hospital impact

Essent Healthcare bought another community hospital, with the proceeds going to a charitable foundation that will fund local health programs. If I'm in that community, I'm celebrating - the hospital's under new management AND there's a new multi-million dollar foundation that'll fund health programs for me. Two-for-none benefits.

Essent Healthcare is relatively new - this is only their 5th hospital acquisition. I previously mentioned another hospital acquiring newbie Stonebridge (their CEO is anything but a newbie).

Speaking of M&A, hospital M&A activity was $1.3B for 3Q05 (compared to just under $1B for 2Q05). As you look at this report more closely, the one thing that jumps out is the M&A for Managed Care - $17.3B. Of course, that's mostly WellPoint's buying WellChoice ($6.5B)

And finally in the international front, apparently French hospitals go for about the same amount as American ones. German hospital giant Fresenius bought hospital chain Helios Kliniken for $1.8B. 24 hospitals, 9,300 beds - so they paid ~$200,000 per bed, similar to deals in America that I've posted on previously. And even after dropping $1.8B, looks like Fresenius is really just getting started.

What does all of this M&A mean? To me, it basically means three things: (1) a lot of people think they can add a lot of value to existing hospitals; (2) a lot of people think healthcare's future growth prospects and profitability is more viable than many other industries; (3) a lot people see "niche" opportunities: finding and buying hospitals with similar characteristics.

(UPDATE: don't get too carried away, though: Evanston Northwestern was just ordered by the FTC to sell Highland Park Hospital. The reason? the acquisition "substantially lessened competition" and drove up health care costs)