it, I’d prefer a non-profit whose chain can be yanked over a for-profit with no public service requirements at all.
I was reminded of my concerns this week when I heard about the two hospitals Cerberus Capital Management agreed to acquire this week. It’s picking the hospitals up from Essent Healthcare, another for-profit. Cerberus, a New York-based private equity firm, just spent $900 million for the six-hospital non-profit chain Caritas Christi. That gave them a nice foothold in Boston, an incredibly competitive but opportunity-rich environment.
Really, both of deals the two-headed guardian of the afterlife has chosen seem to be good ones — for them. While I’m not privy to much financial information on any of the eight hospitals, we do know that Caritas Christi was in big trouble financially.
I’d wager that the other two hospitals, which lie in the Boston suburbs, are in bad need of a capital infusion to prop them up during these bad times. This situation allows the firm to swoop in, buy equipment, get things shipshape and get their money many times over. Oh, and probably do a nice job of squeezing the health plans, now that they’re getting critical mass. Again, good for them.
The thing is, I strongly doubt that any private equity firm is going to have the interests of the community in mind. One way or another, in most of the private equity buyouts I’ve followed, all of the extra money generated by improvements ends up in the bulging bank account of the PE guys. They’re not in ANY investment for the long term; that’s just not what they do. They’re there to pillage, however, legally, and get the hell out.
Far too often, PE players get into a deal, drag the hospitals down financially and then more or less shrug their shoulders when the facility plunges into the red.
The PE firm doesn’t give a rat’s patoot — they’ve made their money. The often-struggling community is left with, well, not a whole lot.
I’d argue that this is a travesty. We need, as professionals and healthcare consumers, to keep hospitals as community asset with a strong bank account and a long-term view.
So, my question to you is this. Is it inevitable, during this period of transition to full-out reform, that community hospitals get decimated?
- Caritas Private Equity Owner Expanding to Buy 2 More Community Hospitals in Massachusetts (ducknetweb.blogspot.com)
- Caritas owner to buy 2 more Mass. hospitals (boston.com)
- Caritas Sale Closes (hcfama.org)
- AG Mandates Consumer Protections in Sale of Caritas (hcfama.org)