Private Equity in Healthcare: FTC v. U.S. Anesthesia Partners and Welsh Carson

ABA Antitrust Law Section


The Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) are continually focused on investigating the impact of consolidation in healthcare. More recently, the agencies have expressed a renewed interest in for-profit medicine. In March 2024, the agencies, along with the U.S. Department of Health and Human Services, issued a Request for Information on the effects of private ownership on healthcare providers and ancillary services.[1] The FTC’s recent challenge of U.S. Anesthesia Partners (USAP) and Welsh, Carson, Anderson & Stowe (Welsh Carson) and the Court’s recent dismissal of  Welsh Carson from the case raise the issue of the liability of private equity firms’ investment in healthcare roll-ups and serial acquisitions. Here, we explore the FTC’s allegations against USAP and Welsh Carson, as well as literature on trends and the impact of private equity in healthcare.

In September 2023, the FTC filed a complaint against USAP and Welsh Carson, accusing the defendants of a “multi-year anticompetitive scheme” to acquire and consolidate anesthesia practices in Texas, increase prices, and boost profits.[2] In the complaint, filed in the Southern District of Texas, the FTC alleged that USAP and Welsh Carson engaged in a three-pronged strategy to amass monopoly power and extract monopoly profits. This alleged scheme includes a roll-up strategy, price-setting agreements with independent anesthesia groups, and market allocation agreements with an unnamed large competitor. The FTC alleged that USAP and Welsh Carson consolidated power in the market for hospital-based, commercial anesthesiology services, allowing the group to negotiate higher reimbursement rates with insurers, thereby increasing the cost of anesthesiology services in Texas.[3] In May 2024, Judge Kenneth Hoyt dismissed Welsh Carson as a defendant, reasoning that the FTC had not shown that the private equity firm was violating antitrust law by owning a minority share in USAP.[4]

Background: U.S. Anesthesia Partners and Welsh Carlson

U.S. Anesthesia Partners, founded in 2012, provides anesthesia and pain management services in eight states (Colorado, Florida, Indiana, Maryland, Nevada, Tennessee, Texas, and Washington).[5] In 2013, USAP consisted of 400 providers who practiced at 45 healthcare facilities and performed around 300,000 anesthesia procedures. As of late 2021, USAP had grown to 4,500 providers practicing at 1,100 healthcare facilities and performing 2.5 million anesthesia procedures.

Welsh Carson is a private equity investment and management firm founded in 1979. Engaged primarily in healthcare and technology sectors, it has invested in over 95 healthcare companies and raised over $31 billion.[6] Welsh Carson co-founded USAP in 2012 by acquiring Greater Houston Anesthesiology, the largest anesthesiology group in Houston. Welsh Carson committed between $1-2 million to establish USAP, gaining a 50.2% stake in the company.

According to the FTC’s Complaint, USAP’s alleged strategy involved acquiring anesthesiology groups with existing exclusive contracts and a high market share for hospital-based anesthesiology services. USAP first purchased Greater Houston Anesthesiology in 2012 and then continued to purchase additional anesthesiology practices in the Houston area. In 2013, USAP expanded into Dallas with its acquisition of Pinnacle Anesthesia Consultants, and later into other parts of Texas.

The Anesthesiology Healthcare Provider Market

Anesthesiology services can be categorized into general and local anesthesia. Whereas local anesthesia (e.g., an injection of lidocaine in the leg) can be administered in many outpatient settings, general anesthesia (i.e., putting someone to sleep) is limited to facilities that allow surgery, such as hospitals and ambulatory surgery centers (ASCs).[7] These facilities needing general anesthesia can either allow surgeons to coordinate anesthesia coverage using an “open staffing model,” or have exclusive contracts with one or more anesthesiology providers. The exclusive contract ensures that a facility has access to constant anesthesiology coverage, and in turn, guarantees the anesthesiology providers access to a larger patient base. Because of the more stable patient flow that exclusive contracts offer, anesthesiology providers are incentivized to compete for exclusive contracts with hospitals.

Facilities and anesthesiology providers each separately negotiate the price of their respective services with commercial insurers. The negotiations determine which facilities and/or providers will be reimbursed at “in-network” rates that are more favorable (i.e., lower to insurers) than “out-of-network” providers, allowing facilities and providers to trade off price and volume. Although facilities and providers may negotiate separately, often all parties prefer to contract broadly. In particular, in the event of a mismatch, an out-of-network anesthesiology provider at an otherwise in-network hospital could result in an unexpectedly high cost to a patient, which could reflect poorly on the hospital and/or insurer. Given this potential coordination problem, hospitals prefer to contract with in-network anesthesiologists, all else equal, to avoid confusing patients and/or the impression of high prices.

