The Federal Trade Commission has reached an agreement in principle with U.S. Anesthesia Partners Inc. (USAP) to settle litigation and restore competition for anesthesia services in Texas.
The preliminary settlement resolves charges, brought in 2023, alleging that USAP violated antitrust laws by engaging in a decade-long scheme to consolidate anesthesia services in Texas. The Commission’s complaint alleged that USAP systemically bought up nearly every large anesthesia practice in Texas in a roll-up scheme to create a single dominant provider with the power to demand higher prices. The complaint alleged that USAP’s multi-pronged anticompetitive strategy and resulting dominance cost Texans tens of millions of dollars more each year for anesthesia services than before USAP was created.
The substance of the agreement is confidential at present to facilitate the negotiations USAP must undertake to execute the settlement. But the terms of the settlement, if fully executed, will restore a competitive market structure and will be consistent with longstanding FTC settlement best practices. If USAP fails fully to execute the settlement, the FTC will return to district court to litigate these allegedly unlawful acquisitions.
The Commission vote authorizing staff to agree to the preliminary settlement was 2-0.
Litigation Allegations
On September 21, 2023, the Federal Trade Commission sued U.S. Anesthesia Partners, Inc. (USAP), the dominant provider of anesthesia services in Texas, and private equity firm Welsh, Carson, Anderson & Stowe, alleging the two executed a multi-year anticompetitive scheme to consolidate anesthesiology practices in Texas, drive up the price of anesthesia services provided to Texas patients, and boost their own profits.
New York-based Welsh Carson created USAP in 2012 after observing that anesthesiology in Texas was made up of small practices competing against one another, which allowed insurers to negotiate lower prices for themselves, for their clients, and ultimately for patients. Welsh Carson allegedly saw a chance to profit by eliminating this competition.
Since its creation, USAP has acquired more than a dozen anesthesiology practices in Texas. As it bought each one, the FTC alleged, USAP raised the acquired group’s rates to USAP’s higher rates—resulting in a substantial mark-up for the same doctors as before. This roll-up strategy has made it the dominant provider of anesthesia services in Texas and in many of the state’s metropolitan areas, including Houston and Dallas. USAP’s size and prices now dwarf those of its rivals.
The FTC’s complaint, filed in federal district court, alleged that USAP and Welsh Carson engaged in a three-part strategy to consolidate and monopolize the anesthesiology market in Texas. First, they executed a roll-up scheme, systematically buying up nearly every large anesthesia practice in Texas to create a single dominant provider with the power to demand higher prices. Second, USAP and Welsh Carson further drove up anesthesia prices through price-setting agreements with remaining independent practices. Third, USAP sidelined a significant competitor by striking a deal to keep it out of USAP’s territory.
The FTC alleged that USAP’s multi-pronged anticompetitive strategy and resulting dominance has cost Texans tens of millions of dollars more each year in anesthesia services than before USAP was created.
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