PE Goes Bankrupt

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Apollo PE/USACS next on the chopping block
 
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Rising Interest rates are going to take ALOT of CMGs and business alike down. The access to cheap capital is not available. Trying to refinance your way out of debt is not available. Either you increase income, decrease costs or you will fail. I don't see how USACS can increase income or decrease costs.
 
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Will lead to the return of more independent groups and groups who have little to no debt like ApolloMD, IES out of Texas, and Core Clinical Partners. I think TeamHealth's days are numbered as well and will probably end up in an Envision type situation.
 
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AAEM sent out a tweet thanking Dr. G for the shout out
 
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To quote Mark Reiter from AAEM 22 “We’re going for the dragons heart”

Looks like it might be working!
 
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Love this, but the reality of it is that PE doesn't "lose" in the end.

It's a leveraged debt buyout. KKR buys Envision with $1B of their own money from a healthcare fund. They get the other $9B as debt taken out on the Envision business itself, collateralized by it's assets. KKR is not at risk for this money, only their initial equity. Envision makes $7B net revenue a year. Within a year or two, KKR's $1B is paid back and KKR is now making risk-free cash. Keep things going for 5+ years, and the ROI is extremely high.

The thing to remember is that Envision is going bankrupt. Not KKR. Their 1B and then some was paid back long ago. What they may lose is the cash spigot they've been drinking out of. However, as these things generally go, Envision has creditors that stand to lose 100% of their investment if Envision goes under. So the best option is for the creditors to agree to an arrangement where Amsurg and whatever profitable portions of the company are spun off separate from the bad ones (which are thrown in the dumpster), and the creditors are paid a few cents on the dollar (which is better than zero cents on the dollar) from the new KKR/Amsurg/Profitable entity, which again, will continue to pay KKR (albeit less than before).

PE gets out of these things unscathed. The companies they pillage and everyone else get the short end of the stick.
 
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emergentmd said:
Rising Interest rates are going to take ALOT of CMGs and business alike down. The access to cheap capital is not available. Trying to refinance your way out of debt is not available. Either you increase income, decrease costs or you will fail. I don't see how USACS can increase income or decrease costs.
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We can all hope they die.. For the docs who work for them I hope its a quick death and maximal pain inflicted on Apollo and Dbag and co.
 
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goodoldalky said:
Love this, but the reality of it is that PE doesn't "lose" in the end.

It's a leveraged debt buyout. KKR buys Envision with $1B of their own money from a healthcare fund. They get the other $9B as debt taken out on the Envision business itself, collateralized by it's assets. KKR is not at risk for this money, only their initial equity. Envision makes $7B net revenue a year. Within a year or two, KKR's $1B is paid back and KKR is now making risk-free cash. Keep things going for 5+ years, and the ROI is extremely high.

The thing to remember is that Envision is going bankrupt. Not KKR. Their 1B and then some was paid back long ago. What they may lose is the cash spigot they've been drinking out of. However, as these things generally go, Envision has creditors that stand to lose 100% of their investment if Envision goes under. So the best option is for the creditors to agree to an arrangement where Amsurg and whatever profitable portions of the company are spun off separate from the bad ones (which are thrown in the dumpster), and the creditors are paid a few cents on the dollar (which is better than zero cents on the dollar) from the new KKR/Amsurg/Profitable entity, which again, will continue to pay KKR (albeit less than before).

PE gets out of these things unscathed. The companies they pillage and everyone else get the short end of the stick.
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If creditors are aware of this situation, why would they ever loan 9B to KKR when there is a very high chance they won't see that money back?

Someone loses in this case. You do this deal once, shame on them. You do this deal again, shame on you.
 
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Keep in mind the kkr fund that owned envision has returned 18% per year. Thats with whatever they lost here. Pe is winning. Their setup is to always win.
 
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EctopicFetus said:
Keep in mind the kkr fund that owned envision has returned 18% per year. Thats with whatever they lost here. Pe is winning. Their setup is to always win.
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Do you have the source for this? I asked somebody for this months ago (maybe it was you) but they never responded because I couldn’t find where this was accurate. If I remember right, this Envision money was a significant chunk of this particular fund.
 
PEs don't typically lose. They structure it for almost guaranteed profitable outcome. They have a good history of performance so people will be willing to put in $$$. If they continue to lose, then their investors will drop out.

If I had a great track record for flipping homes. Being smart, I surely would not risk much of my money on the next project. Use other's money, lower the risk, while still keeping a decent upside.
 