The FTC’s Complaint

The Relevant Market for Hospital-Based Anesthesia

The FTC alleged that the relevant service market is “hospital-only anesthesia services sold to commercial insurers and their insured members.”[8] However, the USAP motion to dismiss, filed in November 2023, contends that the FTC excludes readily and reasonably interchangeable and substitutable services including anesthesiology performed in ambulatory surgical centers. USAP argues that this is “an attempt by the FTC to ‘gerrymander’ its way to an antitrust victory without due regard for market realities.”[9]

USAP’s Alleged Conduct

First, the FTC alleged that beginning in 2012, USAP and Welsh Carson engaged in a “roll-up” scheme by purchasing “nearly every large anesthesia practice in Texas.”[10] The FTC uses the term “roll-up” to refer to a strategy in which private equity firms serially acquire and consolidate several smaller companies in sequence. According to the FTC, the seven acquired practices in Dallas represented individually between 0.3 percent and 42.3 percent of the market for hospital-only anesthesia services by revenue. Similarly, the FTC reports that the four acquired practices in Houston and two acquired practices in Austin each represented between 3.2 percent and 50.5 percent of the market by revenue. The FTC contends that after the initial acquisition of Greater Houston Anesthesiology, USAP controlled about 50 percent of the commercially insured hospital-only market by revenue and in 2021, after acquiring several additional practices, their market share increased to 70 percent. The complaint also alleges that each additional acquisition in Houston following the initial acquisition resulted in at least a 200-point increase in the Herfindahl-Hirschman Index (“HHI”).[11] The FTC considers the acquisitions in Houston and Dallas, “whether considered individually or as a series of acquisitions,” to be in violation of Section 7 of the Clayton Act by “substantially lessen[ing] competition or tend[ing] to create a monopoly.”

Second, the FTC’s complaint has accused USAP of engaging in price-setting agreements with independent anesthesia groups that shared hospitals with USAP in Houston and Dallas. Hospitals can directly employ anesthesia providers or, as many hospitals choose, rely on independent anesthesia groups, such as USAP. As discussed earlier, hospitals prefer exclusive contracts with anesthesiology providers to ensure continuous coverage, among other benefits. The FTC has claimed that USAP and other, lower-cost providers would both provide services to the same hospital, but bill under a single USAP contract. The anesthesiology providers would thus charge USAP's higher prices and split the additional revenues. The FTC alleged, as examples, that USAP maintained agreements with anesthesia groups like the Methodist Hospital Physician Organization in Houston and Dallas Anesthesiology Associates, under both of which payors are billed using USAP’s rates. The FTC cited these alleged pricing agreements as “unlawful monopolization” in violation of Section 2 of the Sherman Act and “an unfair method of competition” in violation of Section 5(a) of the FTC Act.

Lastly, the FTC has claimed USAP and Welsh Carson entered a market allocation with another unnamed large anesthesia services provider. The alleged market allocation agreement was to “avoid a head-to-head rivalry” with that other large anesthesia provider.[12]

The FTC has alleged that the combined alleged anticompetitive conduct has made USAP “the dominant provider of anesthesia services in Texas,” claiming that as of 2021, USAP was “nearly seven times larger than the second-largest group in all of Texas.”[13] The FTC’s complaint alleges that the effect of the alleged scheme has “cost Texans tens of millions of dollars more each year than they did before USAP was created” via higher reimbursement rates for anesthesia services.[14] The FTC also alleged that “Welsh Carson has already begun ‘deploying a similar strategy to consolidate’ multiple other physician practice specialties,’”[15] although Welsh Carlson was recently dismissed from the case.

