According to the FTC’s complaint, filed in federal district court, USAP and Welsh Carson, the firm that created USAP, implemented a three-pronged strategy to achieve market dominance and monopolize the anesthesiology sector in Texas. This strategy began with a “roll-up” scheme, where they systematically acquired almost every significant anesthesia practice in Texas. This aggressive acquisition strategy aimed to establish USAP as the single, most powerful provider, granting them the leverage to demand higher prices. Furthermore, USAP and Welsh Carson allegedly solidified their price control through agreements with the remaining independent practices, ensuring a uniform price increase across the board. Finally, to eliminate potential threats to their market position, USAP purportedly made a deal with a major competitor to restrict their operations within USAP’s expanding territory.
The FTC contends that USAP’s multifaceted anti-competitive approach and the resulting market dominance have imposed significant financial burdens on Texans. It is estimated that patients in Texas have paid tens of millions of dollars more annually for anesthesia services than they would have if USAP had not been established and implemented these strategies.
“Private equity firm Welsh Carson spearheaded a roll-up strategy and created USAP to buy out nearly every large anesthesiology practice in Texas. Along with a set of unlawful agreements to set prices and allocate markets, these tactics enabled U.S. Anesthesia Partners 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,” stated FTC Chair Lina M. Khan. “The FTC remains committed to rigorously examining and challenging serial acquisitions, roll-ups, and other concealed consolidation tactics that illegally undermine fair competition and negatively impact the American public.”
The FTC’s complaint details how Welsh Carson, based in New York, identified an opportunity in the Texas anesthesiology market in 2012. They observed a fragmented landscape of small, competing practices, which allowed insurers to negotiate favorable prices for themselves, their clients, and patients. Welsh Carson recognized the potential for profit by consolidating these practices and eliminating competition.
Since its inception, U.S. Anesthesia Partners has acquired over a dozen anesthesiology practices in Texas. Following each acquisition, the FTC states that USAP consistently raised the rates of the newly acquired practices to match USAP’s own, significantly higher rate structure. This systematic roll-up strategy has successfully positioned USAP as the leading anesthesia services provider in Texas and numerous major metropolitan areas within the state, including Houston and Dallas. USAP’s scale and pricing now overshadow those of its competitors in the region.
The FTC’s complaint further outlines additional tactics allegedly employed by USAP to further inflate prices:
- Price-Setting Arrangements: U.S. Anesthesia Partners reportedly established and maintained agreements that allowed them to impose their market-leading prices for services even when those services were delivered by independent anesthesia groups within prominent hospitals in both Houston and Dallas.
- Market Allocation Arrangement: USAP and Welsh Carson allegedly secured an agreement from another substantial anesthesia services provider to deliberately avoid competing within USAP’s designated market territory.
The FTC’s legal argument asserts that the actions undertaken by USAP and Welsh Carson constitute unlawful monopolization, illegal acquisitions, a conspiracy to monopolize, unfair methods of competition, and unlawful restraints of trade. These actions are alleged to be in violation of both the FTC Act and the Clayton Act.
The FTC is pursuing equitable relief to address the consequences of USAP and Welsh Carson’s anti-competitive behavior and to prevent any future recurrence of similar conduct.
The Commission’s decision to authorize staff to file for a permanent injunction and other equitable relief in the U.S. District Court for the Southern District of Texas was approved by a 3-0 vote.
NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.
The Health Care Division of the FTC’s Bureau of Competition is managing this case.
