The Federal Trade Commission (FTC) has initiated legal action against U.S. Anesthesia Partners, Inc. (USAP), the dominant anesthesia services provider in Texas, and private equity firm Welsh, Carson, Anderson & Stowe. The lawsuit alleges that USAP and Welsh Carson engaged in a long-term anticompetitive scheme designed to consolidate anesthesiology practices across Texas, inflate the prices of anesthesia services for patients, and ultimately maximize their own profits.
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 consolidate and monopolize the Texas anesthesiology market. This strategy began with a “roll-up” scheme, systematically acquiring nearly every major anesthesia practice in Texas. This aggressive acquisition strategy aimed to establish a single dominant provider capable of dictating higher prices. Secondly, USAP and Welsh Carson allegedly colluded with remaining independent practices through price-setting agreements to further escalate anesthesia costs. Finally, USAP is accused of sidelining a significant competitor by entering into an agreement to exclude them from USAP’s operational territory.
The FTC contends that USAP’s multifaceted anticompetitive strategy and its resulting market dominance have imposed significant financial burdens on Texans. Patients in Texas are allegedly paying tens of millions of dollars more annually for anesthesia services compared to the period before USAP’s formation.
“Private equity firm Welsh Carson masterminded a roll-up strategy and established USAP with the express purpose of acquiring almost every large anesthesiology practice in Texas. Coupled with unlawful agreements designed to fix prices and divide markets, these tactics empowered USAP and Welsh Carson to escalate prices for essential anesthesia services,” stated FTC Chair Lina M. Khan. She further asserted, “This scheme resulted in tens of millions of extra dollars flowing to these executives, directly at the expense of Texas patients and businesses. The FTC remains committed to rigorously examining and challenging serial acquisitions, roll-ups, and other covert consolidation schemes that illegally undermine fair competition and inflict harm on the American public.”
The FTC’s complaint details how New York-based Welsh Carson identified an opportunity in the Texas anesthesiology market in 2012. At that time, the market was characterized by numerous small, independent practices competing with each other. This competitive landscape allowed insurers to negotiate favorable prices for their clients and patients. Welsh Carson recognized a potential for substantial profit by eliminating this competition through consolidation.
Since its inception, USAP has acquired over a dozen anesthesiology practices throughout Texas. Following each acquisition, the FTC alleges that USAP immediately increased the acquired practice’s rates to match USAP’s own elevated pricing structure. This practice resulted in significant price markups for the same services provided by the same doctors, simply under the USAP umbrella. This roll-up strategy has successfully positioned USAP as the leading anesthesia services provider in Texas, holding a dominant share in numerous metropolitan areas, including major cities like Houston and Dallas. USAP’s scale and pricing now significantly surpass its competitors.
The FTC’s complaint further details additional tactics employed by USAP to inflate prices, including:
- Implementing and Maintaining Price-Setting Agreements: USAP allegedly established and upheld agreements that allowed them to impose their market-leading prices for services rendered by independent anesthesia groups within key hospitals in both Houston and Dallas.
- Establishing a Market Allocation Arrangement: USAP and Welsh Carson reportedly secured an agreement from another substantial anesthesia services provider to refrain from competing within USAP’s designated territory.
The FTC argues 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 rectify the consequences of USAP and Welsh Carson’s anticompetitive conduct and to prevent any future recurrence of similar behavior.
The Commission’s vote to authorize the filing of a permanent injunction and other equitable relief in the U.S. District Court for the Southern District of Texas was unanimous, with a 3-0 vote.
NOTE: It is important to note that the Commission issues a complaint when it has “reason to believe” that a law has been or is being violated and that initiating a proceeding is in the public interest. The allegations presented in the complaint will be adjudicated by the court.
The Health Care Division of the FTC’s Bureau of Competition is the department responsible for this case.
