INCREASING PRIVATE EQUITY INVESTMENTS IN HEALTHCARE RAISE ANTITRUST AND UNFAIR BUSINESS PRACTICE CONCERNS

Written by Mary Mitchell¹

I. INTRODUCTION

Changes in the regulation of U.S. financial markets that began in the 1980s have allowed private equity (PE) firms to thrive in the last few decades.² In that time, PE investments in healthcare have increased steadily, particularly since 2010.³ PE firms now play a significant role in the ownership and management of many U.S. healthcare facilities and providers. In 2018, PE funds were involved in 45% of mergers and acquisitions in the healthcare sector.⁴

Whether private equity investment provides a net benefit or net detriment to the long-term quality of healthcare markets is the subject of much debate. Supporters argue that PE acquisitions increase efficiency and innovation for both doctors and patients while maximizing returns for investors. Medical practices can derive benefits from consistent access to capital, including referrals from other practices owned by the same PE firm.⁵ As a result, many physicians, especially those seeking to spend less time on the administrative side of medicine, have actively sought out PE ownership for their practices.⁶

Despite these upsides, PE firms have come under fire amid reports of staffing shortages,⁷ cost hikes, overreliance on cheap labor,⁸ and pressure placed on practitioners to treat more patients or perform unnecessary procedures.⁹ Critics say that the PE business model, which aims to buy, build, and sell on a relatively quick timeline, is at odds with a patient-focused approach to medical care and undermines the doctor-patient relationship.¹⁰

Relatedly, antitrust experts have raised concerns that PE firms increase healthcare market consolidation and engage in unfair business practices, and that these tactics contribute to cost and quality issues.¹¹ As a result, a diverse set of voices—including medical workers, patients, and lawmakers—have called for greater scrutiny of the ways that private equity can impact healthcare markets.

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Though it remains to be seen if this increased attention will result in substantive shifts, some signs of change are afoot. The Federal Trade Commission (FTC) and Department of Justice (DOJ) have expressed their commitment to getting to the bottom of the issue and have indicated that they are actively exploring ways to increase oversight for PE deals.¹² California has also taken recent action, and a bill to heighten reporting requirements is currently under consideration in the California State Senate.¹³

II. BACKGROUND: PRIVATE EQUITY STRUCTURE

Private equity firms establish a PE fund by borrowing money from investors, managing 4.5 funds at a time on average.¹⁴ During this time, PE funds makes acquisitions that they then aim to sell for a profit.¹⁵ This cycle operates on a tight timeline—a typical PE fund operates for ten years.¹⁶ PE funds are structured as limited partnerships, with investors serving as limited partners and the PE firm itself serving as general partner.¹⁷ The general partner contributes 1-5% of a fund’s total capital, limited partners contribute 20-30%,¹⁸ and around 70-80% of the fund is comprised of debt equity.¹⁹ U.S. tax policy incentivizes this model because firms can deduct interest paid on debts from their corporate income taxes.²⁰

After acquisition, PE firms have wide latitude to make strategic changes that will increase their profits in a sale.²¹ Firms exercise significant influence over healthcare company leadership by appointing the board of directors.²² Firm principals often serve on the board themselves.²³ Furthermore, firms retain the power to fire the Chief Medical Officer.²⁴ Strategies employed by PE firms to increase an acquisition’s value include merging the acquisition with another company in the firm’s portfolio, reducing staff, and negotiating increased reimbursement rates with insurance companies.²⁵

When the time comes to sell a company—usually within a timeframe of three to seven years²⁶—PE firms will sell to a strategic acquirer, another PE fund, or back to the acquired company; they can also take the company public.²⁷ Profits from the sale are then distributed among the fund’s partners. Provided that a sale exceeds a certain threshold, the general partner typically receives 20% of profits regardless of the size on their own contribution.²⁸ PE firms therefore can maximize profits without relying on a substantial investment of their own money.²⁹

III. TRENDS IN PRIVATE EQUITY INVESTMENT IN HEALTHCARE

Several factors make United States healthcare markets attractive to private equity investors. The United States spends more on healthcare than any other country,³⁰ and the rate of healthcare spending is projected to grow at 5.5% per year through 2027.³¹ An aging population and high rates of chronic illness ensure continued need for care.³² Investors can also rely on third-party spenders, including the federal government, which contributes 40% of U.S. healthcare spending.³³ Additionally, the fragmented nature of healthcare sectors and subsectors, as well as ever-changing needs for technology, provides fertile ground for PE’s "buy and build" strategy.³⁴

Private equity transactions are generally not subject to reporting requirements unless they reach the basic threshold set by the Hart-Scott-Rodino Act (Section 7A of the Clayton Act),³⁵ which was $101 million for 2022.³⁶ As a result, data about PE activity relies on public announcements and proprietary data from industry insiders and does not always paint the full picture.³⁷

