Private-Equity Firms Are Leaders in Hospital Acquisitions
Dow Jones/Wall Street Journal on Wednesday examined how rural and not-for-profit hospitals have become "hot properties" in the private-equity market, with at least two large ventures being formed this year to buy and operate hospitals.
Steven Elek, a partner at PricewaterhouseCoopers, estimated that 60% of bidders for health care properties are private-equity firms, whereas the majority of buyers four or five years ago were either other health care companies or strategic buyers. Elek said factors for the heightened interest include the advancing age of baby boomers, the generally stable reimbursements from government and private insurers compared with past years and projections that health care spending will increase over the next decade as a percentage of total economic output.
Some private-equity firms purchase several hospitals and then use their initial acquisitions "as an operating platform to which other facilities can be added," Dow Jones/Journal reports.
Elek said, "What it means is, I think, a big opportunity for large private-equity funds to get into this space." In return, private-equity firms offer hospitals "a source of much-needed capital" for purchasing medical equipment and funding other expenses, Dow Jones/Journal reports (Loftus, Dow Jones/Wall Street Journal, 11/30).