In summary
Private equity (PE) participation in US healthcare has accelerated over the past decade, drawing scrutiny from federal and state regulators as well as politicians. While the Biden-era FTC and DOJ framed PE-backed ‘roll-ups’ as threats to competition and patient welfare, early actions under the second Trump administration signalled a return to a less-hostile view of private equity. In recent years, at least 15 states passed ‘mini-HSR’ statutes to facilitate review of smaller deals, particularly in healthcare. Recent headline cases – US Anesthesia Partners/Welsh Carson, JAB-Ethos Veterinary and Surmodics/GTCR – illustrate the agencies’ willingness to challenge acquisitions involving private equity firms and attempts to craft forward-looking relief that may affect future deal making. This chapter revisits enforcement trends, state law triggers for M&A review and sector-specific PE investment patterns. It closes with a practical compliance playbook that stresses early antitrust diligence and coordinated federal-state engagement.
Discussion points
Review of past administrations’ policies and statements around serial acquisitions and how they are now assessed in the aggregate.Mini-HSR statutes in more than a dozen states routinely add additional review and public-interest conditions to healthcare deals.Upcoming legislation in large states (eg, Illinois, Minnesota and New York) is poised to expand notice and approval requirements for PE healthcare investments.Proactive antitrust guidance for private equity firms looking to navigate legislative changes in the healthcare industry.
Referenced in this article
In re Sycamore Partners II LP Staples Inc/Essendant IncIn re Linde AG/Praxair IncIn the Matter of Synopsys Inc/Ansys IncHart-Scott-Rodino ActMultiple State Laws (see infra)People v Sutter HealthState of Washington v Franciscan Health SystemConnecticut v Teva Pharmaceuticals USA, IncOhio ex rel. Yost v Express Scripts, IncIn the Matter of JAB Consumers Partners SCA SICAR, et alFTC v US Anesthesia Partners, IncIn the Matter of GTCR BC Holdings/Surmodics
Introduction
Private equity is now part of the mainstream of healthcare investing. In the past decade, PE investors have spent over US$1 trillion on healthcare acquisitions, with over US$200 billion spent in 2021. For several decades, hospitals, nursing homes and homecare have been targets of PE acquisitions, and more recently, investment focus has shifted toward physician practices and, in particular, high-margin specialty practices.
Certain intrinsic aspects of healthcare markets present distinctive antitrust sensitivities. Demand is high, growing and largely inelastic, patients generally do not shop around on price and quality is difficult to observe with informational asymmetries. Under certain conditions, consolidation among hospitals, physician practices and ancillary services can result in higher prices and poorer patient outcomes. These risks lead federal and state regulators to focus on healthcare markets and to express the importance of antitrust enforcement for consumer protection.
The overlay of PE investment further complicates this landscape. In particular, antitrust enforcers have recently focused their interest on ‘roll-up’ strategies. A ‘roll-up’ (also called ‘buy-and-build’) typically consists of a PE-backed company acquiring multiple smaller companies in the same industry and combining them into a larger entity, or a ‘platform’. Though this structure can accelerate efficiency‐enhancing integration and reduce costs – both potentially procompetitive outcomes – certain antitrust enforcers’ concerns come from some PE firms acquiring these companies, ‘rolling them up’ and exiting their investment after five to seven years, leaving markets more concentrated. They see these strategies as raising competitive concerns, which compound existing sensitivities in the healthcare market.
Federal agencies and state regulators have reacted to these concerns in recent years. In 2024, the Federal Trade Commission (FTC), Department of Justice (DOJ) and the Department of Health & Human Services (HHS) jointly released a request for information (RFI) on ‘the effects of transactions involving healthcare providers (including providers of home- and community-based services for people with disabilities), facilities or ancillary products or services, conducted by PE funds or other alternative asset managers’. Contemporaneously, many state legislatures have adopted sector-specific statutes that capture small provider transactions, making healthcare deals a multi-layer compliance exercise. For PE firms, understanding how these parallel regimes intersect is now essential to deal diligence.
