What Do Investment Bankers Know About Building Clinical Volumes That You Don’t?

There is a hospital buying frenzy in the investment world. Investors know that hospitals can make lots of money- maybe it is time we figure that out too.

Investment bankers are cold-blooded deal analysts. If they are willing to spend a billion dollars, it is because they know they can make a great return to investors.

Cerberus Capital Management is buying Caritas Christi Health Care, the second largest hospital chain in New England with six Catholic hospitals. Six hospitals that will become for-profit hospitals.

Blackstone Group owns the Nashville-based hospital group Vanguard Health Systems and they are currently buying Detroit Medical Center with seven hospitals in Detroit. They believe they can make a pile of money in Detroit! If you can make money in the high-unemployment-loss-of-retirement-health-benefits capital of the universe, you can make money anywhere.

Of course Bain Capital and famed leverage buyout kings Kravis Kohlberg & Roberts own HCA Inc., the largest hospital chain in America and were willing to pay over $20 billion for it.

I could go on but here is my point – and frankly the point of this whole blog – your job is to make money for the health system.

You do that by targeting high-incidence high-contribution (or high-profit if you are already a for-profit) procedures while leveraging existing assets.

I write about how to do that almost everyday. I hope you are reading, because you are probably in healthcare because you see it as a life affirming mission. So am I. But we can learn from the cold-hearted bastards buying the hospitals: You gotta learn how to do well if you want to do some good.



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