In 2024, government enforcers and private plaintiffs will continue to use the antitrust laws to curb provider power. These efforts will involve evidence developed from managed care entities and will impact the managed care sector directly. As a prime example, in a case filed in late September 2023, the Federal Trade Commission (FTC) took direct aim at a private equity firm, Welsh Carson, that consolidated anesthesia practices in certain markets in Texas to develop U.S. Anesthesia Partner, Inc. (USAP) into a dominant anesthesia provider. The FTC alleges that USAP and Welsh Carson engaged in a rollup of major anesthesia practices in Texas starting in 2012 and involving more than a dozen practices, 1,000 doctors and 750 nurses. According to the FTC, the rollup strategy and resulting market power have led to higher prices and USAP has engaged in unlawful price setting and market allocation agreements with competitors. On November 20, 2023, USAP and Welsh Carson moved to dismiss, arguing, among other things, that the FTC’s lawsuit exceeds its contractual and statutory authority and fails to allege a relevant market, monopoly power or exclusionary conduct plausibly. On the same day that the defendants moved to dismiss the FTC’s case, a putative class action addressing the same conduct was filed by union employee benefit plans.

The USAP case is of a piece with government and private actions to constrain the power of dominant hospital systems. Private plaintiffs successfully survived a motion to dismiss a putative antitrust class action brought by commercial and Medicaid health plan members against Hartford Healthcare in Connecticut. The allegations are that the defendant hospital system has monopoly power and uses anticompetitive tactics to maintain and grow it. The core anticompetitive tactic alleged is the use of “all-or-nothing” contracting – meaning that Hartford won’t enter agreements with insurers for hospitals in which it has a monopoly and for which there are no alternatives unless the insurers also contract with Hartford’s other hospitals. This case is much like the California attorney general and private plaintiffs’ case against Sutter Health that resulted in a $575 million settlement in 2019 but also in a trial loss for one set of private plaintiffs in 2022. In similar cases against HCA Healthcare and others, all-or-nothing contract terms and anti-steering and anti-tiering provisions are at the heart of the allegations of anticompetitive conduct.

In the hospital merger space, states in the South have continued to pass Certificate of Public Advantage (COPA) laws to provide immunity to merging hospitals from federal antitrust scrutiny. Mississippi passed a COPA law in 2023, North Carolina is considering one for the UNC system and Louisiana passed a COPA for a $150 million hospital merger that sparked a challenge from the FTC. On September 27, 2023, the federal district court in Louisiana concluded that the merger was subject to the state action doctrine – because it was covered by the state COPA review process – and thus immune from the federal antitrust merger enforcement process. Under the state action doctrine, federal antitrust laws do not apply to anticompetitive restraints imposed by states as an act of government.