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JacobMcCandles said:
Do you have the source for this? I asked somebody for this months ago (maybe it was you) but they never responded because I couldn’t find where this was accurate. If I remember right, this Envision money was a significant chunk of this particular fund.
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KKR Average Annual Return 10 Years

KKR average annual return 10 Years, table and charts, presented by AverageAnnualReturn.com
www.averageannualreturn.com www.averageannualreturn.com
 
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emergentmd said:

KKR Average Annual Return 10 Years

KKR average annual return 10 Years, table and charts, presented by AverageAnnualReturn.com
www.averageannualreturn.com www.averageannualreturn.com
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That doesn’t break it up into all the funds (unless I missed it) that KKR has, more specifically, the fund that holds the Envision assets which is what Ectopic is saying has returned 18%. I’d have to look back but off the top of my head the $9B or whatever it was put into Envision was a large majority of the entire fund. The entire fund was like $14B or something.
 
JacobMcCandles said:
That doesn’t break it up into all the funds (unless I missed it) that KKR has, more specifically, the fund that holds the Envision assets which is what Ectopic is saying has returned 18%. I’d have to look back but off the top of my head the $9B or whatever it was put into Envision was a large majority of the entire fund. The entire fund was like $14B or something.
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I have seen it much cleaner elsewhere but it is owned by KKR AMericas fund XII.

www.businesswire.com

KKR Closes $19 Billion North America Private Equity Fund

KKR, a leading global investment firm, today announced the final closing of KKR North America Fund XIII (“NAX3” or the “Fund”), an over-subscribed $19
www.businesswire.com

Bunch of these are subscription only.. So I am having a hard time finding it as I am not a subscriber. I have seen the numbers and its legit. Keep in mind they raised $14b but they didnt spend $9b on Envision. It was a leveraged buyout. Much like real estate. They deploy some of the $14b and the rest they borrow. Note the current owners of envision are not the KKR fund investors rather it is the people who they borrowed money from.

This is from this website but the preview from google. portfolio company of KKR Americas Fund XII, a 2017 buyout fund. KKR ... return for KKR Americas Fund XII of 20.2% as of June 30. It also (That was published August 2023)

This is the link... https://www.pionline.com/private-equity/private-equity-backed-companies-looking-cash-infusions

Here is the link tying envision to KKR XII KKR’s investors should be asking questions around Envision Healthcare bankruptcy risk

Hope this helps.

KKR used approximately $7 billion in debt for the acquisition—about 70.7% of the overall deal.

This debt was not taken on by KKR, but rather loaded onto Envision

Debt KKR Envision
 
I get the economics of leveraged buyouts.

I don't get who the suckers are that lend the money to envision/KKR as the "leveraged" part of the buyout.

When you and I leverage to get a home, it's verified out the wazoo that we can pay and is backed by the land/home. When you play leverage on a portfolio loan, it's backed by your account.

What ***** is lending money to PE backed companies in non priority positions when the company is indebted to the gills?
 
DoctwoB said:
I get the economics of leveraged buyouts.

I don't get who the suckers are that lend the money to envision/KKR as the "leveraged" part of the buyout.

When you and I leverage to get a home, it's verified out the wazoo that we can pay and is backed by the land/home. When you play leverage on a portfolio loan, it's backed by your account.

What ***** is lending money to PE backed companies in non priority positions when the company is indebted to the gills?
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They usually get strong rates. I mean this is what Apollo did with USACS. When interest rates are 4-5% those guys got 6.5-10.5%. Outsized returns. APollo did it with control and more importantly power. I assume the lenders just took much better rates. If no NSA envision might be chugging along. While their troubles started ahead of time reality is that they started to move away from the balance bill game as soon as they sorted out this was a possibility. That cost them money right up front. They were poorly run for a while but the money was flowing like crazy so it didnt matter.
 
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EctopicFetus said:
They usually get strong rates. I mean this is what Apollo did with USACS. When interest rates are 4-5% those guys got 6.5-10.5%. Outsized returns. APollo did it with control and more importantly power. I assume the lenders just took much better rates. If no NSA envision might be chugging along. While their troubles started ahead of time reality is that they started to move away from the balance bill game as soon as they sorted out this was a possibility. That cost them money right up front. They were poorly run for a while but the money was flowing like crazy so it didnt matter.
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Oh I understand the idea of risk premium and accepting risk of loss of principle in exchange for higher return.