Background
Healthcare has become an attractive area of investment for PE sponsors. Over the past decade, PE firms have become increasingly active in the healthcare industry, with 2021 and 2022 being the most active years for PE buyout deals. The rise of PE in healthcare has not gone unnoticed by government regulators, who have increasingly expressed concerns about the negative effects of consolidation in the industry. During the first Trump administration, individual leaders at the FTC began to pay closer attention to PE transactions and their effects, a trend that accelerated significantly under the Biden administration.
First Trump administration
When Trump took office in 2017, antitrust regulators were divided in their sentiments about PE investment. Over the course of the administration, the Democratic minority at the FTC became more critical of PE deals. In particular, Commissioner Rohit Chopra, a Democrat, provided critical comments about PE ownership in connection with public statements on merger settlements in deals like Staples/Essendant and Praxair/Linde. These were some of the first PE-critical comments and themes during the Trump administration that carried over into the Biden administration.
Biden administration
During the Biden administration, leaders of the antitrust enforcement agencies and other regulators openly criticised PE buyers, particularly in healthcare. For instance, in February 2022, the White House published a fact sheet that sharply criticised the consolidation of healthcare markets for causing higher patient costs and lower quality care, which it attributed to ballooning PE ownership. Not only did the Biden-era agencies scrutinise deals involving PE buyers, but they also looked to enforce new merger guidelines that were drafted to include provisions specifically targeted at enforcement against ‘roll-ups’.
Second Trump administration
Thus far, antitrust agency heads in the Trump administration have not made any statements providing clear insight into their views or attitudes toward PE investment in healthcare, nor have they made any commitments to continue the Biden administration’s aggressive enforcement approach against PE-sponsored healthcare deals. Based on what we have seen to date, it is likely PE firms will face less hostility from antitrust enforcers under the current administration in comparison to the prior Biden administration. While the second Trump administration may not share the prior administration’s sceptical view of private equity, its agency heads have expressed support for mergers and acquisitions in general.
Statements by the FTC and DOJ leadership on PE and healthcare
The Biden administration’s antitrust enforcers made clear that they would closely scrutinise M&A in healthcare, especially PE-sponsored mergers. In February 2024, in a speech to the American Medical Association, former FTC Chair Lina Khan emphasised that ‘nowhere are the stakes (of promoting fair and open competition) higher than in healthcare’. Specifically, Khan noted that a ‘pillar’ of the FTC’s work would be ‘tackling unlawful consolidation and rollups’, which she attributed as the cause of higher costs of care and reduced service. She claimed that by challenging ‘giant corporations’, including PE firms, the FTC would be ‘returning to America’s longstanding anti-monopoly tradition’. And in March 2024, Chair Khan, joined by DOJ Assistant Attorney General Jonathan Kanter, held a day-long FTC workshop featuring government officials, academics, economists, practitioners and members of the public focused on the effects of private equity investment in healthcare.
Chair Khan’s stance exemplifies President Biden’s Executive Order that affirmed the administration’s commitment to combat consolidation and its effects, specifically targeting hospital consolidation.
In recent years, state attorney generals (AGs) have echoed similar concerns regarding PE and healthcare. In a submitted comment to the RFI, AGs from 11 states stated that PE investment can lead to ‘degraded quality and access’ to healthcare. These AGs also endorsed certain academic research finding correlation between consolidation and higher prices, and the AGs’ comments alleged that PE’s higher risk tolerance results in decreased quality and availability of care, jeopardising patients’ health. This comment demonstrates that state enforcers may also be closely scrutinising PE deals in healthcare and may aggressively enforce state or federal antitrust laws against such deals.
The role of state attorneys general in antitrust enforcement
State AGs have increasingly become central players in antitrust enforcement in healthcare, often working in parallel with, or stepping in for, federal agencies. State AGs can enforce federal antitrust laws (under section 16 of the Clayton Act, for injunctive relief, or on behalf of consumers) and their own state antitrust statutes, including antitrust statutes mirroring the Sherman and Clayton Acts, as well as consumer protection or unfair competition laws, and more recently, pre-transaction notification requirements alerting states to healthcare deals that may not trigger federal Hart-Scott-Rodino (HSR) pre-merger notification.
