Lawsuit Alleges Decade-Long Conspiracy for Anesthesia Monopoly and Price Hikes

• FTC Initiates Lawsuit Against U.S. Anesthesia Partners and Private-Equity Backer: The Federal Trade Commission (FTC) has taken legal action against U.S. Anesthesia Partners Inc. (USAP), a leading anesthesia staffing company in the United States, and its private-equity sponsor, Welsh, Carson, Anderson & Stowe. The lawsuit alleges a decade-long conspiracy in which both entities sought to acquire anesthesia practices in Texas, with the ultimate goal of monopolizing the market, driving up prices for patients, and reaping substantial profits.

• Monopoly Profits and Price Increases: The FTC's civil complaint, filed in the Southern District of Texas, Houston, asserts that USAP's anticompetitive behavior allowed it to extract monopoly profits while expanding its dominance in the industry. This conduct has resulted in significant price hikes for patients and their employers, amounting to tens of millions of dollars annually.

• FTC's Shift in Focus: This lawsuit marks a shift in the FTC's approach, as it signals a willingness to scrutinize smaller private-equity buyouts that may result in companies gaining monopoly power. Traditionally, the FTC focused on larger transactions exceeding $100 million. However, it now suggests that even smaller acquisitions, like the consolidation of physician practices in specific regions, can lead to increased market power and price manipulation.

• Private-Equity's Influence in Healthcare: In recent years, private-equity investors have increasingly poured substantial capital into the healthcare sector. This trend includes investments in nursing homes, hospice operations, hospital staffing companies, and various medical practices. While private-equity firms provide financing and management expertise, they often operate behind the scenes, escaping regulatory scrutiny.