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Private Equity and Non-Profit Hospitals: Strange Bedfellows or Saving Grace?

An article this week in Becker’s Hospital Review discusses a relatively new twist in the hospital/hospital system merger and acquisition arena  – the involvement of private equity firms. Several examples are listed:

  • Acquisition of Caritas Christi Health System by Steward Health System, an entity of Cerberus Capital Management
  • Purchase of Detroit Medical Center by Vanguard Health Systems, owned by Blackstone Group
  • Catholic system Ascension Health formed a funding venture with Oak Hill Capital Partners

The article briefly discusses the pros and cons for private equity involvement.

Source: McLaughlin J. Private equity and non-profit hospitals: strange bedfellows or saving grace. Becker’s Hospital Review, Mar. 26, 2013. http://www.beckershospitalreview.com/hospital-transactions-and-valuation/private-equity-and-non-profit-hospitals-strange-bedfellows-or-saving-grace.html

Related resources:

Healthcare Private Equity Association: http://www.hcpea.org/

Page L. Private equity funds are changing the face of U.S. hospitals. Becker’s Hospital Review, May 2, 2011. http://www.beckershospitalreview.com/hospital-transactions-and-valuation/private-equity-funds-are-changing-the-face-of-us-hospitals.html

Saint Mary’s plans joint venture with private equity company. Catholic Health World, Apr. 15, 2011. http://www.chausa.org/Saint_Marys_plans_joint_venture_with_private_equity_company.aspx

Creswell J and Abelson. A giant hospital chain is blazing a profit trail [re: HCA now owned by 3 private equity firms]. New York Times, Aug. 14, 2012. http://www.nytimes.com/2012/08/15/business/hca-giant-hospital-chain-creates-a-windfall-for-private-equity.html?

Denning S. HCA: the unsustainable private equity bubble in US health care. Forbes, Aug. 15, 2012. http://www.forbes.com/sites/stevedenning/2012/08/15/private-equity-wont-fix-health-care-either/

Wechsler P. HCA plans biggest U.S. private equity IPO at $4.28 billion. Bloomberg.com, Feb. 22, 2011. http://www.bloomberg.com/news/2011-02-22/hca-offering-as-much-as-4-28-billion-in-shares-to-public.html

Evans M. Limited potential: private-equity deals come with conditions. Modern Healthcare, Jan. 28, 2012. http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&ved=0CFMQFjAE&url=http%3A%2F%2Fwww.modernhealthcare.com%2Farticle%2F20120128%2FMAGAZINE%2F301289974&ei=V_VVUZjCIqWYyAGqj4H4DA&usg=AFQjCNFZJy9RjBAyFmhnac6Xi5OTRCVZVw&bvm=bv.44442042,d.aWc

Becker S and others. Private equity investing in healthcare — 13 hot and 4 cold areas. McGuireWoods LLP, Aug. 4, 2011. http://www.mcguirewoods.com/news-resources/publications/health_care/private-equity-investing-healthcare.pdf

Shinkman R. For hospitals, M&A market means more private equity, payer partnerships. FierceHealthCare, Jan. 29, 2013. http://www.fiercehealthfinance.com/story/hospitals-ma-market-means-more-private-equity-payer-partnerships/2013-01-29

Private equity firms: could they help save your hospital? REDW LLC, Sept. 11, 2011. https://www.redw.com/publication_full_story.php?Page=publications&Blog_Ref=213&UserRef=1&CategoryName=Healthcare+Publications 

Vaughan J. Private equity investment in health care services. Health Affairs, Sept. 2008. http://content.healthaffairs.org/content/27/5/1389.abstract

Applebaum E and Batt R. Private equity at work: when Wall Street manages Main Street. Russell Sage Foundation, May 2014. https://www.russellsage.org/publications/private-equity-work

Related post: https://aharesourcecenter.wordpress.com/2015/03/24/2014-private-equity-acquisitions-in-health-care-sector/

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

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