However, it is clear that PE firms have been making healthcare acquisitions since the 1990s, and that their investments have been steadily growing.³⁸ In 2000, PE invested less than $5 billion in healthcare; in 2018, it invested over $100 billion;³⁹ and 2021 saw the most PE deals in healthcare yet, with investments totaling $194.5 billion.⁴⁰ Overall PE activity in healthcare has declined so far in 2022, with $22.7 billion spent through May.⁴¹ Experts say that inflation, rising interest rates, and the war in Ukraine are to blame.⁴² Despite these speed bumps, 2022 is on track to be a strong year by historical standards.⁴³

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In addition to hospitals, nursing homes, and pharmaceuticals, PE firms have made significant acquisitions in physician staffing groups.⁴⁴ Emergency medicine, anesthesiology, and radiology were common acquisitions of the 2010s, while investments in single-specialty and outpatient practices like dermatology, orthopedics, ophthalmology, and emergency veterinary care have emerged as recent targets.⁴⁵

Most PE acquisitions operate in one of three ways: leveraged buyouts (acquisitions made largely with borrowed funds), add-ons (when a PE firm merges an acquired company into another company in its portfolio), or secondary buyouts (when one PE firm sells to another).

Notably, add-ons are an increasingly prominent acquisition strategy. Between the years 2000 to 2005, 40% of PE healthcare investments were leveraged buyouts, while add-ons made up 26% of investments, and secondary buyouts 15%.⁴⁶ In contrast, between 2014 and 2019, 35% of PE dollars spent on healthcare were add-ons, 34% were leveraged buyouts,⁴⁷ and 23% were secondary buyouts.⁴⁸ Nearly three times as many deals between 2013 to 2019 were add-ons versus leveraged buyouts: 791 and 2,035, respectively.⁴⁹

One explanation for the growth of add-ons is that acquiring and selling larger organizations is harder to pull off profitably within PE firms’ typical three-to-seven-year timeline.⁵⁰ The PE model incentivizes add-ons because a "buy and build" strategy can effectively increase a company’s value within a PE fund’s ten-year lifespan.⁵¹ Add-ons are a particularly popular strategy in physician staffing, where firms acquire small companies that focus on specialty practices and combine them into large-scale, multi-specialty organizations that operate across the United States.⁵²

Federal and state lawmakers have homed in on PE involvement in healthcare after data revealed that PE ownership results in more surprise billing to patients, and that PE firms spent millions to defeat legislation that would have protected patients against it.⁵³,⁵⁴ Surprise billing has caused a major outcry from struggling families and lawmakers. As a result, Congress initiated an investigation of PE firms’ involvement in surprise billing practices that culminated in the passage of the No Surprises Act, which aims to protect consumers from exorbitant bills.⁵⁵

Additionally, multiple studies have found that hospitals acquired by PE firms tend to have higher charge-to-cost ratios and higher income,⁵⁶ and this gap has grown over time.⁵⁷ Health economists at Yale University found that after PE-owned Envision Healthcare Corporation took over staffing for an emergency room, it nearly doubled the cost of care.⁵⁸ These numbers could indicate that PE-owned hospitals are charging for more expensive procedures than what was actually needed or performed.⁵⁹ One study found that PE ownership increases the short-term mortality of Medicare patients in nursing homes by 10%,⁶⁰ despite billing an average of 10% more per patient.⁶¹, ⁶²

IV. ATTENTION AT THE FEDERAL LEVEL

The Biden administration has had tough words for private equity as a suspected threat to the affordability and quality of care. In his 2022 State of the Union Address, President Biden announced a crackdown on "Wall Street firms" that have been "tak[ing] over more nursing homes" and decreasing quality while increasing costs.⁶³ The crackdown aligns with his July 2021 executive order establishing a government-wide effort to reinvigorate competition within multiple sectors, including health,⁶⁴ as well as a February 2022 briefing on the detrimental impacts of PE ownership of nursing homes.⁶⁵ In the briefing, the White House admonished private equity for putting "profits before people," and noted that PE is a "particularly dangerous model" within the healthcare context.⁶⁶

FTC Chair Lina Khan has used similar language. In a September 2021 memo to Federal Trade Commissioners and Commission staff, Khan included investigation of private equity in her list of priorities, saying that the FTC will examine whether

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PE encourages unfair competition and undermines consumer safety.⁶⁷

