Federal Trade Commission Files Suit Against Private Equity–Funded Practice

On September 21, 2023, the Federal Trade Commission (FTC) announced the filing of a lawsuit against a Texas anesthesia group that was backed or owned by a private equity firm.

The suit claims the anesthesia group (U.S. Anesthesia Partners) and the private equity firm advising and financing it were consolidating doctors’ groups in Texas so that they could raise prices and increase their profits. The agency brought the civil lawsuit in federal court against U.S. Anesthesia Partners and Welsh, Carson, Anderson & Stowe, a private equity firm in New York.

The case is significant because it is one of the first to focus on the purchasing and funding of physician practices by a private equity firm. Private equity firms have been helping companies buy more doctors’ practices in various medical specialties, and those purchases have allowed them to control a large share of certain local markets. The suit is also unusual because it was also brought against the private equity investor, which now owns a minority stake in U.S. Anesthesia Partners, and not just the practice itself.

The FTC has recently stated it considers this type of health care merger to be an enforcement priority, a sign that this case may be the first of several scrutinizing the growth of private equity in the industry.

The suit argues that Welsh, Carson, Anderson, & Stowe and U.S. Anesthesia Partners have expanded their reach across Texas with an explicit goal of using market share to raise the prices that its doctors and nurses would be paid by insurers. The suit also accused U.S. Anesthesia Partners of conspiring with another large anesthesia company to stay out of its markets in Texas.

To read the FTC suit, see here.

To read additional coverage of the suit, see here.