The issue is relative to market, the risk premium was absurdly small. The risk of loss of principle with such high rates of leverage is extremely high. Obviously we have hindsight, but many on this board have seen the writing on the wall for years. Loading an asset light business with a debt to value of near 100% meant the business was doomed with any rise in rates.

There is a reason used car lots charge 25% APR with 50% LTV. Risk of default is high so you charge high rates and win big if there is no default, but have limited downside risk due to repo of the physical asset. It's not win/lose, it's win big/win small.

In these cases, lending money for slightly above market rates with high leverage and massive downside risk just makes no sense whatsoever.
 
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DoctwoB said:
Oh I understand the idea of risk premium and accepting risk of loss of principle in exchange for higher return.

The issue is relative to market, the risk premium was absurdly small. The risk of loss of principle with such high rates of leverage is extremely high. Obviously we have hindsight, but many on this board have seen the writing on the wall for years. Loading an asset light business with a debt to value of near 100% meant the business was doomed with any rise in rates.

There is a reason used car lots charge 25% APR with 50% LTV. Risk of default is high so you charge high rates and win big if there is no default, but have limited downside risk due to repo of the physical asset. It's not win/lose, it's win big/win small.

In these cases, lending money for slightly above market rates with high leverage and massive downside risk just makes no sense whatsoever.
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Many with $$$ is ignorant. They see the VCs having a good track record, and they just dump money in without due diligence.
 
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DoctwoB said:
Oh I understand the idea of risk premium and accepting risk of loss of principle in exchange for higher return.

The issue is relative to market, the risk premium was absurdly small. The risk of loss of principle with such high rates of leverage is extremely high. Obviously we have hindsight, but many on this board have seen the writing on the wall for years. Loading an asset light business with a debt to value of near 100% meant the business was doomed with any rise in rates.

There is a reason used car lots charge 25% APR with 50% LTV. Risk of default is high so you charge high rates and win big if there is no default, but have limited downside risk due to repo of the physical asset. It's not win/lose, it's win big/win small.

In these cases, lending money for slightly above market rates with high leverage and massive downside risk just makes no sense whatsoever.
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These banks do well even in such a circumstance as this.

As mentioned previously, they get a very strong premium. Sometimes double the prime rate.

The key is that these deals are not obtained in isolation - for each Envision KKR brings, a group of investment banks (Goldman, Citi, UBS, Credit Suisse, etc., I think there are 20+ involved in this deal) helps to finance it. Along with that, KKR brings them groups of deals. It's not Envision or healthcare in isolation. It's everything KKR does. And KKR is damn good at one thing: making money. Which makes the banks money. The banks spread the risk out among multiple deals. Overall, the risk profile is favorable, and the returns are massively outsize.

Even when a deal such as this eventually fails, you must realize that it chugged along for 5+ years with 7B+ of cash flow directed at the benefit of the PE firm and banks. The larger shares the banks have and the earlier they get in, the more favorable terms they acquire on both the prior debts that Envision held as well as the restructuring terms, and how Amsurg, etc., are going to continue to pay them back after restructuring.

In a way it is almost like a pyramid scheme, that the more times the debt is subsequently restructured with other creditors, the less favorable their terms are (even though their rates are higher, the risk increases significantly. But on the flip side, to jump in and play ball may bring you more opportunities at earlier stages that are more favorable in the future), on and on, until the whole thing collapses. The last ones in get the most screwed in general. Eventually things get to the point where creditors realize they will 100% get screwed and decide they are not going to lend to restructure the debt and then the music stops. You want to be the big dog invited to the table right up front, in which case, you are much more protected.
 
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DoctwoB said:
Oh I understand the idea of risk premium and accepting risk of loss of principle in exchange for higher return.

The issue is relative to market, the risk premium was absurdly small. The risk of loss of principle with such high rates of leverage is extremely high. Obviously we have hindsight, but many on this board have seen the writing on the wall for years. Loading an asset light business with a debt to value of near 100% meant the business was doomed with any rise in rates.

There is a reason used car lots charge 25% APR with 50% LTV. Risk of default is high so you charge high rates and win big if there is no default, but have limited downside risk due to repo of the physical asset. It's not win/lose, it's win big/win small.

In these cases, lending money for slightly above market rates with high leverage and massive downside risk just makes no sense whatsoever.
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The issue is moodys and other agencies didn’t rate their debt poorly enough. In general each classification gets you to a range of rates. These people said oooh healthcare. That’s stable. Welp. Fafo. I’m not sad about it. The new TH debt and usacs and sound debt will be refinanced at very high levels.
 
goodoldalky said:
These banks do well even in such a circumstance as this.

