© Reuters. FILE PHOTO: Federal Trade Commission (FTC) Chair Lina Khan listens during a a hearing on “Oversight of the Federal Trade Commission,” on Capitol Hill in Washington, U.S., July 13, 2023. REUTERS/Kevin Wurm/File Photo
By Mike Scarcella
(Reuters) – The Federal Trade Commission on Thursday sued U.S. Anesthesia Partners and a private equity firm in Texas federal court, accusing them in a novel legal complaint of restricting competition to drive up prices for patients.
The agency’s lawsuit in Houston federal court said health and technology-focused private equity firm Welsh, Carson, Anderson & Stowe led a “roll-up strategy” of buying out anesthesia practices in Texas. This made physician-owned U.S. Anesthesia Partners (USAP), which it created more than a decade ago, the dominant provider in the state, the FTC said.
Biden-appointed FTC Chair Lina Khan had vowed to examine what she said was the “growing influence” of private equity on competition and consumer protection. The agency enforces antitrust law, and the lawsuit was seen as the first litigated case over a private equity firm’s consolidation strategy.
“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,” Khan said in a statement on Thursday.
U.S. Anesthesia Partners raised each new purchased group’s rates, forcing patients to pay more for the same doctor than before, according to the lawsuit.
In a statement, U.S. Anesthesia Partners denied the FTC’s allegations and said it competes with large and small groups and individual anesthesiologists across Texas. The company said it “will vigorously defend itself against the FTC’s misguided allegations.”
The group said its reimbursements for anesthesia services are consistent with industry practice.
Welsh Carson in a statement said it was disappointed in the FTC’s unwarranted case and accused them of “using litigation to pursue radical policy theories.”
U.S. Anesthesia Partners’ largest presence is in Texas, according to the FTC, and it operates in seven other states, including Florida.
The 106-page lawsuit said it was seeking a permanent injunction against “similar and related conduct.”
The trade commission in a statement said U.S. Anesthesia Partners’ “dominance has cost Texans tens of millions of dollars more each year in anesthesia services than before USAP was created.”
The case is 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.