Houston-area lawmaker's anesthesia firm blamed for $11M increase in Texas teachers' insurance costs

State Rep. Tom Oliverson has made lowering health care costs a top goal in the Legislature, even as the anesthesia conglomerate where he's a partner and investor has been accused of driving them up.

The company, U.S. Anesthesia Partners, has been under the microscope of the Federal Trade Commission since 2023 for swallowing up smaller clinics and ratcheting up prices.

Now it's being blamed for raising insurance premiums for hundreds of thousands of Texas teachers.

A top official with the Teacher Retirement System of Texas recently singled out USAP before a legislative committee, where Oliverson is a member, for costing teachers $11 million more per year last year - an outlier even by the standards of America's costly medical system.

Oliverson, who has made health care affordability one of his stated priorities, sat silent as the Retirement System official explained that the cost equated to a 0.4% increase on premiums for more than 400,000 of the state's active teachers.

The Republican doctor said he was silent because he didn't know what to say.

"That was all pretty shocking stuff to hear," Oliverson said Friday. "Here I am sitting on a committee and they're accusing my company of wrongdoing, basically."

The statements sparked a behind-the-scenes campaign by USAP to rebut the retirement agency's claims as House lawmakers look for ways to reduce health care costs during next year's session.

The company, which was sued by the Federal Trade Commission in 2023, met with lawmakers afterward and told them it had never raised rates above the rate of inflation. A spokesperson told the Houston Chronicle that TRS' claims are "patently false."

The Retirement System is not backing down, however. A spokesperson noted that last month Chief Health Care Officer Katrina Daniel repeated the claim to a different House committee.

"When we look at them compared to other anesthesiologists, we pay about twice as much," Daniel said.

The dispute emerged as House lawmakers probe whether health care industry consolidation could be to blame for perpetually increasing health care costs. Daniel cited U.S. Anesthesia Partners and the lawsuit by the FTC, which alleged the company employed a deliberate strategy to acquire anesthesiology firms and use its market power to charge "absurdly high rates across Texas."

The private equity-backed company first acquired Houston's largest anesthesia firm in 2012, followed by the largest firms in Dallas, Austin, San Antonio and Amarillo, according to a March FTC filing. The FTC alleged the company used other anticompetitive practices, such as paying a competitor $9 million a year to stay out of the Dallas area. It acquired 15 firms in total and is Texas' largest anesthesia practice.

"USAP ultimately took many millions of dollars out of the pockets of Texas employers and patients," the agency wrote.

The company, which operates in nine states, has argued that the prices came with better care and that regulators were using "flawed legal theories." The company told the Chronicle that it regularly exceeds Centers for Medicare & Medicaid Services quality benchmarks. In April, the FTC announced it had reached a settlement with the company, which has not yet been released.

U.S. Anesthesia Partners has ties to some of the state's most influential doctors. Dr. Sherif Zaafran, president of the Texas Medical Board, is president of the company's clinical governance board, according to his LinkedIn. Dr. John Zerwas, chancellor of the University of Texas system and a former longtime state lawmaker, was a founding partner and executive until 2019.

Oliverson, an anesthesiologist from Cypress, joined the company as a managing partner and investor when it bought Houston's largest firm, he said. He said he oversees eight people in a hospital in his House district and has no say into the company's practices or acquisitions.

He said he has not read the FTC's filings against the company, but said the pending settlement will require the company to give up market share.

"I don't love the idea of consolidation in health care marketplaces," he said. "Does that affect prices? Yes, I'm sure it does."

But he said he disagrees with the claims by TRS, noting that the company has not made any acquisitions in six years.

"They have been completely unable to verify any of the statements they've made," Oliverson said. "The math doesn't math."

Two other legislators on the Select Committee for Health Care Affordability, including the chairperson, Republican Rep. James Frank of Wichita Falls, said they heard from the company after the April hearing.

Frank told the Chronicle that he discussed the issue with TRS and that its numbers show that "Texas teachers are paying about twice as much for anesthesia from doctors in the USAP network compared to independent anesthesiologists."

"That's yet another sign of the larger problem in all of healthcare: prices are increasingly driven by market power, not by better patient care," he said in a text message. "As hospitals, physician groups, and insurance companies become larger and more vertically integrated, patients end up paying more.

"This is something that should concern every Texas patient and every Texas legislator," he wrote.

Many Americans blame insurance companies for rising premiums but are unaware that medical monopolies are one of the primary drivers, said Vivian Ho, a professor and Chair in Health Economics at Rice University.

"I've been talking with HR executives for the last two years, trying to get someone to listen to this," Ho said.

Among those monopolies, companies like U.S. Anesthesia Partners - which focus on one type of practice and are run by doctors - are problematic, but not the worst offenders, she said. The biggest drivers are hospitals and regional health systems that squelch all competition, studies have shown.

So far, only large public employers reliant on shrinking tax dollars have been paying attention, Ho said.

"They're short on money. They're running out," she said. "This is becoming a strain on every public employer."

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