To that end, the FTC and DOJ held a public comment period and listening forums to gather input on federal merger guidelines earlier this year.⁶⁸ Many of the comments the FTC received identified PE-driven consolidation in healthcare as a threat to working conditions and quality of care.⁶⁹ Likewise, patients, healthcare workers, and academics at the April listening forum on health shared their experiences dealing with negative impacts of consolidation in research and medicine.⁷⁰

On June 3, 2022, Andrew Forman gave his first public remarks as Deputy Assistant Attorney General of the DOJ Antitrust Division at the American Bar Association’s Antitrust in Healthcare Conference.⁷¹ He said that "[p]rotecting competition in health care is among the highest priorities of the Antitrust Division," and that "[v]igorous competition in health care means lower costs . . . increased quality . . . innovations . . . and more good-paying jobs."⁷² He also emphasized the special relationship between doctor or nurse and patient, and cautioned against "distant private equity owner[s]" who can "influence, or in some cases even determine" the treatment a patient receives.⁷³ Forman noted that private equity investment can "add value and help," but that they can also "reduc[e] quality and imped[e] innovation which competition brings." Within this context, he called out private equity "roll-ups," or add-ons, and the fact that smaller deals can lead to both vertical and horizontal consolidation within a market.⁷⁴ To get to the bottom of this issue, Forman said the Antitrust Division is analyzing whether PE can stifle competition, and also whether PE is shirking their reporting responsibilities under the Hart-Scott-Rodino Act.⁷⁵ Furthermore, he emphasized that the DOJ is "thinking a lot about enhancing antitrust enforcement" for PE specifically.⁷⁶

No dramatic policy changes have resulted from this increased scrutiny so far, but gears are turning.

For one, in February 2021, the FTC and DOJ put an indefinite hiatus on exercising authority to allow early termination of the waiting period for parties reporting under the Hart-Scott-Rodino Act.⁷⁷ Typically, regulators have thirty days to review filings mandated by the Act, but can allow mergers to continue before that window has elapsed if the deal appears benign.⁷⁸ Commissioner Rebecca Slaughter said the FTC needs the full thirty days "to ensure we are doing right by competition and consumers."⁷⁹ Though the pause was supposed to be temporary, Commissioner Noah Phillips recently indicated that there are no plans to reinstate early terminations.⁸⁰

The FTC also heightened prior approval requirements in July 2021 by reinstating a requirement that parties involved in anticompetitive mergers obtain approval for additional acquisitions in relevant markets for at least ten years following the offending deal.⁸¹ This policy had previously been in effect but was rescinded in 1995.⁸²

Additionally, in June 2022, the FTC implemented new prior notice and prior approval requirements on a PE firm seeking approval for a veterinary services merger. The order requires JAB Consumer Partners (JABCP) to divest several veterinary clinics across the country before proceeding with a $1.65 billion dollar acquisition of SAGE Veterinary Partners.⁸³ JABCP must also receive prior approval for any acquisition of a specialty or emergency veterinary clinic within twenty-five miles of another clinic owned by JABCP in California or Texas over the next ten years.⁸⁴ JABCP also must provide prior notice for acquisition of any specialty veterinary clinic throughout the country that lies within twenty-five miles of another JABCP clinic.⁸⁵ The FTC found that, without these provisions, the proposed acquisition could create a monopoly for veterinary services in several U.S. markets, including San Francisco, Oakland, and Concord, California.⁸⁶

FTC Chair Khan identified the prior approval requirement as "the first of its kind in a Commission order."⁸⁷ The provision goes beyond the FTC’s reinstated prior approval policy, which applies only to markets relevant to the initial complaint.⁸⁸ By

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contrast, the Commission’s order to JABCP applies prior approval requirements to proposed deals throughout California and Texas, even where the FTC did not find threat of monopolization in its first review.⁸⁹ The prior notice requirement also extends the FTC’s review beyond the geographic and service markets identified in the complaint.

These two provisions raised debate between the Democratic and Republican Commissioners about the scope of out-of-market remedies.⁹⁰ At the core of the debate are differing perspectives on the role of PE investment in healthcare, and whether the PE model should, by its nature, raise concerns for antitrust enforcers.⁹¹ Democratic Commissioners Khan, Slaughter, and Alvaro Bedoya argued that the prior notice and prior approval provisions help "address stealth roll-ups by private equity firms," which they said raise special concerns within healthcare markets.⁹² In their concurring opinion, Republican Commissioners Phillips and Christine Wilson called out the Democrats’ "obvious distaste for private equity as a business model," and expressed fears that the Democrats would treat PE as "disfavored groups" by imposing restrictions based on "who they are rather than what they have done."⁹³ Despite the Republican Commissioners’ strong reservations on this point, the order was passed 5-0.⁹⁴

V. STATE ACTIONS

Washington, Florida, Oregon, Indiana, Nevada, and California have all introduced bills that would heighten reporting requirements beyond Hart-Scott-Rodino Act thresholds.⁹⁵ California legislators have introduced bills targeting healthcare consolidation for the last three years.

