FTC secures settlement against PE in antitrust roll-up case

FTC settlement puts conditions on future Welsh Carson acquisitions

In January this year, the Federal Trade Commission (FTC) announced that it had reached a settlement with private equity firm Welsh, Carson, Anderson, and Stowe (“Welsh Carson”) and its affiliates, resolving a potential administrative antitrust case against the private equity firm.[1]

The FTC had alleged in an administrative complaint that Welsh Carson used its portfolio company U.S. Anesthesia Partners (USAP) to engage in anticompetitive acquisitions to suppress competition and drive up prices for anesthesiology services across Texas.

The administrative settlement follows a September 2023 complaint filed in federal court alleging that Welsh Carson and USAP engaged in a roll-up scheme by systematically buying up nearly every large anesthesia practice in the state to create a single dominant provider with the power to demand higher prices.

As part of the administrative settlement, the FTC proposed a consent order outlining conditions meant to protect the public from Welsh Carson’s potential future anticompetitive conduct, and to deter other parties from engaging in similar anticompetitive conduct.

The consent order provisions include freezing Welsh Carson’s ownership rights in USAP at current levels and reducing its board representation to one seat; requiring Welsh Carson to obtain prior approval for any future investments in anesthesia nationwide; and mandating the firm provide 30-day notice for transactions involving other hospital-based physician practices nationwide.

The settlement is a small victory for responsible oversight

The settlement represents the lengths to which administrative agencies must go to hold private equity firms accountable within the existing policy landscape. It comes after Welsh Carson was originally dismissed on procedural grounds from a Federal Trade Commission antitrust challenge against the private equity firm and its portfolio company U.S. Anesthesia Providers, which was brought in federal district court.

Following the dismissal in the district court, the FTC continued to pursue Welsh Carson in administrative proceedings. Adjudicative proceedings – in which the FTC files a complaint under its administrative process – can lead to settlement, or if contested, to a trial-type proceeding before an administrative law judge.

Administrative action can serve as a backstop for accountability when statutory and other legal options are lacking. According to a FTC press release, the administrative settlement with Welsh Carson “underscores that the common corporate tactic of seeking dismissal of a federal case on Section 13(b) grounds may delay—but will not deny—the FTC’s efforts to challenge anticompetitive conduct.”

Small administrative victories do not address private equity’s scale

Rather than resolving antitrust claims through post-hoc solutions, policymakers and agencies with oversight authority should move to limit private equity consolidation before it happens.

Private equity has invested in the healthcare sector through the serial acquisition of smaller medical businesses by larger platform companies. These add-on acquisitions, sometimes called “roll-ups,” are one of the fundamental strategies used by private equity firms seeking to grow their investments. Federal antitrust regulators – including the Federal Trade Commission and U.S. Department of Justice – have said that private equity roll-ups often unfairly reduce competition and can harm patients.

Multiple federal agencies in the previous administration, as well as state attorneys general, had begun in 2024 to examine the effects of private equity consolidation:

• In March 2024, the Federal Trade Commission, Department of Justice (DOJ) Antitrust Division, and U.S. Department of Health and Human Services (HHS) jointly launched a public inquiry into private equity firms and other corporate owners which are increasingly involved in healthcare system transactions. In January 2025, HHS released a report highlighting the impacts of increasing healthcare consolidation by private equity and other private investors.
• In May 2024, the FTC and DOJ Antitrust Division jointly launched a public inquiry on serial acquisitions and roll-up strategies used by corporate actors, including private equity firms, across a wide array of markets and industries. The inquiry was meant to complement the parallel inquiry on healthcare system transactions.
• In June 2024, 11 attorneys general submitted a comment letter in response to the FTC, DOJ, and HHS inquiry on healthcare transactions. The letter advocated for enforcement and regulatory action where federal and state governments can collaborate, and it laid out possible action to address the detrimental effects of private equity healthcare transactions, including roll-up acquisitions.