Welsh Carson’s Involvement in USAP

Welsh Carson invested in establishing USAP and has received dividends from USAP’s profits. According to the FTC’s complaint, the private equity firm has driven USAP’s corporate strategy since its inception, including appointing senior USAP leadership, overseeing investments, and aiding in settling disputes with insurers. Notably, the FTC cited a 2012 presentation in which Welsh Carson allegedly presented a consolidation strategy to USAP directors.[16] The FTC also accused the private equity firm of identifying practices with high market share as acquisition targets in “key geographies” and of funding expansion into these new geographies. For example, the FTC’s complaint specifically accused Welsh Carson of purchasing additional shares in USAP to fund the acquisition of Pinnacle Anesthesia Consultants in Dallas.[17] As noted above, despite these allegations, Welsh Carlson successfully received dismissal from the case in May 2024.[18]

Requested Remedy

The complaint asked the Court to permanently enjoin USAP and Welsh Carson “from engaging in similar and related conduct in the future” and “grant other such equitable relief, including but not limited to structural relief, as the Court finds necessary to redress and prevent recurrence of Defendants’ violations” under Section 13(b) of the FTC Act.

USAP and Welsh Carson’s Response

In response to the FTC’s complaint, Dr. Derek Schoppa, a USAP Physician in Texas, stated that the 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.”[19] Though the FTC’s complaint accuses the USAP acquisitions of providing USAP with “outsized market power” that affected health plan prices, USAP contents that anesthesia practices do not have power over health plans. To the contrary, USAP stated that many health plans dwarf USAP in size and that USAP’s commercial prices that are negotiated with each health plan have “increased modestly over the years and, which adjusted for inflation, have remained essentially flat.”

Private Equity in Healthcare


Private equity firms are capital market intermediaries that invest investors’ funds into private companies. Investments typically take two forms – leveraged buyouts (LBOs) or growth equity. LBOs are more common in healthcare provider transactions and involve a private equity firm purchasing equity in existing provider groups. In contrast, growth equity investments dedicate funds (in exchange for equity in provider groups), which are used to grow groups and/or improve efficiency, such as by investing in technology.[20] 

In LBO scenarios, private equity firms acquire a company with the intention of maximizing their return on investment. They typically purchase shares of a target company, usually to fund its growth, and then continue to provide managerial oversight as they hold their investment. The usual holding period is around 10 years, after which the private equity firm sells the acquired company and profits from the difference between the sale price and the initial investment.[21]

Private equity firms have shown an increased interest in investing in healthcare in recent years. One Bain & Co. study shows that the number of private equity deals has steadily increased from 2010 to 2021. This study found that the number of healthcare deals as a proportion of total private equity deals economy-wide has increased from 9% in 2010 to 15% in 2022 to 2023.[22]

Various factors could explain the increased private equity activity in healthcare. Healthcare accounts for a large proportion of the U.S. economy and continues to grow as the U.S. population ages.[23] Healthcare also has relatively stable demand and is viewed as a “recession proof” industry, meaning it is less responsive to broader macroeconomic trends than other sectors. Moreover, the potential for organic growth and the opportunity for innovation within healthcare businesses are attractive to investors.[24] In particular, additional funding from private equity firms can help financially constrained provider groups grow their practices and better compete with provider groups that are already owned by corporate entities.[25]


The impact of private equity on healthcare is mixed based on studies thus far. Moreover, the ability to determine the causal impact of private equity acquisitions is further complicated by pre-acquisition differences between healthcare businesses that were acquired and those that were not acquired. In the case of short-term general acute care hospitals, for example, acquired hospitals tend to be larger and have larger pre-acquisition profit margins, as compared to hospitals that were not acquired.[26] In the case of provider groups, private equity firms may focus specifically on more profitable specialties, such as dermatology or ophthalmology, resulting in a non-random set of acquired groups, as compared with groups that were not acquired.[27]  

In the academic studies that have been done, the literature generally evaluates four types of acquisition-driven effects: cost to providers, cost to patients, quality of care, and patient health outcomes. To date, the effects have been mixed and have varied by setting and specialty—there is not yet consensus on whether private equity has an overall positive or negative effect on the provision of healthcare. That said, a consistent finding has been that private equity firms are highly responsive to short-term market incentives.

For example, private equity acquisitions of hospitals and long-term care facilities show diverging outcomes. For general acute care hospitals, private equity investments can help hospitals provide more advanced services in addition to existing services. Private equity investments can also help expand access to care for underserved populations, such as Medicare patients.[28] Research focused on nursing homes, however, shows that private equity ownership may be associated with increases in short-term mortality and deterioration of patient health.[29] Moreover, private equity-owned nursing homes have shown operational differences, such as decreased nurse staffing. Overall, whereas nursing homes have shown decreased financial stability after private equity acquisition, there is no such evidence for general acute care hospitals.