As mentioned previously, they get a very strong premium. Sometimes double the prime rate.

The key is that these deals are not obtained in isolation - for each Envision KKR brings, a group of investment banks (Goldman, Citi, UBS, Credit Suisse, etc., I think there are 20+ involved in this deal) helps to finance it. Along with that, KKR brings them groups of deals. It's not Envision or healthcare in isolation. It's everything KKR does. And KKR is damn good at one thing: making money. Which makes the banks money. The banks spread the risk out among multiple deals. Overall, the risk profile is favorable, and the returns are massively outsize.

Even when a deal such as this eventually fails, you must realize that it chugged along for 5+ years with 7B+ of cash flow directed at the benefit of the PE firm and banks. The larger shares the banks have and the earlier they get in, the more favorable terms they acquire on both the prior debts that Envision held as well as the restructuring terms, and how Amsurg, etc., are going to continue to pay them back after restructuring.

In a way it is almost like a pyramid scheme, that the more times the debt is subsequently restructured with other creditors, the less favorable their terms are (even though their rates are higher, the risk increases significantly. But on the flip side, to jump in and play ball may bring you more opportunities at earlier stages that are more favorable in the future), on and on, until the whole thing collapses. The last ones in get the most screwed in general. Eventually things get to the point where creditors realize they will 100% get screwed and decide they are not going to lend to restructure the debt and then the music stops. You want to be the big dog invited to the table right up front, in which case, you are much more protected.
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I think sometimes it is overstated how good these deals are. Maybe if they do 30 of them...the majority work out. But some don't. But the debt holders / creditors for this deal are getting ****ed.

It's why we diversify our stock holding. Hold an ETF or invest in 20-30 stocks. You'll lose some, but you win on most.

It's not like the creditors of the 9B, who are getting pennies back on the dollar, are sitting around smoking cigars, drinking whiskey slapping each other on the back saying "Good job mates! You got 22c on the dollar for that deal!"

I do agree with what I think you are suggesting, which is that we have a favorable economic and political environment for these kinds of companies and business deals to succeed with, in general, great success. That's why they are done.
 
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thegenius said:
I think sometimes it is overstated how good these deals are. Maybe if they do 30 of them...the majority work out. But some don't. But the debt holders / creditors for this deal are getting ****ed.

It's why we diversify our stock holding. Hold an ETF or invest in 20-30 stocks. You'll lose some, but you win on most.

It's not like the creditors of the 9B, who are getting pennies back on the dollar, are sitting around smoking cigars, drinking whiskey slapping each other on the back saying "Good job mates! You got 22c on the dollar for that deal!"

I do agree with what I think you are suggesting, which is that we have a favorable economic and political environment for these kinds of companies and business deals to succeed with, in general, great success. That's why they are done.
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The guys who lent them money did fine. Keep in mind they had years of fat returns, did they lose probably, the will get more out of the deal once the bankruptcy finishes. They made a ton of their other deals i am sure.
 
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The amount of debt is simply staggering
 
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Nothing changes. Envision is still ticking for some reason.
 
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EctopicFetus said:
The guys who lent them money did fine. Keep in mind they had years of fat returns, did they lose probably, the will get more out of the deal once the bankruptcy finishes. They made a ton of their other deals i am sure.
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Don't know about that. It takes a lot of years of above market returns to make up for loss of principal plus investing in the market.
 
Most of the responses in this thread are completely wrong. Pre-med turned management consultant here, working within my firms private equity group. First time skimming through SDN in years, and I just saw this thread.

In an LBO buy-out, a PE firm acquires a company—in part funded by debt. Debt allows PE firms to acquire companies contributing less equity than they otherwise would. Importantly, debt has a lower cost of capital than equity, meaning the more debt = the more you can juice returns.

Nobody underwrites a deal with only 10% equity, 90% debt. Nobody would allow that because there are covenants around the debt structure (such as maximum net debt / EBITDA ratio or EBITDA / interest ratio). It's more 20-40% equity. These are also highly negotiated deals. Perhaps existing company management rolls-over some of their equity. Perhaps it's a co-invest situation between Apollo and KKR—the possibilities are endless.