State authorities step into the breach

Private equity consolidation is also subject to scrutiny by state-level actors. However, such oversight is a patchwork that varies across states.

In February 2024, U.S. Anesthesia Partners reached an agreement with the Colorado attorney general resolving an “investigation into the company’s anticompetitive business practices that drove up prices for consumers receiving surgical anesthesia services,” according to a press release from the attorney general’s office. It explicitly compared USAP’s consolidation in Colorado with its consolidation in Texas:

Starting in 2015, USAP began purchasing anesthesia practices in the Denver Metro Area, modeling their plan on a similar approach the company took in Texas earlier in the decade. By 2021, USAP bought out all its major competitors and established control of surgical anesthesia at the two largest hospital systems in the Denver area, accounting for more than 70% of health plan reimbursements.

The agreement required USAP to divest its exclusive contracts at five Colorado hospitals, make changes to the company’s practices, and pay $200,000 in monetary relief.

Regulating private equity: consolidation, debt, and more

Consolidation and merger review: Policymakers should seek to limit the risks from private equity consolidation before it happens, rather than leaving the issue to be resolved post-hoc in the various federal and state courts and agencies.

• PESP recommends that on the state and federal levels, policymakers create strong change-of-ownership regulations which provide authority to approve or deny transactions based on multiple factors, including cost and market share, long term access to quality healthcare for the community, and preservation of jobs and collective bargaining rights.
• On the federal level, policymakers should expand federal pre-merger review authority by amending the Hart-Scott-Rodino Act to capture private equity-backed mergers and acquisitions of a lower dollar threshold. Additionally, healthcare mergers and acquisitions review authority should be expanded to the US Department of Health and Human Services, due to impacts private equity investment may have on quality of and access to patient care. On the state level, require review of all private equity-backed healthcare provider transactions, regardless of dollar value.

Joint and several liability: Policymakers should also require joint and several liability for corporate owners and investors of healthcare providers. This would mean that if a healthcare provider was sued for statutory violations, a right of action would automatically exist against the private equity owner(s), landlord, and other investors.

Debt and anti-looting: Welsh Carson and other owners have collected multiple debt-funded dividends from USAP. In 2018, USAP took on debt to fund $369 million in payments to its owners. The company increased its debt again in 2021, in part to pay $400 million to WCAS and other owners. The practice, which returns cash to investors, typically does not fuel a company’s growth – and can actually signal that a private equity firm is struggling to generate returns promised to investors.

• PESP recommends policymakers prohibit investors from paying themselves debt-funded dividends from health systems (also called dividend recapitalizations). If dividends are allowed, they should only be paid as a percentage of overall profit and may not be funded by taking on additional debt or liabilities. Investors should be able to prove that the dividends can be funded without impacting the short -and long-term financial viability of the company.
• Policymakers should also place limits on the ratio of debt-to-equity used to finance healthcare buyouts.

Policymakers should continue seeking to address harms from private equity’s consolidation- and debt-based tactics.

In addition to the federal agency investigations mentioned earlier, since 2023 multiple states have proposed or passed new legislation enhancing oversight of healthcare acquisitions and mergers. In 2024, two new bills were introduced at the federal level targeting private equity in healthcare, and during the Biden administration multiple congressional committees launched investigations and hosted hearings about private equity’s impacts in healthcare. State attorneys general working with the Department of Justice have also worked to hold private equity-owned healthcare companies accountable for Medicaid and Medicare fraud.

PESP released a comprehensive report in December 2024 detailing recent legislative and regulatory actions taken across the United States in response to the growing evidence of private equity’s detrimental impact on healthcare systems. It is available HERE.

[1] Federal Trade Commission. “FTC Secures Settlement with Private Equity Firm in Antitrust Roll-Up Scheme Case,” January 16, 2025. https://www.ftc.gov/news-events/news/press-releases/2025/01/ftc-secures-settlement-private-equity-firm-antitrust-roll-scheme-case.