One survey of private equity in healthcare published in the British Medical Journal evaluated the literature on private equity in healthcare from 2000-2023. While this literature survey could not find definitive conclusions on health outcomes and quality metrics, it found increased healthcare prices at private equity-acquired providers. In some instances, the survey found that private equity firms raised allowed amounts by increasing charge-to-cost ratios, and in other instances, the survey concluded that the mechanism of increased prices was through the accumulation of additional market power.[30]

Another 2022 study evaluated the impact of private equity investment on over 500 acquired dermatology, ophthalmology, and gastroenterology physician groups. The study found an increased volume of patient visits among both new and returning patients, holding constant the physician count in the studied groups. The study also found increases in coding intensity at acquired practices.[31] It is not clear, however, whether these results indicate higher quality of care or more profitable business strategies. In still another study of gastroenterology, OB/GYN, and dermatology specialties, the authors found that markets in which a private equity firm employs more than 30% of physicians exhibit larger private equity-driven price effects.[32]

Because private equity firms benefit directly from the invested firm’s profitability, this may explain why private equity-owned healthcare providers appear to respond more strongly to short-term market incentives than non-acquired providers.[33] Unlike corporate health systems, private equity firms typically hold a portfolio company for under ten years, and profit primarily from the sale of the company.[34] This shorter-run dynamic can manifest itself in several ways. For example, private equity firms may over-encourage more profitable services. However, private equity investments in healthcare technology can nonetheless grow more efficient health programs, such as remote visits and digitized medical records. One study observes that private equity firms are highly responsive to regulation and value-based reimbursement programs.[35]  

Broader FTC Strategy

The FTC’s complaint marks a potential landmark case for the FTC and may signal more scrutiny of roll-up strategies, serial acquisitions, and the liability of private equity firms. FTC Chair Lina Khan stated that 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.”[36]

The FTC’s complaint, in particular, is one of the first to focus on “roll-up” acquisitions. These acquisitions are facing scrutiny in part due to reporting requirements that do not generally require these acquisitions to be reported under the Hart-Scott-Rodino Act (HSR). For 2023, the minimum transaction size to be required to report under the HSR was $111.4 million.[37] According to the American Economic Liberties Project, many private equity acquisitions fall below the HSR reporting threshold, reporting that the “median buyout size [is] now around $70 million, and over 50% of add-ons [fall] below $100 million.”[38] However, according to a different report published by Bain & Company, add-on transactions account for less than 20% of all transactions (by dollar-value) from 2016 through 2021.[39]

The alleged liability (albeit, eventual dismissal) of Welsh Carson is also notable. Despite a decreasing ownership share in USAP——a note the Court emphasized in its dismissal—the FTC nonetheless named Welsh Carson in its complaint. At USAP’s founding in 2012, Welsh Carson owned 50.2% of USAP, which then decreased to 44.8% between 2013 and 2017 and further to 23% by late 2017.[40] It remains to be seen whether this attempt by the FTC signals a continued strategy of focusing on even minority investments and considering alternate methods of alleged control in analyzing firms’ conduct. For example, the FTC noted in its complaint that, despite not holding a majority stake, Welsh Carson is guaranteed at least two seats on the board of directors. Despite the FTC’s allegations, U.S. District Judge Kenneth Hoyt dismissed Welsh Carson from the case, reasoning that the FTC did not show that it was actively violating competition law as a minority investor.[41]

The progression of the FTC’s case will provide insight into the future scrutiny of private equity and roll-up strategies. Additionally, the FTC’s claims under Section 5 of the FTC Act highlight its broader approach to enforcement. Section 5 does not require the conduct to “directly [cause] actual harm.” Rather, it examines whether the conduct “has a tendency to generate negative consequences.”[42] Section 5 also allows the agency to challenge conduct without a showing of market power or market definition, and there is less of a focus on econometric analysis as the “rule of reason” analytical approach that is the focus of most challenges under the Sherman Act. This ongoing case against USAP may help determine whether the FTC can bring claims under this alternative standard.


[1] Request for Information on Consolidation in Healthcare Markets (February 29, 2024), available at

[2] FTC v. U.S. Anesthesia Partners, Inc. et al Complaint, 4:23-cv-03560, (S.D. Tex.) [hereinafter Complaint], ¶1.

