Private Equity and Roll-Up Transactions in Healthcare in India — PART II
ARTICLESCOMPETITION LAW2026
Akshat Joshi 3rd Year B.A. LLB (Hons.) | Rajiv Gandhi National University of Law, Punjab
8/21/20265 min read
In the last part, I primarily discussed the limitations of the current merger control regime. Here, I will show that there are circumstances that justify a hard look at the spectre of harm that unscrutinised roll-up transactions can cause, and how other jurisdictions have responded.
I. Shifts in the Healthcare Sector in India
Two studies from different states in India show a noticeable shift to a form of financialisaton of care, a reshaping of healthcare on corporate lines. The point of this section is to argue that legal regulation in the healthcare sector is structurally weak and toothless, and the implications of that.
One study, focusing on Maharashtra published in 2025 and relying on field research from 2017-18 and data collated from more recent secondary sources showed that there was direct pressure on utilizing resources more “efficiently” (read: staff cuts) and increase in prices. While the study showed no evidence of a decline in quality, it showed cost inflation, and other studies in similar settings from the USA have observed worse patient outcomes (discussed in the next part). The study also showed that domestic healthcare corporate chains and private equity units alike have undertaken buyouts and investments, fuelled by financial distress among smaller hospitals. These corporates, driven by a profit motive, have cut costs by reducing resources applied while simultaneously increasing billing to boost revenue.
Another study noted that the existing regulatory mechanism in the healthcare sector is not only weak and powerless, but also dominated by corporate bodies, which again leaves it open to misuse by bad actors. That study noted that states such as Madhya Pradesh and Delhi had almost no healthcare policy or programmes specifically to regulate cost of care (prices) in private hospitals.
The CCI is the closest existing mechanism to benchmark and oversee prices in the private healthcare sector that has had at least some success in other sector (like the pharmaceutical sector). For instance, CCI just recently ended a decade-long abuse of dominance investigation against 12 super-speciality hospitals in Delhi. While it did not result in a finding of abuse, it was real action based on allegations of some substance.
II. Private Equity and Healthcare: A Comparative Look at the US and EU
The primary obligation of a private equity firm which buys this practice is to sell it in the future for a profit. Therefore, its primary aim after the acquisition is to cut costs in any way possible. Therefore, the actions of the PE firm not only create newer monopolies and strengthen existing ones, but also lower the standard of care for thousands of consumers, people who are already dealing with debilitating maladies.
We must look at the two jurisdictions which have significantly influenced India’s competition law and policy direction, and what their approach has been, to combat roll-ups.
A. United States
The strongest and most overwhelming evidence of the correlation between adverse quality of care and private equity investment comes from the US.
Private equity in healthcare in the United States (US) has been consistently linked to higher costs and lower quality of care. A number of studies have shown that the PE firm cuts staff as a response to losses. This creates a vicious cycle, as this method is usually ineffective in reducing losses. As a response, the firm resorts to even harsher measures, such as shutting down the loss-making hospitals, as happened in the case of the long-term care hospital chain New LifeCare Hospitals. One study specifically mentioned the existence of out-of-network surprise billing, specifically in sectors like emergency services and anaesthesiology. Another study showed that post-PE investment, a discernible increase in hospital-acquired conditions occurred despite a pool of healthier individuals, which suggests a poor quality of patient care, likely due to staff cuts.
The primary legislation in the United States that governs the thresholds for pre-merger notifications, where the Federal Trade Commission (FTC) and the Department of Justice (DOJ), the statutory bodies responsible for antitrust actions, can act is the Hart-Scott-Rodino Act (“HSR Act”). Similar to the Act, it has specific reporting baselines for combinations. But aside from the HSR Act, under Section 7 of the Clayton Act, the FTC and DOJ also have the power to bring action against any merger, the effect of which is to “substantially to lessen competition, or to tend to create a monopoly”.
In August 2023, the FTC amended the premerger notification rules under the HSR Act, to be able to better flag cases of anti-competitive consolidation. It then filed a suit against U.S. Anesthesia Partners (“USAP”) and its PE backer, Welsh, Carson, Anderson & Stowe, of executing serial transactions through which they acquired multiple physician practices in the state of Texas, to gain a dominant market position to ‘suppress competition and drive up prices for anesthesiology services across Texas.’ The action was under Section 7 of the Clayton Act. In April this year, the FTC entered into a preliminary settlement with USAP to restore competition in the market.
B. The European Union
While the US healthcare system works like free-market system, the EU private healthcare framework is much more heavily regulated. Because of that, at least in the healthcare sector, roll-ups have been a lesser cause of concern.
Still, similar concerns over regulatory gaps have been identified in the rulings of the European General Court (“ECG”) about killer acquisitions. For instance, in Illumina v Commission, the EGC held that the European Commission (“EC”) has the authority under Article 22 of the EU Merger Regulation (EUMR) to review mergers that fall below both the EU’s and the individual Member States' turnover thresholds, to deal with “killer acquisitions”. There is enough overlap between killer acquisitions and roll-ups, that in some cases, the provision meant for the former can work to catch the latter.
On appeal, the ECG order was overturned by the European Court of Justice, the European Union’s Highest Court. The EC has since turned to member states to change their own legislations to catch killer acquisitions and roll-ups. Their strategy has been to allow the regulator to “call in” deals that are below the threshold. Criticism for this approach has been centred on allegations that it increases administrative costs and the possibility of false positives, and reduces business efficiency, without the standard of proof of harm that justifies such measures. The question arises whether the trade-off is worth it for India.
III. Recommendations and Conclusions
In India, anti-competitive agreements and abuse of dominance allegations face ex-post investigation, while the merger control regime functions in an ex-ante assessment scheme.
One of the biggest issues is the De Minimis Exemptions (DMEs) mentioned before. While reducing compliance burdens and being business-friendly is a laudable goal, healthcare and education, which are two sectors where PE investment has been substantial are far too important for a country to be under-regulated. As mentioned before, these PE firms have primarily employed this strategy to buy a big hospital as a platform and then acquire smaller regional ones, in tier-2 and tier-3 cities.
An ex-post assessment solution, which was initially suggested to screen killer acquisitions, but can be just as useful for roll-ups would be an amendment to section 20(1) by inserting a proviso to it that extends its Suo moto powers with respect to ‘non-notifiable and exempt combinations’ beyond the one year, in cases where it reasonably apprehends that there is an appreciable adverse effect on competition, a safety net, so to say, and would be similar to the call-in powers of the National Competition Authorities in the EU.
This could be combined with a requirement for parties to transactions that do not require notification (meaning those that fall under the DMEs) , to inform the CCI if the acquiring firm entity has previously made any acquisitions (and the number thereof) in that same sector. As mentioned previously, the FTC amended the rules under the HSR Act and created requirements wherein the parties involved would need to disclose similar transactions entered into over a 10-year period. Similarly, the spirit of regulation 9(4) would be strengthened by such a change, because CCI would know from previous transactions if the ‘ultimate intended effect’ is to consolidate control over the relevant market. If the CCI has this information, it would be able to act under its suo moto powers, even when the transaction is not notifiable. And, it would have better evidence if it wants to pursue abuse of dominance allegations or even if such claims were to arise through an informant. There does not even need to be a requirement for an approval, just a requirement to notify.
What we can glean from the foregoing discussion is that antitrust authorities in Europe and the United States have started to adapt their threshold-based standards for merger control, instead creating (reserve) powers to scrutinise transaction. The CCI must scrutinise whether on a cost-benefit analysis in the present circumstances, tougher ex-ante regulation such as the above solutions is necessitated