While state and federal enforcers share the goal of preserving competition, state AGs often have a broader mandate that allows them to consider local impacts such as healthcare access, equity and community wellbeing more directly. Most healthcare markets are inherently local, and this local perspective means states might pursue a transaction or conduct that the federal agencies deprioritise, especially if it raises concerns unique to the state’s communities. For example, some states have explicit ‘public interest’ standards for hospital transactions, enabling consideration of a merger’s impact on indigent care, rural hospital closures or health equity in underserved areas. Federal antitrust agencies, in contrast, generally focus on transaction effects like price, quality and innovation, and less on healthcare access considerations.
State AGs have become vocal policy advocates. As discussed above, 11 state AGs responded to the RFI detailing their concerns about PE’s involvement in healthcare. More recently, at the 2025 American Bar Association (ABA) Antitrust Section Spring Meeting, state enforcers emphasised their readiness to fill gaps in federal healthcare antitrust enforcement that may arise if the new administration is more permissive.
State enforcers have made clear that their interest in healthcare is here to stay and that they will continue to serve as both collaborators and backstops in antitrust enforcement, often bringing a broader public-interest lens to healthcare deals and ensuring that local competitive dynamics and health outcomes are safeguarded.
Key state laws governing healthcare provider acquisitions
In response to growing concerns about consolidation and competition, numerous states have enacted laws creating pre-merger notification requirements for healthcare transactions. These ‘mini-HSRs’ require healthcare providers and investors to report planned transactions to state authorities even when federal law would not require any filing. Currently, 30 states have some form of a notification requirement for healthcare transactions, but the scope of these state laws varies. Fifteen states have passed ‘mini-HSRs,’ covering both for-profit and nonprofit healthcare transactions as follows.
Breakdown of states with mini-HSR statutes and salient features
StateNotice trigger and timingScope/key requirementsCalifornia90 days pre-closing for any ‘material’ transfer of a healthcare entity’s assets or governanceOffice of Health Care Affordability may open a Cost & Market Impact Review (CMIR) on cost, access or competition groundsColorado60 days pre-closing for transfers > 50 per cent of a hospital’s assets (aggregated over five years)All deals file; nonprofit-to-for-profit conversions may face hearings and deeper AG reviewConnecticut30 days pre-closing notice to AG for HSR-reportable hospital deals, system affiliations, or ‘material’ physician-group changes; 30 days post-closing notice to Office of Health StrategyDual-track filing captures both hospitals and large physician groupsHawaiiNotice (and possible approval) for hospital control changes ≥ 20 per cent or ownership ≥ 50 per centApplies to any acquisition of a ‘controlling interest’ in a hospitalIllinois30 days pre-closing notice to AG for in-state health facilities & provider orgs; also required if an out-of-state party earns > US$10 million/year from Illinois patientsCaptures cross-border transactions impacting Illinois marketsIndiana90 days pre-closing notice to AG for mergers where either party’s total assets ≥ US$10 millionAG has 45 days for antitrust analysis; statute expressly covers PE partnershipsMassachusetts60 days pre-closing ‘Notice of Material Change’ for providers with > US$25 million net-patient revenueHealth Policy Commission decides within 30 days whether to launch a CMIRMinnesota60 days pre-closing notice to AG & Commissioner for deals involving entities with ≥ US$80 million average annual revenueCovers both existing and projected revenues of the combined entityNevada30 days pre-closing notice to AG for group-practice or insurer deals that create > 50 per cent share of any service in a marketCopy of any federal HSR filing must be supplied simultaneouslyNew MexicoNotice to Superintendent of Insurance for any hospital control change; review completed within 120 daysAgency may approve, conditionally approve, or disapprove the transactionNew York30 days pre-closing notice to Dept. of Health for ‘material’ deals raising in-state revenue > US$25 millionNotice is posted publicly and forwarded to the AGOregon180 days pre-closing notice for ‘material change’ where one party’s revenue > US$25 million and the other > US$10 millionOregon Health Authority may approve, condition or deny after reviewRhode IslandDual applications to AG & Dept. of Health for hospital ‘conversions’ transferring > 20 per cent controlBoth agencies must act (approve, condition or disapprove) within 180 daysVermontNotice to AG for any hospital or medical-practice deal; hospital purchase of a practice requires 90 days advance noticeAdditional data may be requested for certain provider acquisitionsWashington60 days pre-closing notice to AG for ‘material-change’ hospital or provider deals; applies to out-of-state parties with > US$10 million WA revenueFiling a copy of the HSR form satisfies the requirement
Private equity in healthcare: trends in investment activity
In the past five years, PE firms have pivoted toward investing in businesses like veterinary practices, long-term care/nursing homes and specialty physician practices, likely because they are in fragmented markets and have high growth potential.
