Lina Khan on Private Equity
TL;DR
Lina Khan views private equity's 'roll-up' strategies, especially in healthcare, as a major source of anticompetitive harm that requires vigorous federal scrutiny.
Key Points
She stated that the FTC's lawsuit against U.S. Anesthesia Partners and its private equity owner was intended to put the market on notice regarding roll-up schemes (2023).
The Commission, under her leadership, actively scrutinized serial acquisitions by private equity firms, noting that cumulative small deals can consolidate a market even if individual deals are small.
Concerns have been raised regarding empirical research showing that private equity investment in areas like nursing homes has been associated with declines in care quality.
Summary
Lina Khan, in her capacity as Federal Trade Commission Chair, has positioned herself as a vocal challenger of private equity (PE) acquisitions and business practices, particularly within the healthcare sector. Her core stance is that the common PE strategy of serial acquisitions, known as 'roll-ups,' illegally consolidates markets, leading to higher prices, reduced quality of care, and stifled competition for workers. She and the FTC have signaled this by taking legal action, such as filing a complaint against a major anesthesiology group and its PE owners for allegedly building an illegal monopoly in Texas through such a strategy.
This approach represents a shift from prior eras where such serial acquisitions often flew under the radar due to low individual deal values falling below regulatory thresholds. Khan's work emphasizes a broader view of antitrust that moves beyond just short-term consumer prices to focus on the general concentration of corporate power and its negative effects on labor markets and clinical autonomy. Her actions serve as a clear signal to the industry that these potentially harmful roll-up schemes will now face aggressive scrutiny from the agency, creating a perceived 'chilling effect' on dealmaking.
Frequently Asked Questions
Lina Khan views private equity's investment and acquisition strategies with significant skepticism, especially concerning market consolidation. She believes that the 'roll-up' strategy, where firms acquire numerous small entities, harms competition and consumer welfare.
Yes, as FTC Chair, she has overseen enforcement actions against private equity firms, most notably by challenging a firm's alleged scheme to monopolize the Texas anesthesiology market. She has made clear that the FTC is scrutinizing such roll-up strategies across industries.
Khan is concerned that the short-term, profit-driven nature of private equity investment in healthcare, often achieved by driving up prices and reducing utilization or staffing, conflicts with the best interests of patients and taxpayers. This is evidenced by research showing price increases after PE acquisition.
Sources9
Mamdani’s appointment of Lina Khan a warning to private equity, experts say
Murphy Live With FTC Chair Lina Khan: We're Trying To Create A Health Care System That Benefits Patients
FTC chair addresses noncompete agreements, private equity investors
FTC's Khan puts private equity on notice
Lina Khan Steps on Another Rake in Court - Americans for Tax Reform
FTC Chief Gears Up for a Showdown With Private Equity - KFF Health News
FTC Chair Lina Khan ’17 Speaks about Competition Policy in Health Care | Yale Law School
Lina Khan speaks out about FTC’s private equity lawsuit: ‘We’re putting the market on notice’ | National Alliance of Healthcare Purchaser Coalitions
Transcript of Lina Khan's Vision of Capitalism | Capitalisn't
* This is not an exhaustive list of sources.