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The anesthesiologist who is putting you under may work for a private-equity firm

This summer, the anesthesiology department at the Cooperman Barnabas Medical Center in Livingston, New Jersey, was in crisis. For months, the outside staffing company overseeing the department had slashed staff to what the 600-bed hospital's leaders considered dangerous levels. In the first six months of 2022, hospital officials recorded 286 adverse events that resulted from chronic understaffing, according to a lawsuit.

Trying to avert a catastrophe, hospital officials called a meeting on June 25 with the anesthesiology department and its chief, Joel M. Braverman. After learning that he’d attended the meeting, the staffing company that employed Braverman — North American Partners in Anesthesia — placed him on administrative leave, the lawsuit said, and directed him to leave the hospital immediately, even though he was on call and the anesthesiology department was short staffed. The next day, North American Partners in Anesthesia, also known as NAPA, fired Braverman, the lawsuit said.

The nonprofit, acute care hospital then formed a new anesthesiology department of its own, hiring the clinicians who had previously worked for NAPA, and, in July, filed a lawsuit against NAPA. The company’s severe understaffing put its own profits ahead of the hospital’s patients, Cooperman Barnabas alleged, adding that the company’s “entire business structure should be scrutinized, because New Jersey laws and regulations preclude corporations from exercising clinical control over health care decisions.”

NAPA’s practices have drawn complaints and generated litigation from other hospitals in recent years. This spring, for example, Renown Regional Medical Center in Reno, Nevada, broke its contract with NAPA, saying it had severely understaffed the facility and put patients at risk.

Cooperman Barnabas Medical Center
In late June, Cooperman Barnabas Medical Center in New Jersey formed a new anesthesiology department of its own.Cooperman Barnabas Medical Center

North American Partners in Anesthesia is the nation’s largest anesthesia staffing company, employing 6,000 clinicians at 500 facilities in 21 states. The company is owned by two well-heeled private-equity firms, American Securities of New York City and Leonard Green & Partners in Los Angeles. Four of NAPA’s nine directors are private-equity executives.

Private-equity firms invest in companies and aim to sell them in about five years for more than they paid. In recent years they’ve snapped up heath care companies, with a particular interest in anesthesiology. But some physicians and patient advocates say the health care investments of private-equity firms and their drive to reap relatively short-term profits are inconsistent with putting patients first. Independent academic studies find that private equity’s laser focus on profits in health care operations can result in lower staffing levels at hospitals and nursing homes.

A spokesperson for NAPA declined to comment on its disputes with the New Jersey and Nevada hospitals, citing ongoing litigation. In a countersuit against Cooperman Barnabas and the clinicians who went to work for the hospital, NAPA said Cooperman Barnabas “pirated” its employees and the clinicians breached their duties to the company, causing “irreparable harm to its business.”

NAPA is focused on elevating the standard of patient care in the communities it serves, its spokesman said in a statement. “NAPA’s enterprise-wide culture of safety and its clinician focus has resulted in a 94 percent clinician retention rate, the industry’s lowest vacancy rate, a 98 percent surgeon satisfaction rate, and a 4.84/5 rating in patient satisfaction,” the spokesman added. “Reflecting its culture of safety and commitment to quality of care above all else, NAPA created the NAPA Anesthesia Patient Safety Institute, one of only 100 federally listed Patient Safety Organizations.”

Michael E. Knecht, spokesman for RWJBarnabas Health, declined to comment on its dispute with NAPA, and Braverman did not return a phone call seeking comment. In a statement, however, Knecht said, “As a statewide leader in adult and pediatric surgery, the volume of patients we see daily necessitates the immediate availability of skilled anesthesiologists and certified registered nurse anesthetists to provide care. While litigation is never desirable, our actions continue to be driven by what is in the best interests of patient care.”

Market power

Over the past decade, private-equity firms have bought up physician practices in anesthesiology, emergency medicine and dermatology, research shows. A study of private-equity buyouts of physician practices published in JAMA Network in February 2020, found that anesthesiology practices were the focus of almost 20% of those buyouts, the highest percentage of deals involving a single specialty. Emergency medicine practices accounted for 12% of the takeovers.

The firms have focused on these areas for several reasons: Their profitability is high or their revenue growth is expected to exceed that of other health care arenas because of demographic changes or other factors.

Renown Regional Medical Center in Reno
Renown Regional Medical Center in Reno, Nev., broke its contract with NAPA this year, alleging it had severely understaffed the facility and put patients at risk. Renown Health

These buyouts have gone unchallenged for years, but now they may be coming under scrutiny by the Federal Trade Commission, which monitors industries for anti-competitive and monopolistic activities that can hurt consumers. In early October, The Wall Street Journal reported the FTC was investigating U.S. Anesthesia Partners, another large anesthesiology staffing company. Neither the FTC nor U.S. Anesthesia Partners responded to voice mails seeking comment; a spokesman for U.S. Anesthesia Partners confirmed the inquiry to the Journal, saying it is cooperating. 

