The deal shoppers are not looking for those with efficient operations but rather those on the other side of the coin to where strategies and businesses can be realigned to show profits. The one big example was the announcement earlier this year in the Boston area with Caritas Christie Health Systems which was coming out of bankruptcy.
What I also found interesting on that buy out was the fact that if the established ethics and religious elements of the organization get in the way, they can cash out there and move them right out, kind of scary and just a little cold, just my opinion, but the reality of the world we live in today.
$25 Million Dollar Donation to Charity Included in New Agreement for Caritas to “Lose Their Religion” if Working With Catholic Ethics Becomes “Materially Burdensome”
How big is this business, large enough to create a “non profit” trade organization.
How Big Are Private Equity Investments in Healthcare – Large Enough to Create a “Non-Profit” Trade Association To Talk About How to “Profit”
Apax Partners (located in the UK) is also busy buying up the payer side of the business and you can read more at the link below. See any trending here with hospitals and payers with Private Equity groups? If not, take notice as we have both moving in big ways and some of the same private equity firms buy up both types of companies. The TriZetto group is in the risk management area and is one of the companies that makes millions from medical billing auditing and processing.
Private equity firms are investing and as a matter of fact the big company CareMore has partnered with is ran by a Private Equity company in the UK. They are also all about numbers and algorithms to create profits so you can read about what they are calling their “killer” PHR they are offering with Payer information and access to who in total, I’m not quite sure. Trizetto partners with Ingenix, the wholly owned subsidiary of United Healthcare. This one small company made a billion dollars in profit last year and this is where the investors are going.
Bravo Health – Venture Capital Backed Medicare Senior Health HMO Carrier Sees Profits of 1 Billion for 2009
With reform, it may not always mean better care in the forefront but rather profits first and of course there will be improvements at how healthcare is delivered but what will be the tradeoffs for profit remains to be seen as private equity firms grow their investments. This is one of the reasons hospitals are on the agenda as the price is right with many on the brink of either bankruptcy or having years of running in the red without a solution in near sight. BD
Speaking on a panel at the Dow Jones Limited Partner Summit in New York, Scott Mackesy, a general partner with Welsh Carson Anderson & Stowe, said hospitals have been one winner in the health-care reform debates.
“On a spectrum of how different subsectors came out, hospitals were on the plus side,” Mackesy said, adding that they were less affected than many other types of health-care providers.
There are a couple of buyout deals for hospitals brewing, as Cerberus Capital Management has agreed to buy Caritas Christi Health Care, a Boston-based hospital chain, for $830 million, while Blackstone Group-backed Vanguard Health Systems is buying the Detroit Medical Center for $700 million plus additional investments later.
Mackesy predicted more deals in the sector, saying there will be aggregation of existing hospital companies, diversification into outpatient sectors, and more jostling among companies to pick up larger positions in local markets.