The Federal Trade Commission (FTC) has filed a lawsuit against U.S. Anesthesia Partners (USAP), a physician-owned anesthesia practice, and the health and technology-focused private equity firm Welsh, Carson, Anderson & Stowe, alleging that they engaged in anti-competitive practices to inflate patient costs.
The FTC’s legal action, which unfolded in a Houston federal court, asserts that Welsh, Carson, Anderson & Stowe executed a “roll-up strategy,” systematically acquiring anesthesia practices throughout Texas. This strategic move, the FTC contends, led to the establishment of USAP as the dominant anesthesia service provider in the state over the past decade.
FTC Chair Lina Khan, appointed by President Biden, had previously expressed concern about the increasing influence of private equity firms on competition and consumer protection. The lawsuit marks a significant development as it represents the first litigated case challenging a private equity firm’s consolidation strategy.
Khan stated, “The FTC will continue to scrutinize and challenge serial acquisitions, roll-ups, and other stealth consolidation schemes that unlawfully undermine fair competition and harm the American public.”
The lawsuit alleges that U.S. Anesthesia Partners systematically raised rates for each acquired anesthesia group, resulting in higher costs for patients seeking the same medical services.
In response to the FTC’s allegations, U.S. Anesthesia Partners issued a denial, asserting that it competes fairly with both large and small anesthesia groups, as well as individual anesthesiologists across Texas. The company expressed its intention to vigorously defend itself against the FTC’s claims and emphasized that its reimbursements for anesthesia services align with industry standards.
Welsh Carson responded to the FTC’s legal action by expressing disappointment and accused the agency of “using litigation to pursue radical policy theories.”
According to the FTC, U.S. Anesthesia Partners holds a substantial presence in Texas and operates in seven other states, including Florida.
The 106-page lawsuit seeks a permanent injunction against “similar and related conduct” by the defendants.
In a statement, the FTC highlighted that U.S. Anesthesia Partners’ alleged dominance has resulted in Texans paying tens of millions of dollars more annually for anesthesia services compared to the period before USAP’s formation.
The case is identified as Federal Trade Commission v. U.S. Anesthesia Partners Inc and Welsh, Carson, Anderson & Stowe et al, U.S. District Court for the Southern District of Texas, No. 4:23-cv-03560.
