US accuses investment firm, anesthesia company of Texas monopoly scheme

The Federal Trade Commission (FTC) has taken legal action against U.S. Anesthesia Partners (USAP) and private equity firm Welsh, Carson, Anderson & Stowe, accusing them of engaging in anti-competitive practices that drive up healthcare prices for patients. This lawsuit marks the first litigated case over a private equity firm’s consolidation strategy, and it reflects FTC Chair Lina Khan’s commitment to examining the influence of private equity on competition and consumer protection.

The FTC’s complaint, filed in a federal court in Houston, alleges that Welsh Carson led a “roll-up strategy” of acquiring anesthesia practices in Texas, making USAP the dominant provider in the state. As a result, USAP was able to raise the rates for its services, forcing patients to pay more for the same doctors. The FTC argues that such practices unlawfully undermine fair competition and harm the American public.

USAP has denied the FTC’s allegations, stating that it competes with both large and small groups as well as individual anesthesiologists across Texas. The company asserts that its reimbursement rates are consistent with industry standards and that it will vigorously defend itself against the FTC’s claims.

Welsh Carson also rejected the FTC’s case, describing it as unwarranted and accusing the agency of using litigation to pursue radical policy theories. The private equity firm expressed disappointment in the FTC’s action, signaling a potential legal battle in the coming months.

USAP has a significant presence in Texas and operates in seven other states, including Florida. The FTC claims that the dominance of USAP in the anesthesia market has resulted in Texans paying tens of millions of dollars more each year for anesthesia services compared to before USAP’s creation.

The FTC’s lawsuit seeks a permanent injunction against similar conduct, and the agency has expressed its commitment to challenging consolidation schemes that undermine fair competition and harm consumers.

This case highlights the growing scrutiny of private equity firms’ involvement in the healthcare sector and the potential impact on healthcare costs for patients. With the Biden-appointed FTC Chair Lina Khan at the helm, it is likely that we will see further investigations into anti-competitive practices and consolidation strategies in various industries.