Dec 4, 2019

Private equity eyes another rural hospital chain

Photo: Andrew Lichtenstein/Corbis via Getty Images

Private equity giant KKR has floated a private buyout of Quorum Health, a 24-hospital system that operates in rural and small suburban communities, for about $30 million, or $1 per share. Quorum executives said they would "carefully consider" any deal.

Where it stands: Private equity has increasingly bought up hospital chains, doctors' groups, and ground and air ambulance companies due in large part to those firms' inherent market power. KKR, for example, just took physician staffing firm Envision Healthcare private for $10 billion last year.

Private equity has shown particular interest in publicly traded hospital systems — most recently with major deals for LifePoint Health and Iasis Healthcare.

By the numbers: Quorum, a group of hospitals that Community Health Systems spun out in 2016, has lost $446 million since 2017.

  • The company has struggled with high interest expenses from its debt, as well as a drop in hospitalizations and surgeries.

Yes, but: Quorum still generates $1.6 billion of revenue every year by owning hospitals that have monopoly or near-monopoly power in their markets.

  • That concept is attractive to any investment group willing to take on risk. But that raises questions about costs and quality for patients, and what the future holds if private equity decides to abandon a hospital.
  • Quorum executives also hinted during its latest earnings call that its hospitals will be more aggressive in collecting payments from health insurers and patients starting next year.

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Private equity on defense in Washington

What's believed to be the first congressional hearing in recent years squarely focused on the practices of private equity firms is happening later this morning.

Why it matters: Private equity is facing "the most serious political challenge it has seen in years," per the WSJ.

Go deeperArrowNov 19, 2019

House hearing on private equity lands with a whimper

Sens. Elizabeth Warren and Bernie Sanders. Photos: Sarah Rice/Scott Olson/Getty Images

Tuesday's House of Representatives hearing on private equity landed with a whimper, after more than a week of escalating rhetoric from progressive Democrats.

Reality check: Even if Sen. Elizabeth Warren wins the presidency, she would have a tough time getting her "Stop Wall Street Looting Act" through Congress, with or without Democratic Party control of both chambers.

Go deeperArrowNov 20, 2019

How private equity is fueled by public pension plans

Illustration: Lazaro Gamio/Axios

Private equity's loudest political antagonists were back at it over the weekend, wrongly arguing that Taylor Swift's contract dispute is illustrative of the industry's rapaciousness.

What happened: While Sen. Elizabeth Warren and Rep. Alexandia Ocasio-Cortez each tweeted that private equity must be "reined in," they'll need to publicly wrestle at some point with how private equity is fueled by public pension systems that they otherwise support.

Go deeperArrowNov 18, 2019