In a July 7 article posted by The University of Chicago’s Booth School of Business, researchers outlined the impact of a recent anesthesia “rollup” acquisition’s impact on healthcare prices.
Here are 10 things to know from the analysis:
1. The researchers initially analyzed the impact of U.S. Anesthesia Partner’s acquisition of anesthesia practices across Texas. The acquisition was the subject of a 2023 lawsuit filed by the Federal Trade Commission against USAP and its parent company, Welsh Carson. The lawsuit, which was settled in May, alleged that the companies executed a roll-up scheme and drove up the prices of services to boost profits.
2. According to the researchers, the USAP rollup drove up local patient costs by roughly 30%. They identified similar rollups across the U.S., and asserted that unwinding these acquisitions would save patients hundreds of millions of dollars.
3. The researchers gathered national data on clinical anesthesiologists and their employers through CMS, Pitchbook, Becker’s reporting and online press releases, and identified 18 other markets that demonstrated a trend toward “slow consolidation” with many similarities to the USAP rollup in Texas. These 18 markets represent 20% of the U.S. population.
4. The researchers found that acquisitions resulted in a significant increase in anesthesia prices in these markets, which had a gradual trend upward until the point of acquisition. At that point, prices rose by an average of 18% in six months, and 25% to 30% in two years.
5. The spike in prices was not alleviated by the entry of new practices, according to the researchers, who found that when new competitors entered the market to undercut prices, the effect was small.
6. The increase in prices could also not be explained by an improvement in services. Looking at unintentional dural punctures, the most common serious complication in obstetric anesthesia administration, and 30-day hospital readmission rates, there was no appreciable improvement in outcomes after practices were acquired.
7. If the FTC were to pursue anticompetitive enforcement actions in the 18 studied markets, it would cut anesthesia expenditures by roughly $120 million per year, according to the researchers.
8. The researchers identified another 89 markets where, as of 2021, companies had made a platform acquisition but not any add-ons. They estimated that preventing potential rollups in these additional markets could save patients another $126 million per year, focusing only on anesthesia. The study also notes that rollups are spreading throughout other specialties, including gastroenterology, oncology and radiology.
9. The researchers argue that policymakers should focus on enforcement actions against these rollups in order to bring down healthcare costs, noting that rollups accounted for 80% of private equity deal volume in 2022, up from 40% in the early 2000s.
10. They also note that much of the current healthcare policy research evaluates the differences among provider types, including nonprofit providers and physician-owned practices.
“We find that competitive considerations can swamp those concerns,” the researchers write. They argue that rollups and their impact on prices represent a larger issue, and that antitrust laws would be a more direct manner of managing the rising cost of medical care.
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