The private-equity industry has recently received a stern warning from federal antitrust enforcers regarding their roll-up strategy. This strategy involves a company engaging in a series of small acquisitions within a single industry, ultimately leading to an excessive market share.
Now, it seems that regulators are acting on this warning.
Speaking on Bloomberg's "Odd Lots" podcast, Federal Trade Commission Chair Lina Khan expressed particular concern about the impact of private equity within the healthcare sector.
Rising healthcare costs and subpar outcomes
Khan highlighted the fact that the United States spends more on healthcare than any other country in the Organization for Economic Cooperation and Development. Despite this, the country's health outcomes are far from satisfactory. She attributed this issue, in part, to a "lack of competition" within the healthcare industry.
Expanding influence of private equity
Over the past decade, private equity investment in healthcare markets has witnessed significant growth. Khan revealed that they have been receiving feedback from healthcare workers about the detrimental outcomes resulting from private equity's infiltration into the sector.
It is against this backdrop that federal regulators are taking a closer look at private equity's roll-up strategies with an emphasis on the healthcare space.
To be continued...
Private-Equity Interest in Nursing Homes Linked to Higher Mortality Rates
A recent study has uncovered a concerning correlation between private-equity interest in nursing homes and an increase in mortality rates at these facilities. According to the study, this issue goes beyond mere pricing concerns and can have life-or-death implications.
The Federal Trade Commission (FTC) has taken action against U.S. Anesthesia Partners Inc. and private-equity firm Welsh, Carson, Anderson & Stowe for allegedly employing illegal and anti-competitive practices in consolidating the anesthesiology industry in Texas. In response to the lawsuit, Khan, a prominent figure in the industry, accused Welsh, Carson, Anderson & Stowe of spearheading a roll-up strategy that led to the acquisition of most major anesthesiology practices in Texas. Khan also highlighted the company's use of unlawful agreements to manipulate prices and allocate markets, which ultimately resulted in artificially inflated prices.
USAP, one of the companies implicated in the FTC lawsuit, has vowed to challenge what they consider to be an overreaching and misinformed complaint. They argue that the case has the potential to disrupt and limit patients' access to quality healthcare.
This revelation raises serious concerns about the negative impact of private-equity involvement in healthcare sectors and the potential consequences for vulnerable populations. It underscores the need for greater regulatory oversight to ensure that patient care and safety are prioritized over financial gain.
Note: CVS, Target, Walmart-branded eye-drop products have recently been recalled.