California Senate Bill 977, introduced in 2020, would have required that entities pursuing deals that would result in acquisition or change of control⁹⁶ for a healthcare provider or facility obtain pre-approval from the California Attorney General.⁹⁷ Though SB 977 did not pass the Senate,⁹⁸ a related bill was soon introduced in 2021. As first written, Assembly Bill 1132, called the Health Care Consolidation and Contracting Fairness Act, would have required AG approval for healthcare acquisitions valued at $5 million or more.⁹⁹ Under the terms of the bill, the AG would be required to hold a public hearing and have ninety days to issue a decision.¹⁰⁰ Additionally, the bill gave the AG discretion to deny proposals for a wide variety of reasons, including impacts on quality of care.¹⁰¹ This latter provision would have increased antitrust authority beyond any federal or state regulation to date.¹⁰² However, the bill was heavily amended for unclear reasons, and now focuses on separate healthcare issues.¹⁰³

This year, AB 2080, the Health Care Consolidation and Contracting Fairness Act of 2022, was introduced in February and passed the California State Assembly in May.¹⁰⁴

AB 2080 proposed to expand the state’s oversight of healthcare mergers and acquisitions by requiring written consent by the AG for any deal involving a for-profit medical group, hospital, skilled nursing facility, acute psychiatric hospital, healthcare service plan, or health insurer valued at $15 million or more.¹⁰⁵ The bill would have required merging parties to give the AG notice ninety days prior to the acquisition, or at the same time that they provide notice to other federal or state agencies (whichever comes sooner).¹⁰⁶ AB 2080 was held in the Senate Health Committee and will not move forward.¹⁰⁷

VI. LITIGATION: AMERICAN ACADEMY OF EMERGENCY MEDICINE V. ENVISION HEALTHCARE CORPORATION

Though still in its early stages, a suit filed in federal court in the Northern District of California recently brought the spotlight on PE investments in healthcare to the courtroom.

In December 2021, the American Academy of Emergency Medicine Physician Group (AAEM-PG) filed suit against Envision Healthcare Corporation for violating California’s corporate practice of medicine laws and Unfair Competition Law by offering kickbacks to hospitals, requiring healthcare workers to sign restrictive covenants, and employing

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false and misleading advertising tactics.¹⁰⁸ Envision became the largest emergency medicine staffing company in the country when it merged with AmSurg Corporation in 2016.¹⁰⁹ Private equity firm Kohlberg Kravis Roberts & Company owns the physician staffing powerhouse as well as medical practices in other specialties.¹¹⁰

Envision made headlines as a source of a disproportionate number of instances of surprise medical billing,¹¹¹ and for contributing millions to a dark money campaign to defeat surprise billing legislation.¹¹² Surprise billing is of particular concern in emergency rooms, where physicians do not see what their patients are charged for, and patients are usually in no position to shop around for alternatives.¹¹³ Envision’s focus on ER staffing means the tactic would have dramatic impacts on profits. As previously noted, one study found that Envision nearly doubled the cost of care when it took over staffing at emergency rooms.¹¹⁴ And at one hospital, the percentage of patients billed for the most expensive level of care jumped from 6% to 28% after Envision took over emergency room staffing.¹¹⁵

In its suit, AAEM-PG alleges that Envision engages in unlawful conduct under California’s corporate practice of medicine laws, California Business & Professional Code §§ 2400 et seq., which prohibit corporations and any unlicensed entity from practicing medicine.¹¹⁶ California’s corporate practice of medicine doctrine has been in effect since the 1920s, when the American Medical Association successfully advocated for state laws that prohibit corporations from managing medical practices, require that practices are doctor-owned, and require states to issue licenses for doctors and nurses.¹¹⁷ These laws, including California’s, have since included various exceptions to the rule, such as for incorporated doctors’ practices, hospitals, and management services organizations that connect hospitals and physicians in various specialties.¹¹⁸In describing the motivation for the doctrine, the district court overseeing the AAEM-PG case has explained that "[w]hile the principal evils of the corporate practice of medicine may arise from . . . the profit motive . . . the courts have also noted the danger of lay control."¹¹⁹

AAEM-PG’s complaint alleges that Envision’s business constitutes lay ownership of medical practices and violates the corporate practice of medicine doctrine. Relatedly, it claims that Envision’s billing practices amount to illegal fee-sharing with a corporate entity.¹²⁰

