The Federal Trade Commission (FTC) filed an antitrust lawsuit against U.S. Anesthesia Partners and its financial backer, Welsh, Carson, Anderson & Stowe, a New York-based private equity firm on Thursday. The lawsuit alleges that the firms have been consolidating medical practices in Texas to increase prices and profits.
This case is part of the FTC's broader scrutiny of healthcare consolidation, which has been linked to rising prices. The case is unique due to its focus on a business strategy increasingly prevalent in healthcare: private equity firms assisting companies in acquiring more doctors’ practices across various specialties, enabling these firms to command a significant portion of certain local markets.
In an unusual move, the lawsuit also targets Welsh, Carson, Anderson & Stowe, which currently owns a minority stake in U.S. Anesthesia Partners. The study found that private equity-funded consolidation has resulted in price increases across several medical specialties including gastroenterology and dermatology.
According to the lawsuit, Welsh Carson and U.S. Anesthesia Partners have explicitly aimed to expand their market share across Texas to hike up the prices that insurers pay their doctors and nurses. The suit also alleges that U.S. Anesthesia Partners conspired with another large anesthesia company to avoid competing in Texas markets.
However, both Welsh Carson and U.S. Anesthesia Partners deny these allegations and vow to contest the lawsuit. They argue that their businesses do not violate federal antitrust laws. U.S. Anesthesia Partners claims that its commercial prices in Texas have only modestly increased over time and have essentially remained flat after adjusting for inflation.
An interesting aspect of this case highlighted by Fiona Scott Morton, a professor of economics at Yale and former chief economist for the Justice Department’s antitrust division, is how numerous small mergers can collectively have the same impact as a single large merger.
The FTC has previously reviewed and approved two of the largest acquisitions in the history of U.S. Anesthesia Partners.
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