Anticompetitive Practices in the Texas Anesthesiology Market: FTC Takes Legal Action Against USAP and Welsh Carson
The Federal Trade Commission (FTC) has filed a lawsuit against U.S. Anesthesia Partners, Inc. (USAP) and private equity firm Welsh, Carson, Anderson & Stowe, accusing them of engaging in anticompetitive practices in the Texas anesthesiology market. The lawsuit alleges that the two companies collaborated on a multi-year scheme to monopolize the market, drive up prices, and increase their own profits.
According to the FTC, USAP and Welsh Carson orchestrated a strategic plan aimed at consolidating anesthesiology practices in Texas and eliminating competition. Their actions allegedly violated federal laws including the FTC Act and the Clayton Act, which address issues such as monopolization, unlawful acquisitions, conspiracy to monopolize, and unfair competition methods.
Welsh Carson, a private equity firm based in New York, founded USAP in 2012, recognizing the potential for growth in the fragmented Texas anesthesiology market. The FTC's complaint, filed on September 21, 2023, reveals that the market initially consisted of smaller, independent practices, enabling insurance companies to negotiate competitive rates. Welsh Carson sought to disrupt this landscape by consolidating the market.
The FTC's complaint outlines a three-part strategy employed by the companies to establish market dominance. Firstly, USAP systematically acquired almost every significant anesthesiology practice in Texas, creating a monopoly that could dictate higher prices for services. Secondly, USAP entered into pricing agreements with the remaining independent practices, allowing it to set market-leading rates at key hospitals in Houston and Dallas. Lastly, USAP and Welsh Carson reached an agreement with another major competitor to divide market territories, ensuring that the competitor would not interfere with USAP's influence.
FTC Chair Lina M. Khan stated that Welsh Carson formed USAP with the explicit intention of executing a roll-up strategy, which involved acquiring a significant number of anesthesiology practices in Texas. These actions have resulted in increased costs for anesthesia services, burdening both Texas patients and businesses.
In response to these anticompetitive actions, the FTC is seeking equitable relief to mitigate the impact on the market and prevent similar conduct in the future. The case, led by the Health Care Division of the FTC's Bureau of Competition, will proceed in the U.S. District Court for the Southern District of Texas.
The outcome of this legal battle will have significant implications for the Texas anesthesiology market and the broader healthcare industry. It