AAEM-PG also alleges that Envision violates California’s Unfair Competition Law (UCL) in multiple ways.¹²¹ AAEM-PG claims that, by violating corporate practice of medicine laws, Envision violates the "unlawful" prong of the UCL.¹²² Additionally, AAEM-PG says that by offering reduced prices for hospitals at its anesthesia groups in exchange for exclusive emergency room contracts, Envision is guilty of providing illegal kickbacks.¹²³ Furthermore, the complaint alleges that Envision restrains competition by requiring its employees to sign non-compete agreements.¹²⁴ Envision is also accused of engaging in false advertising by misrepresenting itself as a physician group.¹²⁵ Finally, the complaint claims that Envision violates the Cartwright Act by stifling competition with legitimate and law-abiding management service organizations and that AAEM-PG has lost business as a result.¹²⁶

AAEM-PG seeks declaratory relief that Envision’s business practices constitute the corporate practice of medicine, that its restrictive covenants are invalid, and that the incentives it offers for exclusive contracts are illegal.¹²⁷ It additionally asks that Envision be enjoined from engaging in corporate practice of medicine and offering kickbacks to hospitals.¹²⁸ On May 27, 2022, the district court denied Envision’s motion to dismiss.¹²⁹

VII. CONCLUSION

It is still unclear whether the present moment is leading towards a major inflection point in antitrust regulation of PE, but change seems likely. The FTC has reportedly been asking more questions than usual during merger reviews involving PE firms.¹³⁰

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Additionally, the FTC’s and DOJ’s public comment period on merger guidelines could be the first step in a restructuring of merger review. Meanwhile, the JAB Consumer Partners order could signal a new approach to PE acquisitions that looks beyond the limits of traditional geographic and service market definitions.

At the same time, some experts remain doubtful that recent scrutiny will amount to substantive shifts in antitrust enforcement and say that recent enforcement actions have been par for the course.¹³¹ Despite a marked increase in the number of transactions reported under Hart-Scott-Rodino requirements in the last ten years, the number of challenged mergers has not yet increased under the Biden administration, and actually declined in 2021.¹³²

One likely avenue for change would be to increase transparency by lowering the Hart-Scott-Rodino threshold or instituting other reporting requirements for physician practice acquisitions or for private equity acquisitions generally.¹³³ States could also continue to pursue laws like California’s AB 2080 that heighten scrutiny within state boundaries.

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Notes:

^1. Mary Mitchell is a 2L at University of California, Hastings College of the Law. She was a Summer Associate at Pritzker Levine LLP in 2022 and continues to work there during the school year.

^2. Eileen Appelbaum & Rosemary Batt, Private Equity Buyouts In Healthcare: Who Wins, Who Loses? 4 (Inst. for New Econ. Thinking, Working Paper No. 118, 2020), https://www.ineteconomics.org/uploads/papers/WP_118-Appelbaum-and-Batt-2-rb-Clean.pdf.

^3. Id.

^4. Id. at 17.

^5. MEDICARE PAYMENT ADVISORY COMM’N, REPORT TO CONGRESS: MEDICARE AND THE HEALTH CARE DELIVERY SYSTEM 99-100 (2021), https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun21_medpac_report_to_congress_sec.pdf.

^6. MEDICARE PAYMENT ADVISORY COMM’N, supra note 5, at 98.

^7. Andrew Forman, The Importance of Vigorous Antitrust Enforcement In Health Care, U.S. DEP’T OF JUST. (June 3, 2022), https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-andrew-forman-delivers-keynote-abas-antitrust.

^8. Emily Pisacreta & Emmarie Huetteman, Betting On "Golden Age" of Colonoscopies, Private Equity Invests In Gastro Docs, KAISER HEALTH NEWS (May 27, 2022), https://khn.org/news/article/private-equity-gastroenterologist-colonoscopy.

^9. MEDICARE PAYMENT ADVISORY COMM’N, supra note 5, at 98.

^10. Forman, supra note 7.

^11. RICHARD M. SCHEFFLER ET AL., SOARING PRIVATE EQUITY INVESTMENT IN THE HEALTHCARE SECTOR: CONSOLIDATION ACCELERATED, COMPETITION UNDERMINED, AND PATIENTS AT RISK 2 (2021), https://publichealth.berkeley.edu/wp-content/uploads/2021/05/Private-Equity-I-Healthcare-Report-FINAL.pdf.

^12. Lina M. Khan, Vision and Priorities for the FTC at 3, FED. TRADE COMM’N (Sept. 22, 2021), https://www.ftc.gov/system/files/documents/public_statements/1596664/agency_priorities_memo_from_chairjina_m_khan_9-22-21.pdf; Arindam Kar, Private Equity Pass No More: Antitrust Enforcers Look to Increase Scrutiny on "Roll Up" Acquisitions, JD Supra (June 16, 2022), https://www.jdsupra.com/legalnews/private-equity-pass-no-more-antitrust-2436455.

