Wall Street Suddenly Scrambles to Buy Doctors, “Leverage” Their Patients

[marmar]

by Wolf Richter • July 20, 2015


For PE firms, the fracking boom was nirvana. An eternal-growth industry. A big part of the money they poured into the scrappy oil & gas companies is now going up in smoke. Other industries are mired in a no-growth or shrinking environment. Chaos keeps breaking out in the international markets, most recently over Greece and China.

So, healthcare, which accounts for nearly one-fifth of US GDP, “is really the growth opportunity,” Tom Banning, CEO of the Texas Academy of Family Physicians, told The Texas Tribune:

“The forces are aligned to force consolidation, and frankly, how those independent doctors are able to compete against well-heeled, deep-pocketed systems or networks is going to be a problem,” Banning said. “To me the question becomes, if a for-profit, publicly traded or privately held venture-capital fund owns these doctors, what’s their fiduciary duty to the patients?”

Think of the possibilities! The Texas Tribune: “Sensing a new vein of potential profits to be mined in the multibillion-dollar health care industry, a small but growing number of private equity firms is seeking to buy into primary care practices, interviews with doctors and financial analysts suggest.”

Mergers and acquisitions are at an all-time record in the US. In the second quarter alone, US targeted deals reached $635 billion, the highest quarterly total ever. These deals are driven by corporate buyers. Armed with cheap debt and their overpriced shares, they’re out-bidding PE firms and pushing them aside

Consolidation in the healthcare sector is running rampant, from the M&A activity among the largest health insurers, such as Aetna’s acquisition of Humana, to hospital systems buying physician practices. ...............(more)

http://wolfstreet.com/2015/07/20/private-equity-firms-buy-out-your-doctors-cash-in-on-medicare/