I saw a few replies implying a pyramid scheme or the music stopping. I think there's some misunderstanding here. Debt is not free money... net debt at exit directly impacts your returns: the goal of a LBO is to use the acquired companies' cash flow to pay down the debt, similar to using your personal income to pay down a mortgage.

Debt is provided by banks, institutional investors (e.g., pension funds), and high net worth individuals. They make money through interest. There are various tranches of debt, which get paid in the order of their seniority. Generally, the lower seniority, the higher the interest rate. There's no "losers" here. For some lenders, first lien debt (higher seniority / earlier paydown) might be better because of the lower perceived risk and getting your money back sooner. Other lenders might prefer second lien (lower seniority) debt due to the higher interest rate.

Happy to answer any questions! Not saying PE in healthcare is a good thing (I do not think it is), but just wanted to clear up some fundamental misunderstandings of the mechanics of PE

TLDR: PE firms borrow money in order to buy companies. They use the cash flows of the acquired company to paydown debt. Debt is paid down based on seniority. Higher seniority debt is paid down first, while lower seniority debt has a higher interest rate. At exit (e.g., 5-years after acquisition), returns are calculated by deducting remaining net debt from enterprise value. Remaining debt is typically settled by the next buyer, whether that's a strategic buyer (i.e., a company like Siemens, Epic, etc.) or another financial buyer (e.g., another private equity firm).
 
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What does being a 'pre-med' have to do with anything? That's like me saying I had planned on playing professional sports. It means nothing and gives me no credibility.
 
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JacobMcCandles said:
What does being a 'pre-med' have to do with anything? That's like me saying I had planned on playing professional sports. It means nothing and gives me no credibility.
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I would assume that they are explaining why someone in PE is perusing an emergency medicine internet forum.
 
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I dont know what posts the management consultant is referring to that are wrong. No one knows the debt ratio on these deals but debt was cheap. It is also why as interest rates rise these deals look worse and worse. It’s why the PE debt is trading at a 60-80%+ discount to par. The amount of leverage will go up the heavier the business is cash wise.

Also, and importantly the lenders of the debt can and do take a bath. I think this latest round of debt Envision got freed from 70% of the debt the company had on it and KKR lost its equity position as well.

While I agree PE rarely loses KKR lost here… no one knows how much on that deal but we do know the fund that housed the envision deal was still making 18% per year AFTER the envision write off.
 
KKR did not lose money. They wrote it down and rode what they had. Granted it was not astronomical returns but they were solid.
 
Porfirio said:
KKR did not lose money. They wrote it down and rode what they had. Granted it was not astronomical returns but they were solid.
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Do u know this for a fact? Cause their equity is now 0 they paid for that. I know they had years of good returns but I don’t think the details are available.
 
Let me just say that life is random. I met someone within KKR while I was at a wedding. KKR rented out the entire resort for a company event the day after the wedding weekend. I thought the wedding was lavish, but KKR events are next level. We are definitely in the wrong field.
 
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Porfirio said:
Let me just say that life is random. I met someone within KKR while I was at a wedding. KKR rented out the entire resort for a company event the day after the wedding weekend. I thought the wedding was lavish, but KKR events are next level. We are definitely in the wrong field.
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Just because you have a nasty abscess over your scapula that you need to incise and drain, doesn't mean you aren't an otherwise healthy and functioning individual. Perhaps even an exceptionally healthy individual. But that abscess? Its a distinctly unhealthy part of you. If the scope of the discussion is only the left scapula, things look really rancid. You cut it out and accept whatever scar/crater it leaves behind. How much that impacts your life really depends on how the rest of your body outside of your scapula is, it could be a small blemish and nothing more (what I imagine to be true). Its not likely, but i guess possivble, to be indicative of your whole body.
 
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DocEspana said:
Just because you have a nasty abscess over your scapula that you need to incise and drain, doesn't mean you aren't an otherwise healthy and functioning individual. Perhaps even an exceptionally healthy individual. But that abscess? Its a distinctly unhealthy part of you. If the scope of the discussion is only the left scapula, things look really rancid. You cut it out and accept whatever scar/crater it leaves behind. How much that impacts your life really depends on how the rest of your body outside of your scapula is, it could be a small blemish and nothing more (what I imagine to be true). Its not likely, but i guess possivble, to be indicative of your whole body.
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TL;DR: PE in healthcare is a perirectal abscess on the taint of America.
 