^13. Dennis Williams et al., Proposed California Legislation Imposes Attorney General Approval Requirements, KIRKLAND & ELLIS LLP (June 21, 2022), https://www.kirkland.com/publications/kirkland-alert/2022/06/california-attorney-general-approval-requirements.

^14. MEDICARE PAYMENT ADVISORY COMM’N, supra note 5, at 77.

^15. Id. at 86.

^16. Id.

^17. Id. at 77.

^18. Id.

^19. Appelbaum & Batt, supra note 2, at 6.

^20. Anaeze C. Offodile II et al., Private Equity Investments In Health Care: An Overview Of Hospital And Health System Leveraged Buyouts, 2003-17, 40 HEALTH AFFAIRS 719, 719 (2021).

^21. Appelbaum & Batt, supra note 2, at 79.

^22. Id. at 6.

^23. Id.

^24. Id. at 59.

^25. Zawn Villines, What is Private Equity In Healthcare?, MED. NEWS TODAY (Nov. 10, 2021), https://www.medicalnewstoday.com/articles/private-equity-in-healthcare.

^26. MEDICARE PAYMENT ADVISORY COMM’N, supra note 5, at 86.

^27. Id. at 79.

^28. Id. at 80.

^29. Id. at 78.

^30. Health Spending, ORG. ECON. COOP. & DEV. (2021), https://data.oecd.org/healthres/health-spending.htm.

^31. SCHEFFLER ET AL., supra note 11, at 5.

^32. BAIN & CO., GLOBAL HEALTHCARE PRIVATE EQUITY AND M&A REPORT 2022 42 (2022), https://www.bain.com/globalassets/noindex/2022/bain_report_global_healthcare_private_equity_and_ma_2022.pdf; SCHEFFLER ET AL., supra note 11, at 5; MEDICARE PAYMENT ADVISORY COMM’N, supra note 5, at 77.

^33. Appelbaum & Batt, supra note 2, at 16.

^34. Id. at 14.

^35. 94 Pub. L. No. 435, 90 Stat. 1383.

^36. Hart-Scott-Rodino Act Thresholds Jump in 2022, COOLEY LLP (Jan. 24, 2022), https://www.cooley.com/news/insight/2022/2022-01-24-hart-scott-rodino-act-thresholds-jump.

^37. Offodile et al., supra note 20, at 722; SCHEFFLER ET AL., supra note 11, at 4.

^38. SCHEFFLER ET AL., supra note 11, at 11; Appelbaum & Batt, supra note 2, at 4.

^39. Appelbaum & Batt, supra note 2, at 14.

^40. Ryan Prete, PE Investors Home In On Value-based Healthcare Deals In Q1, PITCHBOOK (April 18, 2022), https://pitchbook.com/news/articles/pe-investors-value-based-healthcare-q1-charts.

^41. Chris Cummings, Antitrust Authorities Take Aim at Private-Equity Healthcare Deals, Wall St. J. (June 14, 2022), https://www.wsj.com/articles/antitrust-authorities-take-aim-at-private-equity-healthcare-deals-11655243804.

^42. KPMG, DEAL MAKING COMES BACK TO EARTH: M&A TRENDS IN HEALTHCARE 2 (2022), https://advisory.kpmg.us/content/dam/advisory/en/pdfs/2022/ma-healthcare-dwindled-q1-2022.pdf.

^43. PITCHBOOK, US PE BREAKDOWN Q2 2022 14 (2022), https://pitchbook.com/news/reports/q2-2022-us-pe-breakdown.

^44. Appelbaum & Batt, supra note 2, at 4.

^45. MEDICARE PAYMENT ADVISORY COMM’N, supra note 5, at 88; Appelbaum & Batt, supra note 2, at 4; BAIN & CO., supra note 32, at 42.

^46. Appelbaum & Batt, supra note 2, at 19.

^47. Id. at 18-19.

^48. Id. at 19.

^49. Id.

^50. Id. at 18.

^51. Id. at 52; SCHEFFLER ET AL., supra note 11, at 38; David W. McCombie III, The Alchemy Of Private Equity Explained, FORBES (Mar. 31, 2022), https://www.forbes.com/sites/davidwmccombie/2022/03/31/the-alchemy-of-private-equity-explained/?sh=5ac5a38c3c6c.

^52. MEDICARE PAYMENT ADVISORY COMM’N, supra note 5, at 88; Appelbaum & Batt, supra note 2, at 65.

^53. Appelbaum & Batt, supra note 2, at 73; Pisacreta & Huetteman, supra note 8.