Pet health industry
The pet health industry has caught the eyes of PE investors, many of which have been buying local veterinary practices across the country. According to Greg Hartmann, CEO of National Veterinary Associates, ‘(r)oughly 25 percent of general veterinary practices in the US are owned by corporate consolidators, and that’s up from around 5 percent just 10 years ago’. The main driver of PE investment in the pet industry is due to the ‘pet boom’. Pre-pandemic, pet ownership had been growing roughly 1–1.5 per cent annually and the rate of pet ownership accelerated to three to four times that pace during covid.
Nursing homes
Long-term nursing facilities have also attracted PE investment. The ageing population in the US has driven heightened demand for elder care, and PE firms have responded to that growth potential by investing in nursing homes and other long-term care facilities. Private equity interest stems from the anticipated demand for such services, government reimbursements for care and the quantity of financial assets available per facility. These factors make nursing homes good investments.
Dental practices
PE firms have also invested in dental practices, attracted by the dental industry’s fragmentation, steady cash flow and recession resilience. When PE firms invest in dental practices, they tend to form a new entity called a dental support organisation (DSO). The percentage of dentists affiliated with a DSO has been growing since 2015. In 2023, 28.5 per cent of dentists that were at most five years out of dentistry school were part of a DSO.
Specialty physician practices
PE firms have increasingly invested in specialty physician practices like dermatology, ophthalmology and gastroenterology because these areas can generate additional profit via providing elective procedures and ancillary services. At least one academic study found that in 120 of 384 Metropolitan Statistical Areas (MSAs), practices associated with PE firms held 30 per cent market share in at least one specialty, and in 60 of those 120 MSAs, practices associated with PE firms held greater than 50 per cent market share.
Key antitrust issues in private equity and healthcare mergers
In January 2025, HHS, along with the DOJ and FTC, issued a report summarising the key antitrust concerns expressed by respondents to the agencies’ RFI stemming from consolidation in the healthcare sector. The report identified concerns about potential anticompetitive effects of PE acquisitions, such as higher prices, increased market power, reduced care quality, access to care and adverse effects on wages.
The report expresses certain stakeholders’ views that consolidation in the health sector from PE-sponsored mergers is associated with increased prices and profits. The commenters point to studies showing that hospitals acquired by PE firms increase prices by 7–16 per cent and profits by 27 per cent, and physician practices acquired by PE firms increase prices by 4–20 per cent. According to the commenters highlighted in the report, these price increases may occur because PE firms engage in up-coding, provide unnecessary services, exaggerate population health risks and order more high-margin tests and procedures.
According to the critics cited in the report, not only does consolidation enable PE firms to raise prices, it also allows firms to gain market power without triggering antitrust scrutiny. The report states PE transactions tend to be small, serial acquisitions that individually fall below the HSR notification threshold. Critics state that PE firms acquire multiple small businesses in the same industry, which incrementally increases their market share and, potentially, market power. On the other hand, the report also points to important procompetitive benefits from these transactions such as reduced costs from economies of scale.
The report presents some evidence that PE acquisitions may affect healthcare quality and even patient safety due to the cost cuts PE firms sometimes implement to increase efficiency and revenue. For example, the report cited a study claiming that service quality in nursing homes and inpatient facilities, as measured by mortality and adverse events, declined following acquisitions by PE firms.
Finally, the report contends that PE firms’ cost-cutting tactics can also affect patients’ access to care. Following a medical practice’s or facility’s acquisition by PE, some patients reported being unable to afford the care they once received due to increased costs and that it was more difficult to see their physicians.