[3] Id., ¶8.

[4] FTC v. U.S. Anesthesia Partners, Inc. et al Memorandum Opinion and Order, 4:23-cv-03560, (S.D. Tex.) (May 13, 2024).

[5] Complaint, ¶¶21-22.

[6] Complaint, ¶23.

[7] Id., §3A-3B.

[8] Id., ¶216.

[9] FTC v. U.S. Anesthesia Partners, Inc. et al Motion to Dismiss the FTC’s Complaint (November 20, 2023).

[10] Complaint, ¶4.

[11] Id., ¶266; HHI is a measure of market concentration, where it approaches zero in a market with a large number of firms and approaches its max of 10,000 in a market controlled by one firm. See Herfindahl-Hirschman Index, U.S. Department of Justice Antitrust Division (January 17, 2024), available at

[12] Complaint, ¶7.

[13] Id., ¶8.

[14] Id., ¶8.

[15] Id., ¶9.

[16] Id., ¶79.

[17] Id., ¶127.

[18] FTC v. U.S. Anesthesia Partners, Inc. et al Memorandum Opinion and Order, 4:23-cv-03560, (S.D. Tex.) (May 13, 2024).

[19] U.S. Anesthesia Partners Refutes Federal Trade Commission's Misguided Allegations, U.S. Anesthesia Partners (September 21, 2023), available at

[20] Atul Gupta et al., The Effect of Private Equity Investment in Health Care, University of Pennsylvania (March 3, 2023), available at

[21] Ibid.

[22] Nirad Jain et al., Healthcare Private Equity Market 2023: Year in Review and Outlook, Bain & Company (January 3, 2024), available at

[23] Atul Gupta et al., The Effect of Private Equity Investment in Health Care, University of Pennsylvania (March 3, 2023), available at

[24] Grant Thorton, The Growing Role of Private Equity in Healthcare (September 6, 2023), available at

[25] Atul Gupta et al., The Effect of Private Equity Investment in Health Care, University of Pennsylvania (March 3, 2023), available at

[26] Anaeze C. Offodile II et al., Private Equity Investments in Health Care: An Overview of Hospital And Health System Leveraged Buyouts, 2003–17, Health Affairs 40, no. 5 (May 2021), available at

[27] Private Equity’s Role in Health Care, The Commonwealth Fund (November 17, 2023), available at,home%2C%20and%20home%20care%20settings. See also Monetizing Medicine: Private Equity and Competition in Physician Practice Markets, American Antitrust Institute (July 10, 2023), available at

[28] Atul Gupta et al., The Effect of Private Equity Investment in Health Care, University of Pennsylvania (March 3, 2023), available at

[29] Atul Gupta et al., Owner Incentives and Performance in Healthcare: Private Equity Investment in Nursing Homes, NBER Working Paper 28474 (August 2023), available at

[30] Alexander Borsa et al., Evaluating Trends in Private Equity Ownership and Impacts on Health Outcomes, Costs, and Quality, British Medical Journal (July 19, 2024), available at

[31] Yashaswini Singh et al., Association of Private Equity Acquisition of Physicians Practices with Changes in Health Care Spending and Untilization, JAMA Health Forum, 3(9) (2022), available at 10.1001/jamahealthforum.2022.2886.

[32]Monetizing Medicine: Private Equity and Competition in Physician Practice Markets, American Antitrust Institute (July 10, 2023), available at

[33] Atul Gupta et al., The Effect of Private Equity Investment in Health Care, University of Pennsylvania (March 3, 2023), available at

[34] Ibid.

[35] Ibid.

[36] FTC Challenges Private Equity Firm’s Scheme to Suppress Competition in Anesthesiology Practices Across Texas, FTC Press Release (September 21, 2023).

[37] HSR Threshold Adjustments and Reportability for 2023, FTC (February 16, 2023), available at

[38] The Roll-Up Economy: The Business of Consolidating Industries with Serial Acquisitions, American Economic Liberties Project (December 15, 2022), available at

[39] Global Private Equity Report 2022, Bain & Company (July 13, 2022), available at, p. 13.

[40] Complaint, ¶35.

[41] FTC v. U.S. Anesthesia Partners, Inc. et al Memorandum Opinion and Order, 4:23-cv-03560, (S.D. Tex.) (May 13, 2024).

[42] Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act, FTC File No. p221202 (November 10, 202), available at


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