^54. Surprise billing occurs when insured patients receive treatment from physicians that they did not realize were out-of-network, often within otherwise in-network facilities. See Pisacreta & Huetteman, supra note 8.

^55. Appelbaum & Batt, supra note 2, at 65; Eileen Appelbaum, A Surprise Ending for Surprise Billing?, AM. PROSPECT (Dec, 16, 2020), https://prospect.org/health/surprise-ending-for-surprise-billing/.

^56. Joseph D. Bruch et al., Changes in Hospital Income, Use, and Quality Associated With Private Equity Acquisition, 180 JAMA INTERNAL MED. 1428, 1432 (2020); Offodile et al., supra note 20, at 724.

^57. Offodile et al., supra note 20, at 724.

^58. Zack Cooper et al., Surprise! Out-of-Network Billing for Emergency Care in the United States, 128 J. POL. ECON. 3626, 3629 (2020).

^59. Bruch et al., supra note 56, at 1433.

^60. Atul Gupta et al., Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes 14 (Nat’l Bureau of Econ. Rsch., Working Paper No. 28474, 2021).

^61. Id at 19.

^62. But see Marcelo Cerullo et al., Association Between Hospital Private Equity Acquisition and Outcomes of Acute Medical Conditions Among Medicare Beneficiaries, 5 JAMA NETWORK OPEN (Apr. 29, 2022), https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2769549 (finding that PE ownership is associated with lower mortality for patients who suffered heart attacks, and no difference in quality or outcome was observed for four other acute medical conditions).

^63. President Biden’s State of the Union Address, THE WHITE HOUSE (Mar. 1, 2011), https://www.whitehouse.gov/state-of-the-union-2022/.

^64. Exec. Order No. 14036, 86 Fed. Reg. 36,987 (July 9, 2021).

^65. Fact Sheet: Protecting Seniors by Improving Safety and Quality of Care in the Nation’s Nursing Homes, THE WHITE HOUSE (Feb. 28, 2022), https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes.

^66. Id.

^67. Khan, supra note 12, at 3.

^68. Bryan Koenig, Doctors’ Worries Over PE Deals Dominate Merger Comments, Law260 (Mar. 23, 2022), https://www.law360.com/articles/1476116/doctors-worries-over-pe-deals-dominate-merger-comments.

^69. Id.

^70. Forman, supra note 7.

^71. Id.

^72. Id.

^73. Id.

^74. Id.

^75. Id.

^76. Id.

^77. E. John Steren & Patricia M. Wagner, Return of Early Termination of the HSR Waiting Period Not on the FTC’s Agenda, According to Commissioner Phillips, NAT’L L. REV. (Mar. 10, 2022), https://www.natlawreview.com/article/return-early-termination-hsr-waiting-period-not-ftc-s-agenda-according-to.

^78. HSR Headwinds: FTC Hits "Pause Button" On HSR Early Terminations, COOLEY LLP (Feb. 10, 2021), https://www.cooley.com/news/insight/2021/2021-02-10-ftc-pause-button-hsr-early-terminations.

^79. Id.

^80. E. John Steren, supra note 77.

^81. FTC to Restrict Future Acquisitions for Firms that Pursue Anticompetitive Mergers, FED. TRADE COMM’N (Oct. 25, 2021), https://www.ftc.gov/news-events/news/press-releases/2021/10/ftc-restrict-future-acquisitions-firms-pursue-anticompetitive-mergers.

^82. Id.

^83. FTC Takes Second Action Against JAB Consumer Partners to Protect Pet Owners From Private Equity Firm’s Rollup of Veterinary Services Clinics, FED. TRADE COMM’N (June 29, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-takes-second-action-against-jab-consumer-partners-protect-pet-owners-private-equity-firms-rollup-of-veterinary-services-clinics.

^84. Lauren Battaglia et al., Private equity in health care: in the Antitrust crosshairs, JD SUPRA (June 22, 2022), https://www.jdsupra.com/legalnews/private-equity-in-health-care-in-the-3540695.

^85. Id.

^86. Id.

^87. Id.

^88. FTC to Restrict Future Acquisitions for Firms that Pursue Anticompetitive Mergers, supra note 81.

^89. Battaglia et al., supra note 84.

^90. Id.

^91. Id.

^92. Id.

^93. Id.

^94. Id.

^95. Amanda Wait & Vic Domen, HSR Statistics Show Increasing Scrutiny of Health Care M&A, Law360 (May 24, 2022), https://www.law360.com/articles/1496138/hsr-statistics-show-increasing-scrutiny-of-health-care-m-a.