In contrast with the HHS report, other data-driven studies tend to indicate that PE investments have procompetitive effects. Studies suggest that PE investments lead acquired firms to: (1) experience substantial increases in labour productivity; (2) be more resilient to financial crises than non-PE owned companies; (3) expand their businesses by launching new products in new geographic areas; and (4) have better operational efficiency. Further, studies show that PE firms may be ‘good buyers’ of divested assets, since the value of PE-owned divested assets on average grows faster than comparable public companies.
Notable enforcement actions and case studies
FTC’s challenges to JAB Consumer Partners’ acquisitions of SAGE Veterinary Partners and Ethos Veterinary Health (2022)
In the span of a few weeks in June 2022, the FTC took action and entered into settlements resolving agency concerns with two acquisitions by the private equity firm JAB Consumer Partners (JAB) of veterinary clinic operators.
On 13 June 2022, the FTC brought a first complaint and announced a settlement with JAB in connection with its acquisition of SAGE Veterinary Partners (SAGE), the owner and operator of 16 clinics offering specialty and emergency veterinary care. The complaint alleges that JAB’s acquisition of SAGE would substantially lessen competition in specified geographic markets by eliminating head-to-head competition between SAGE and its closest competitor in the specialty and emergency veterinary services markets, and increasing the likelihood that prices will rise and quality of services will degrade. To remedy these potential anticompetitive effects of the acquisition, the FTC and JAB entered into a consent order, in which JAB agreed to: (1) divest six of its clinics, including three SAGE clinics; (2) obtain the Commission’s prior approval before acquiring a specialty or emergency veterinary clinic within 25 miles of any JAB-owned clinic anywhere in California or Texas; and (3) notify the FTC 30 days before acquiring any specialty or emergency veterinary clinic within 25 miles of a JAB-owned clinic anywhere in the United States that is not otherwise required to be reported under the HSR Act. In the FTC’s press release, Bureau of Competition Director Holly Vedova celebrated the terms in the FTC’s consent decree as a means of combatting perceived ‘roll-up’ strategies: ‘(p)rivate equity firms increasingly engage in roll-up strategies that allow them to accrue market power off the Commission’s radar. . . The prior notice and approval provisions will ensure the Commission has full visibility into future consolidation and the ability to address it’.
On 29 June, the FTC announced a second settlement with JAB in its acquisition of Ethos Veterinary Health, an owner and operator of specialty and emergency veterinary clinics. The FTC’s complaint alleged JAB’s US$1.65 billion purchase of Ethos would unlawfully lessen competition for specialty and emergency veterinary services in four local markets. Consequently, the consent decree ordered JAB to divest five specified clinics and imposed both a statewide prior-approval requirement and a nationwide prior-notice requirement for any future acquisitions within 25 miles of a JAB-owned veterinary clinic. In the press release announcing the settlement, Bureau Director Vedova proclaimed that the FTC ‘is taking action to prevent private equity firm JAB from gobbling up competitors in regional markets that are already concentrated’. According to the FTC, the remedy is explicitly aimed at addressing JAB’s serial ‘roll-up’ strategy to protect regional markets from consolidation.
By binding JAB itself, not just its portfolio companies, these orders appear to recognise the sponsor’s role in planning, financing and integrating acquisitions, an enforcement strategy directly targeting the PE business model and operating practices.
US Anesthesia Partners/Welsh, Carson, Anderson & Stowe (2023)
In September 2023, the FTC sued US Anesthesia Partners (USAP) and its PE sponsor Welsh, Carson, Anderson & Stowe (WCAS) in the Southern District of Texas alleging a decade-long ‘roll-up’ that bought nearly every large anaesthesia practice in Texas, coupled with price-fixing and market-allocation agreements that pushed commercial rates up and netted tens of millions of dollars in additional profits. WCAS created USAP in 2012, supplied early capital and board control and, according to the FTC’s complaint, used add-on deals, non-compete covenants and a side deal that kept a rival out of Houston to entrench USAP’s monopoly power. The FTC sought an injunction under section 13(b) of the FTC Act.
Judge Kenneth Hoyt dismissed the claims against WCAS while allowing the case to proceed against USAP. In his reasoning for the dismissal of WCAS, Judge Hoyt explained, ‘
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