs) – before their cases volumes are developed.

In this climate, and in consideration of these factors, U.S. Anesthesia Partners (USAP) was founded in 2012. The goal of the USAP model is to bring together like-minded groups around the country to create high-performing and highly ranked practices, especially focused on quality of care. USAP now offers comprehensive anesthesia services in 12 states plus Washington, D.C. In 2023, USAP performed over 2.5 million anesthetics in over 550 facilities with over 5,000 clinical providers.

For USAP to survive and flourish as a national independent practice, our founding clinicians and practice groups developed the following principles:

Like any business, access to capital is one of the prevailing requirements to operate (Figure); but in health care, this need comes with risks and benefits. As our single-city group in Las Vegas navigated through the process of raising capital, we weighed the pros and cons of partnering with different financial partners. This process resulted in three core requirements:

  1. Our top priority was to be physician-owned and physician-led. Clinical work, quality reporting, revenue cycle management, payer contracting, and hospital contracting have all been done by USAP physicians or under their direct guidance.
  2. We were not interested in an employment model.
  3. We wanted physician shareholders to own equity alongside their capital partners to ensure that incentives are aligned, i.e., earnings would not be returned to any financial partner ahead of physician shareholders.
Figure: Suggested Steps for Creating Access to Capital

Figure: Suggested Steps for Creating Access to Capital

After thoughtful consideration of our three core requirements, it became clear that partnering with the right private equity (PE) financial partner was the right course of action. The right partner would be one willing to participate in the physician-led, physician-owned structure. Other PE-backed competitors are structured differently without physician leadership/ownership. Further, not all PE structures are the same. A case in point, from a news article in April of this year: “Like any other industry, there are good and bad players in PE, according to OHSU’s Zhu, who also co-authored [a related] JAMA study.” (asamonitor.pub/3zyhQEU).

“The right partner would be one willing to participate in the physician-led, physician-owned structure.”

It goes without saying that our physicians were aware of the sensitivities around PE, but there was no ignoring the fact that over the last several decades, investment in health care has skyrocketed (asamonitor.pub/3xAUAW4). This involved such organizations as insurance companies, hospitals, and health care data and services companies, along with venture capital firms. PE investments have totaled nearly $1 trillion in U.S. health care since 2006, representing nearly 12.7% of all health care investments in the same period (asamonitor.pub/4cwRUrK).

When the founding partners of our group surveyed the landscape, it was clear that USAP had the right model for us. USAP governance was created to keep the physicians in charge of clinical decisions, while benefitting from the investments that an outside partner can enable. In USAP, there are no preferred shares or different classes of equity. All shareholders, including physicians, receive the same distribution of dividends per share. Value is returned to shareholders via growth in stock price or through declared dividends. As a result, USAP has benefited from its PE partners, which have offered access to capital as well as excellent business and financial expertise.

Due to investment enabled by increased access to capital, and the proven expertise of experienced business leaders, the quality metrics of our group have demonstrated marked improvement following our partnership. For example, the current public rating of USAP of Nevada on Google reviews is 4.6 out of 5 stars, a metric that many small anesthesia practices are not even aware of, let alone able to improve. Quality improvement mechanisms include improved federal measure reporting, novel data infrastructure, enhanced clinical protocols, educational resources, local and national resource personnel, and subspecialty clinical groups. USAP partners participate in a federally designated Patient Safety Organization, participate in the National Anesthesia Clinical Outcomes Registry and the Wake Up Safe pediatric anesthesia registry, and work with medical students and residents at dozens of sites across the country. USAP enabled us to partner locally to start our own anesthesia residency; our first three graduating classes have had a 100% board pass rate. Further, partnership with USAP has offered financial stability during the COVID pandemic and the Change Healthcare cyberattack, along with the infrastructure needed to comply with the No Surprises Act and ever-evolving state and federal billing requirements.

As a result of the emphasis on quality, half a million returned surveys in 2023 show that 96% of USAPs patients rate their anesthesia experience as good or great, while 97% rated their clinicians as good or great. USAP patient satisfaction is consistently 10% above the national average, as measured by Qualtrics. One hundred percent of USAP practices from 2019-2022 have earned a positive Merit-based Incentive Payment System score (MIPS), and USAP clinical performance is above the national average for 15 different MIPS measures, including patient-reported overall anesthesia experience. Private capital has also enabled USAP to recruit highly qualified clinicians – 97% of those clinicians are board-certificated or board-eligible. More than 50% are fellowship or subspecialty trained. In short, USAP is deeply committed to high-quality, physician-led anesthesia care and has the data to back up our success, via both quantitative and qualitative metrics.

Private capital investment is also applied to practice management functions, including clinician recruiting, revenue cycle management, documentation compliance, and IT systems. USAP has developed proprietary tools assessing almost all aspects of anesthesia services including, but not limited to: scheduling optimization, workforce needs, call burden and frequency, and OR utilization. Although these systems are capital intensive, they are necessary to meet the needs of our increasingly sophisticated health care system partners. Collectively, they enable us to serve more patients while increasing the overall quality of care and patient experience. It is my firm belief that access to capital (as provided by PE partners), along with clinical and business expertise, is needed to secure a successful future for independent anesthesiologist practices.