After pledging to address mergers in the health care industry, the Federal Trade Commission filed an antitrust lawsuit on Thursday that challenged the growing practice of private equity firms backing companies that consolidate medical practices and dominate local markets.
The lawsuit targeted a large physician group that operates anesthesia practices in several states, alleging that the group and the private equity firm that advises and funds it are consolidating physician groups in Texas so they can raise prices and increase their profits.
I brought the agency Civil suit In federal court against US Anesthesia Partners and Welsh, Carson, Anderson & Stowe, a New York private equity firm.
“These tactics enabled USAP and Welch Carson to raise prices for anesthesia services, resulting in tens of millions of additional dollars for these executives at the expense of Texas patients and businesses,” FTC Chairwoman Lena M. Kahn said in a report. statement. “The FTC will continue to scrutinize and challenge chain takeovers, mergers, and other covert consolidation schemes that unlawfully undermine fair competition and harm the American public.”
This case is important because it focuses on a business strategy that has become increasingly common in health care. Private equity firms were helping companies buy more doctor’s clinics in various medical specialties, and these purchases allowed them to control a large share of some local markets.
The lawsuit is also unusual because it is also brought against the private equity investor, who now owns a minority stake in USA Anesthesia Partners, not just the company.
A recent study conducted by researchers at Beatrice Centre At the University of California, Berkeley, and Washington Center for Equitable Growtha progressive think tank in Washington, said the private equity-financed merger led to price increases for gastroenterology, dermatology and other medical specialties.
The Federal Trade Commission said it considered so A type of health care integration To be an executive priority, it is a sign that this issue may be the first of many examining the growth of private equity in the industry. The companies argued that their actions did not violate federal antitrust law.
The suit says Welsh Carson and US Anastasia Partners expanded their reach throughout Texas with the express goal of using their market share to raise the prices doctors and nurses would be paid by insurance companies.
Brian Regan, head of Welch Carson’s healthcare group who sat on the board of US Anesthesia Partners, was quoted in the lawsuit as telling lenders who were financing a key deal that the company planned to “build a platform on a national scale by consolidating practices.” With a high market share in a few key markets” and to improve “negotiating leverage” with insurers.
After learning of the strategy, an executive at one of the companies the company had purchased in Austin, Texas, responded: “Great! Cha-ching,” according to the lawsuit.
The lawsuit also accused US Anesthesia Partners of conspiring with another large anesthesia company to stay out of its Texas markets. The name of that company has been deleted from the legal file.
Two of the largest acquisitions in US Anesthesia Partners’ history were previously reviewed and approved by the Federal Trade Commission (FTC).
Welsh Carson and US Anesthesia Partners disputed the FTC’s claims and said they would fight the lawsuit.
“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 the level of care we provide to patients in Texas,” the doctor said. Derek Shuba, MD, a Texas physician and board member of US Anesthesia Partners, Inc a permit.
The company said its commercial rates in Texas have “increased modestly over the years” and have remained “essentially” constant after adjusting for inflation.
Amy Stevens, a spokeswoman for Welsh Carson, said the private equity firm is “disappointed” by the lawsuit. “Unfortunately, this is consistent with a recent series of lawsuits brought by the FTC using litigation to pursue extreme political theories,” she said in a statement. “We are confident that we will prevail.”
Fiona Scott Morton, an economics professor at Yale University and former chief economist in the Justice Department’s antitrust division, said the case highlighted how many small mergers can have the same impact as a large merger.
“If each individual transaction is small but there are a lot of them, you end up with a cumulative effect,” she said. “It is important that we do not get caught up in evaluating one transaction at a time and lose the forest for the trees.”
