WASHINGTON–U.S. Senator Chris Murphy (D-Conn.), a member of the U.S. Health, Education, Labor & Pensions Committee, on Monday hosted another episode of his series on the Biden Administration’s antitrust enforcement agenda with Federal Trade Commission (FTC) Chair Lina Khan to discuss the FTC’s case against U.S. Anesthesia Partners, Inc. (USAP) and the role of private equity in healthcare.

Murphy emphasized the importance of empowering regular people through antitrust enforcement: “I really think that you've got to approach this issue of antitrust enforcement through the prism of how it impacts regular, average, everyday people, and certainly that rings true when it comes to the price impacts and the reduction in quality that comes when we have anti-competitive markets. But it's also about this feeling of powerlessness that people feel when these big, huge decisions are being made about their life. When there's no accountability — they're not being made by government, they're being made by monopolies — it just makes people feel like they have no ability to have a voice in the changes that they see need to be made in order to give them power.”

Murphy highlighted how private equity’s growing involvement in health care drives up costs and reduces quality for consumers: “In 2012, there were about 75 healthcare practices across the country that were bought up by private equity firms. In 2021, there were 484 physician practices that were being bought by private equity companies. When you go to your physician, you may not know it, but you are going to a physician not owned by the doctors but owned by some national or international focused private equity firm. Because many of these purchases are made with borrowed money, because many of these purchases make sense financially for the private equity firm only if there is a short-term, big return on that investment, the private equity role often does not line up with the best interests of the patient and the best interest of the taxpayer. Because when you are interested, as a private equity firm, in getting a three- or five- or eight-year quick return on your investment, how you get that is by driving up the prices. And by driving up utilization. You don't tend to get that short term return by driving up quality. Quality can get you a longer-term return, but quality often doesn't come along with increased price or increased utilization. And there's actually some pretty damning studies out there that show that when private equity companies get their hands on some really important health care institutions, quality doesn't go up, it doesn't remain constant — it goes down.”

Murphy continued, pointing to the quality reductions and anti-competitive practices that the FTC observed in their case against the USAP: “There are plenty of times in our economy where profit and quality are aligned. In the health care world, often that is not the case. When you are trying to pull as much profit as you can out of the system, that is often not aligned with quality, what's best for the consumer. And you can see that in many of these deals. Let me ask you about something I read about in the context of the USAP case. And that is, one of the defenses that they make is, well, we don't have 100% of the market, there are still plenty of practices that are owned independently or owned by other firms. But what you found in Texas is that once USAP acquired this big a share, they actually could do deals with firms and companies and practices that were not aligned with them. So that they effectively came to an agreement that everybody would charge the same price, or some version of the same price. And so even if you tried to go outside of USAP, you still found that you were paying the elevated price.”

On the role of noncompete agreements in stifling competition and harming employees, which the FTC has proposed a rule to ban, Murphy said: “It is just true that physicians are, in particular, greatly impacted and affected by these noncompetes. It is a very well used tactic by big physician practices, by hospitals, to force doctors to sign noncompetes for really no good reason. The noncompetes started, in part, to protect trade secrets, so that somebody didn't leave with some important intellectual property. But what happens when you are subject to a noncompete and you want to leave and you can't, and you're sort of bound to an employer, is what would happen to any of us — you become unhappy, disgruntled, right? You are only at that company because you are bound by a contract. You want to be somewhere else. And if there's anybody in my life, any employee in my life, that I want to be happy, who I want to be fulfilled and satisfied, it's my doctor. And so, it's not in any of our interests to have physicians working for a practice or working for a hospital that is against their interests. We want them to be at the top of their game when they are treating us.”

Murphy concluded: “I think it's so important that the FTC is taking a leadership role here. This case in particular is important. But it is not a trend that Congress can ignore. The increased role of for-profit ownership in our health care system, the increased role that profit plays in the care we get, and this new trend of private equity firms — short-term owners who are looking for big quick turnarounds — owning some of the pieces of our healthcare system that we care most deeply about, like nursing homes, is a really important development that I'm glad the FTC is paying attention to, and that I would argue Congress has to pay close attention to.”

This conversation was the fourth in a new series breaking down the Biden administration’s steps to shift the balance of power back in favor of the American people, focusing on FTC and DOJ’s recent actions to reshape major sectors like online commerce, internet search, health care, and airlines to the benefit of consumers.

 

Click Here to Watch the Full Video

###