FTC sues Texas anesthesiology provider to bust monopoly

by Arjun Singh

The Federal Trade Commission (FTC) has taken legal action against the largest anesthesiology provider in Texas, accusing the company of using its monopoly power to drive up prices for patients and increase its profits. The agency alleges that New York-based private equity firm Welsh, Carson, Anderson & Stowe founded U.S. Anesthesia Partners (USAP) in 2012 with the intention of consolidating the fragmented market for anesthesiology providers in Texas. This consolidation allowed the company to exploit its monopoly power and raise prices, resulting in tens of millions of extra dollars in revenue.

The FTC has filed a lawsuit asking a federal judge in Houston to break up USAP’s alleged monopoly power and permanently prevent the company from engaging in anti-competitive practices. The complaint highlights how Welsh Carson aimed to make USAP the dominant provider in Texas by acquiring numerous independent practices that previously competed with each other, thereby keeping prices lower.

According to the FTC, USAP has grown significantly since 2013, expanding from 400 anesthesia providers at 45 healthcare facilities to 4,500 providers at 1,100 facilities in 2021. The company has established a monopoly in Houston and Dallas, the two largest cities in Texas, and holds a dominant position in Austin, the state’s capital.

USAP’s dominant position in these cities allows it to raise prices while still gaining market share. The difficulty for competitors to enter the market, coupled with the fact that patients cannot forgo anesthesia, gives USAP significant pricing power. The FTC alleges that the company has used this power to raise prices and accumulate tens of millions of dollars.

Dr. Derek Schoppa, a board member of USAP, has responded to the FTC’s complaint, calling it based on flawed legal theories and a lack of medical understanding about anesthesiology. Dr. Schoppa argues that the intended outcome of the lawsuit could disrupt and restrict patients’ access to quality anesthesia care in Texas, negatively impacting hospitals and health systems that provide care in underserved communities.

The outcome of this lawsuit will have significant implications for the healthcare industry in Texas and potentially beyond. It highlights the FTC’s commitment to challenging anti-competitive practices, particularly in industries where consolidation can lead to higher prices for consumers. As the case proceeds, it will be closely watched by healthcare providers, private equity firms, and regulators interested in preserving competition and patient affordability.

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