Not-For-Profit Hospitals, Meet Leverage
The hospital sector is ripe for consolidation, an opportunity private equity firms are licking their chops at. A new study from Moody’s outlines the opportunity for acquisitions of not-for-profit hospitals, indicating a “significant shift” in the hospital industry is underway. Two recent deals have paved the way: In March, Cerberus Capital Management acquired Caritas Christi Health Care. More recently, Vanguard Health Systems, a hospital operator backed by Blackstone Group, acquired Detroit Medical Center. The deals, which both involve a private equity investor making inroads into a market dominated by not-for-profit hospitals, show an increased appetite for not-for-profit hospitals from private investors. Likewise, they put pressure on what’s left of the not-for-profit hospitals, which now face increased competition from for-profit hospitals.
