In a lawsuit filed Sept. 21 against U.S. Anesthesia Partners and Welsh, Carson, Anderson & Stowe, a private equity firm, the Federal Trade Commission alleges that the two companies executed an anticompetitive scheme to consolidate anesthesiology practices in Texas, drive up the price of services and boost their profits.
Welsh Carson, which created USAP, allegedly engaged in a three-part strategy to consolidate and monopolize the Texas anesthesiology market, according to the FTC complaint.
The agency alleges that Welsh Carson executed a roll-up scheme, buying up almost every large anesthesia practice in Texas to create a single dominant provider that could demand higher prices. USAP and Welsh Carson then allegedly further drove up prices through price-setting agreements with remaining independent practices, with USAP later sidelining a competitor by agreeing a deal to keep it out of USAP's territory, according to the complaint.
"Welsh Carson spearheaded a roll-up strategy and created USAP to buy out nearly every large anesthesiology practice in Texas," FTC Chair Lina Khan said in a news release. "Along with a set of unlawful agreements to set prices and allocate markets, these tactics enabled USAP and Welsh Carson to raise prices for anesthesia services — raking in tens of millions of extra dollars for these executives at the expense of Texas patients and businesses."
Since launching in 2012, USAP has acquired more than a dozen anesthesiology practices in Texas. The FTC alleges that USAP raised acquired groups' rates to USAP's higher rates, which were significant mark-ups for the same physicians as before. The alleged roll-up strategy made USAP the dominant provider of anesthesia services in Texas and in many metropolitan areas, including Houston and Dallas, according to the FTC.
"The FTC's intended outcome threatens to disrupt and restrict patients' equitable access to quality anesthesia care in Texas and will negatively impact the Texas hospitals and health systems that provide care in underserved communities," said Derek Schoppa, MD, a USAP physician and board member. "The FTC's civil complaint is based on flawed legal theories and a lack of medical understanding about anesthesia, our patient-oriented business model and our level of care for patients in Texas."