Private Equity Stealth Rollups in Anesthesiology

Thomas Wollmann, Associate Professor of Economics and William Ladany Faculty Scholar
Paulo Ramos, Microeconomics PhD Student
Amanda Starc, Associate Professor, Nothwestern University
Aslihan Asil, PhD Student, Yale School of Management

Whether a US merger faces antitrust scrutiny depends critically on whether the transaction must be reported to the federal government [Wollmann 2019, 2021]. Due to differences in their investment structures, acquirers backed by private equity sponsors face less strict reporting requirements than ones backed by public companies [Asil, Barrios, and Wollmann 2023]. Thus, privately sponsored deals may, on average, reduce competition by more than publicly sponsored ones. Motivated by a novel lawsuit recently filed by the Federal Trade Commission, we the effects of anesthesiology practice acquisitions on US healthcare markets. The alleged transactions as well as similar ones we identify in our data represent largescale "stealth consolidation"—deals that avoided antitrust scrutiny because they were never reported to agency staff in their incipiency. We estimate changes pre-/post-acquisition changes in price and quality. Then, we ask whether these changes are the result of declining competition or independent effects of private equity ownership. Finally, we estimate a structural model of bargaining and simulate counterfactual outcomes under various remedies to the alleged anticompetitive transactions.