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Porfirio said:
Let me just say that life is random. I met someone within KKR while I was at a wedding. KKR rented out the entire resort for a company event the day after the wedding weekend. I thought the wedding was lavish, but KKR events are next level. We are definitely in the wrong field.
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I struggle with this a bit. I have lots of friends decently high up in PE. They’ve come out numerically far far ahead of me and will always be. But when I go with them to PE events, or meet their finance bro friends, I don’t see the draw at all.

The dinners are lavish, the trips are out of this world. They’re buying second homes at 30, I’m barely scraping by basically working and sleeping.

But I dont like the people, the work sounds boring, and I’m not sure how much fulfillment I’d get from having a black amex and it’s perks. I’d love to be able to buy my parents some nice gifts some day, or be able to reliably afford a house and a kid in a major city.

Meanwhile having a fun shifts with a cool other doc or taking care of some fun, grateful cases? Priceless. Its tough to find a middle ground
 
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The Knife & Gun Club said:
I struggle with this a bit. I have lots of friends decently high up in PE. They’ve come out numerically far far ahead of me and will always be. But when I go with them to PE events, or meet their finance bro friends, I don’t see the draw at all.

The dinners are lavish, the trips are out of this world. They’re buying second homes at 30, I’m barely scraping by basically working and sleeping.

But I dont like the people, the work sounds boring, and I’m not sure how much fulfillment I’d get from having a black amex and it’s perks. I’d love to be able to buy my parents some nice gifts some day, or be able to reliably afford a house and a kid in a major city.

Meanwhile having a fun shifts with a cool other doc or taking care of some fun, grateful cases? Priceless. Its tough to find a middle ground
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Quoted for truth.

They'll bury me with my stethoscope, after the students have dissected my cadaver. Money is cool to some people; but when I die - I want to hear St. Peter say: "Bro. Matthew 25? Verse 40? Yeah, its clear that you understood that one. Also, killer biceps bro. Head on in; golf course is to the left, mountain bike trails are to the right."
 
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RustedFox said:
Quoted for truth.

They'll bury me with my stethoscope, after the students have dissected my cadaver. Money is cool to some people; but when I die - I want to hear St. Peter say: "Bro. Matthew 25? Verse 40? Yeah, its clear that you understood that one. Also, killer biceps bro. Head on in; golf course is to the left, mountain bike trails are to the right."
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St. Peter, continuing: "There's a red button at the top of the MTB trails that you can push if you want to ski instead. Oh, and remember when ESPN showed sports? Yeah, we brought that back."
 
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And now usacs just got all the inova sites.
 
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Teamhealth and usacs debt ratings downgraded.

Who ran inova before? Envision?

Those inova sites better prep for less $$$.
 
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RustedFox said:
"Downgraded"?

Forgive me, if you downgrade a bad thing, does that make it a better, bad thing?
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Makes it a worse bad thing and practically raises the cost to carry debt. When usacs and teamhealth have to refinance their debt the interest rate will be that much higher.

https://www.fitchratings.com/research/corporate-finance/fitch-downgrades-team-health-holdings-inc-to-ccc-13-11-2023#:~:text=Fitch%20Ratings%20%2D%20New%20York%20%2D%2013,CCC%2D'%20from%20'CCC'.
 
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USAP files to dismiss suit

U.S. Anesthesia Partners, a private equity-backed group affiliated with more than 4,500 physicians, has filed a motion to dismiss the Federal Trade Commission's civil complaint alleging that certain USAP business practices violate U.S. competition laws.

In a Sep. 21 suit, the FTC alleged that USAP and private equity firm and Welsh, Carson, Anderson & Stowe executed an anticompetitive scheme to consolidate anesthesiology practices in Texas, drive up the price of services and increase their profits.

USAP filed a motion to dismiss the complaint, arguing that "the FTC has inaccurately represented the anesthesia market in Texas and has failed to properly allege that USAP has monopoly power by charging more than a competitive price," according to a Nov. 20 news release.

Texas is a highly competitive market and USAP said it competes with both large and small anesthesia groups as well as individual anesthesiologists across the state. Additionally, the group argues that the reimbursements it receives for care are in line with industry standards and "reflect the complex nature of treating the most critically ill patients."

"The FTC's civil complaint against USAP is based on flawed legal theories and a lack of understanding about the healthcare industry," Scott Holliday, DO, USAP board member and physician in Texas, said. "It is an attack on our independent, physician-owned and physician-led medical practice rather than a valid complaint that has credible allegations of anticompetitive harm. USAP has filed a motion to dismiss this complaint given the agency is acting outside the scope of its authorized powers."
 
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