Laura K. Olson is distinguished professor of political science at Lehigh University in Bethlehem, Pennsylvania, and author of “Ethically Challenged: Private Equity Storms U.S. Health Care.” “One of the goals of private equity in health care is to take a very fragmented health industry and consolidate them and get monopoly power,” Olson said in an interview. After reviewing the Cooperman Barnabas complaint, Olson said its allegations fit that pattern: “This case surely shows how they’ve monopolized anesthesiology and were willing to understaff and force the hospital to do egregious things because they had monopoly power.”

One outcome of market power is rising prices, and new research finds that private-equity takeovers of anesthesiology practices have resulted in higher patient costs. A study published by the Journal of the American Medical Association Internal Medicine in February 2022 analyzed more than 2 million anesthesia claims from 2012 through 2017. The researchers found that patient costs rose by 26% after anesthesiology practices were taken over by private equity firms.

NBC News asked both of NAPA’s private-equity owners about the disputes involving the company and the research showing higher costs associated with private-equity ownership of anesthesiology practices. Leonard Green & Partners did not respond to a request for comment.

A spokesperson for American Securities provided a statement. “NAPA is, and always has been, a clinician-led organization that has put quality of care, its patients, and its clinicians above all else,” said the statement. The company has made significant investments in “clinical capabilities and ensuring they are providing the best trained and most capable clinicians to their customers. This investment and commitment to care is reflected in the company’s superior clinical outcomes, its high customer, employee, and surgeon satisfaction rates, and its strong and over 98 percent in-network payor relationships.”

American Securities currently owns 28 companies, among them Conair, a maker of appliance and personal care products; Bluebird, a school bus manufacturer; and Learning Care Group, the nation’s second-largest provider of early childhood care and education services.

Leonard Green & Partners owns 54 companies, including Mister Car Wash, The Container Store and Union Square Hospitality Group, the famed restaurant company in New York City created by Danny Meyer.

‘Opportunity for disasters’

Higher anesthesiology costs are one thing, but potential patient risks from understaffing a hospital’s anesthesiology department are far worse, clinicians say. “I am concerned about the impact of private equity on health care,” said Dr. Thomas Graf, chief executive of Renown Health in Nevada, in an interview with NBC News. “With private equity, the drive for profits and particularly the short-term time horizon it needs, I’m very worried it creates the opportunity for disasters like this to occur.”

Thomas Graf
Dr. Thomas Graf, Renown’s chief executive.Renown Health

The kind of disaster Graf hoped to avoid allegedly began unfolding late last year when he said NAPA was inadequately staffing the Renown Regional Medical Center, a level two trauma center in Reno. A previous staffing company, not owned by private equity, had overseen Renown’s anesthesiology department with no problems, Graf said, but after that company sold its operations to NAPA, problems arose quickly.

A few months after NAPA took over Renown’s anesthesia services, “it became obvious they were understaffing,” Graf told NBC News. “We’re the only trauma center in the area, and we have an active obstetrical practice — because of the potential disruption of patient care, community needs were in danger.”

At the same time, Graf said, many anesthesiologists were telling the hospital system they intended to resign from NAPA over its compensation practices, management style and overall lack of support staff. Because their contracts had restrictive noncompete clauses barring them from practicing for other companies in the area, they would have to move to another region when they quit, Graf said. After terminating its contract with NAPA, Renown began hiring some of the anesthesia clinicians who had previously worked for NAPA, the same approach Cooperman Barnabas took.

A third health care facility that has had problems with NAPA is Moses Taylor Hospital, a 214-bed acute care center in Scranton, Pennsylvania, that sued the company in June 2020. Covid was sweeping the country and Moses Taylor was doing its best to respond to the health care crisis, according to its lawsuit. Under its contract with NAPA, according to the suit, the company had agreed not to act in a manner that would be disruptive to Moses Taylor or jeopardize the health of patients.

But in mid-June 2020, the hospital received a letter from NAPA saying that in 20 days, it would stop providing the facility with anesthesia services. Moses Taylor had no replacement company lined up to provide the services, it said in the suit, and had to scramble to find one. According to the hospital’s suit, NAPA’s threat was “a maneuver to gain leverage in an underlying dispute” over expenses NAPA had billed to the hospital outside of an agreed-upon budget. In the letter warning that it would withdraw its services, NAPA cited almost $800,000 in expenses it said were past due; the hospital said it was current on payments within the budget. 

Source: https://www.nbcnews.com/health/health-care/anesthesiologist-putting-may-work-private-equity-firm-rcna51071


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