The Federal Trade Commission sued U.S. Anesthesia Partners Inc., one of the country’s top anesthesia staffing companies, and its private-equity backer, Welsh, Carson, Anderson & Stowe, on Thursday, accusing both entities of scheming over a decade to acquire anesthesia practices in Texas, monopolize the market, drive up prices for patients and generate profits.
“Thanks to its anticompetitive conduct, USAP has been able to extract monopoly profits while simultaneously growing its monopoly power,” the FTC said in its civil complaint, filed in federal court in the Southern District of Texas in Houston. “This conduct has resulted in egregious price increases for patients and their employers, on the order of tens of millions of dollars or more each year.”
The FTC’s suit follows recent comments by Lina Khan, the commission’s chairwoman, that her agency would investigate anticompetitive practices among companies acquired by private-equity firms. Private-equity firms use borrowed money to buy companies they hope to sell at profits in five to seven years.
The FTC oversees mergers and acquisitions to ensure that they do not result in monopolies, but it typically focuses on buyouts that meet a large-dollar threshold — more than $100 million — though it can review smaller deals, as well. Companies purchased by private-equity firms generally fall under the threshold and so have escaped scrutiny.
Now, however, the FTC’s suit indicates the government believes even smaller buyouts, such as a roll-up of physician practices in a city, a state or a region, can give companies monopoly power, allowing them to raise prices for goods and services without fear of competitors’ undercutting them.
In recent years, sophisticated private-equity investors have poured hundreds of billions of dollars into the health care industry, buying up nursing homes and hospice operations, hospital staffing companies and an array of doctors’ practices. The private-equity firms provide financing and management expertise to the companies they acquire but operate in the background; only rarely has the government sued the firms when companies they own are accused of improprieties, such as Medicare fraud or anti-competitive behavior.
U.S. Anesthesia Partners has 4,500 clinicians serving 2 million patients in nine states, including Colorado, Florida, Kansas and Tennessee. A spokesman for the company called the FTC’s allegations “misguided” in a news release. The release quotes Dr. Derek Schoppa, a practicing USAP physician in Texas and a USAP board member: “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.”