^96. In this context, change of control occurs when "a health care system . . . acquires direct or indirect control over the operations of a health care facility or provider in whole or in substantial part." Mallory Warner, Post-Mortem Reflection on SB 977: The Significance of What Could’ve and Should’ve Been, SOURCE ON HEALTHCARE PRICE & COMPETITION (Sept. 16, 2020), https://sourceonhealthcare.org/post-mortem-reflection-on-sb-977-what-it-couldve-done-and-why-was-it-important.

^97. Id.

^98. Jonathan F. Buck et al., Health Care Consolidation Legislation (AB 1132) No Longer Under Consideration in California Assembly, NAT’L L. REV. (Apr. 30, 2021), https://www.natlawreview.com/article/health-care-consolidation-legislation-ab-1132-no-longer-under-consideration.

^99. Id.

^100. Id.

^101. Id.

^102. Paul W. Pitts et al., California Legislature Debates Restricting Private Equity Investments and Competitor Acquisitions In Health Care, REED SMITH LLP (Mar. 15, 2021), https://www.reedsmith.com/en/perspectives/2021/03/california-legislature-debates-restricting-private-equity-investments.

^103. Buck et al., supra note 98.

^104. Williams et al., supra note 13.

^105. Id.

^106. Id.

^107. 2021-2022 Legislation, JIM WOOD: 2nd ASSEMBLY DISTRICT, https://a02.asmdc.org/2021-2022-legislation.

^108. Compl. at 3, Am. Acad. of Emergency Med. Physician Grp., Inc. v. Envision Healthcare Corp., No. 3:22-cv-00421-CRB (N.D. Cal. Jan. 1, 2022), ECF No. 1-1.

^109. Dave Barkholz, Physician Staffing Firm Envision Wants to Be Hospitals’ "One Throat to Choke", MODERN HEALTHCARE (Dec. 7, 2016), https://www.modernhealthcare.com/article/20161207/NEWS/161209935/physician-staffing-firm-envision-wants-to-be-hospitals-one-throat-to-choke.

^110. Appelbaum & Batt, supra note 2, at 55.

^111. Tara Bannow, Envision CEO Steps Down Amid Surprise Billing Scrutiny, MODERN HEALTHCARE (Feb. 6, 2020), https://www.modernhealthcare.com/providers/envision-ceo-steps-down-amid-surprise-billing-scrutiny.

^112. Margot Sanger-Katz et al., Mystery Solved: Private-Equity-Backed Firms Are Behind Ad Blitz on "Surprise Billing", N.Y. TIMES (Sept. 13, 2019), https://www.nytimes.com/2019/09/13/upshot/surprise-billing-laws-ad-spending-doctor-patient-unity.html.

^113. What is a "Surprise Medical Bill" and What Should I Know About the No Surprises Act?, CONSUMER FIN. PROTECTION BUR. (Feb. 2, 2022), https://www.consumerfinance.gov/ask-cfpb/what-is-a-surprise-medical-bill-and-what-should-i-know-about-the-no-surprises-act-en-2123.

^114. Cooper et al., supra note 58.

^115. Julie Creswell et al., The Company Behind Many Surprise Emergency Room Bills, N.Y. TIMES (July 24, 2017), https://www.nytimes.com/2017/07/24/upshot/the-company-behind-many-surprise-emergency-room-bills.html.

^116. Compl., supra note 108, at 3-4.

^117. Appelbaum & Batt, supra note 2, at 59.

^118. Id.

^119. Order Denying Mot. to Dismiss at 5, Am. Acad. of Emergency Med. Physician Grp., Inc. v. Envision Healthcare Corp., No. 3:22-cv-00421-CRB (N.D. Cal. May 27, 2022) (citing Cal. Physicians’ Service v. Aoki Diabetes Rsch. Inst., 163 Cal. App. 4th 1506, 1516 (2008)).

^120. Compl., supra note 108, at 9.

^121. Id. at 12-14.

^122. Id. at 12-13.

^123. Id. at 7-8.

^124. Id. at 10-12.

^125. Id. at 13.

^126. Id. at 6-7.

^127. Id. at 16.

^128. Id.

^129. Order Denying Mot. to Dismiss, supra note 119.

^130. Cummings, supra note 41.

^131. Bannow, supra note 111.

^132. Amanda Wait & Leslie Roter, Data On Biden’s Tough Antitrust Stance Paints Subtler Picture, Law360 (Feb. 1, 2022), https://www.law360.com/articles/1460601/data-on-biden-s-tough-antitrust-stance-paints-subtler-picture.

^133. ERIN FUSE BROWN ET AL., Private Equity Investment As A Divining Rod For Market Failure: Policy Responses To Harmful Physician Practice Acquisitions 19 (2021), https://www.brookings.edu/wp-content/uploads/2021/10/Private-Equity-Investment-As-A-Divining-Rod-For-Market-Failure-14.pdf.

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