Created by a private-equity firm in 2012, U.S. Anesthesia Partners (USAP) first opened in Texas and spread to nine other states — often growing by acquiring the largest anesthesiology firm in a city and then adding other nearby practices.
The legal action was filed against USAP and its private-equity founder, Welsh, Carson, Anderson & Stowe. The case represents one of the strongest moves by regulators to address complaints that the large doctor practices being built by financial firms are boosting U.S. medical prices.
“Private equity firm Welsh Carson spearheaded a roll-up strategy and created USAP to buy out nearly every large anesthesiology practice in Texas,” FTC Chair Lina Khan said in a statement announcing the lawsuit. “Along with a set of unlawful agreements to set prices and allocate markets, these tactics enabled USAP 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.”
In brief statements, USAP representatives said the FTC lawsuit was unwarranted.
“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 our level of care for patients in Texas,” said Derek Schoppa, a USAP physician and board member.
“We are confident we will prevail in this misguided litigation, ” added J. Scott Holliday, another company physician and board member.
The FTC has been looking into USAP since 2016 but had closed at least one of its inquiries into the firm since then.
A Washington Post story in June detailed the company’s practices, focusing on its expansion in Colorado, where internal documents showed a rare peek into its business practices. As in Texas, the company there bought some of the state’s largest anesthesiology firms and then negotiated price hikes. Company officials denied that they wielded monopoly power.
As the United States struggles to control medical costs, private-equity firms like Welsh Carson have become critical players in health-care economics, with their funds acquiring hundreds of physician practices across America and, according to multiple academic studies, raising prices while returning billions to investors.
When anesthesia companies backed by private-equity investors took over at a hospital outpatient or surgery center, they raised prices by an average of 26 percent more than facilities served by independent anesthesia practices, according to a 2022 study published in JAMA Internal Medicine based on six years of data.
USAP has issued more than $1.3 billion in dividends to its shareholders.
According to the FTC lawsuit, USAP’s tactics allowed it to get reimbursement rates that are double the median rate of other anesthesia providers in Texas.
USAP and Welsh Carson executives have described the consolidation of doctor practices as a means of creating “synergy,” but one executive at an acquired company allegedly put it more bluntly after one acquisition.
“Cha-ching!” the executive said, according to the lawsuit.
“The FTC will continue to scrutinize and challenge serial acquisitions, roll-ups, and other stealth consolidation schemes that unlawfully undermine fair competition and harm the American public,” Khan said.