Let me cite some information about the nation's largest for-profit hotel operator, HCA Inc., the evil cabal of private equity, and how a combination of the two can make life miserable for those Americans who cannot afford the superb health care quality that institutions such as HCA can give.
First, some relevance to breaking news. HCA, which was founded by the family of Senate Majority Leader Bill Fri$t, said today it has agreed to be purchased by a group of investors for about $21.3 billion plus the assumption of $11.7 billion in debt.
The buyer is an investor group comprised of Bain Capital, Kohlberg Kravis Roberts & Co., and Merrill Lynch Global Private Equity.
Shareholders will receive $51 in cash for each share of common stock under the deal announced Monday. That is an 18 percent premium to HCA's closing share price last Tuesday, the last major trading day before media reports about a potential buyout of the company, and a 6.5 percent premium to its closing price on Friday.
The deal, no doubt, comes as a result of a prosperous operation that has all too often placed profits before patients. Before I cite specifics, let me tell you a bit about private equity.
To a significant extent, private equity firms represent untold billions in pools of money invested by people who are already rich- day traders who tweak their investments from the comfort of their condos in Incline Village, attorneys who assess billable hours when they brush their teeth in the morning, and yes, rich doctors who got that way because they overcharge patients seven ways to Sunday with fine print- and then find tax shelters or other schemes to make their money grow still more. Money sometimes obtained from overcharging you.
Yes, rich doctors who make their money grow, while it is we ordinary folks who pay for it with skyrocketing health care premiums and fine-print charges when we visit the hospital or doc's office.
Take the case of the Denver market. According to "Sky High Health Care Costs," a September, 2005 report prepared for Colorado for Health Care by the Project for Strategic Health Care Purchasing (also responsible for the graphic at the top of this post):
In 2003, the last year for which government data is available, the average operating margin for Denver's consolidated hospital systems was 18%. The average margin for the remaining independent private hospitals
in the market was 7%, and Denver's public hospitals had an average loss of 50%.Denver's consolidated hospital systems were four and one-half times more profitable than the average for all U.S. hospitals, which was
just 4.1% that year.
The system with the greatest market share, HCA-HealthONE, also had the highest operating margin in 2003. HCAHealthONE has declined to make its 2004 operating margin public."
But this was not HCA's first public exposure to its financial imperatives.
In the late-1990s, after a merger with Columbia Hospital Corporation, the company was investigated by the government for Medicare and Medicaid fraud and paid a settlement of $1.7 billion, the largest fraud settlement in US history. The CEO resigned but no criminal prosecutions resulted.
To be fair, Sen. Frist sold his HCA stock a year ago, in July, 2005. But no one is denying that he got awfully rich while owning equity in a company that has always been profit-minded. And throughout his tenure in the Senate, Doctor Bill has been no friend of economies that would put patients ahead of profits.
The evil arm$ merchants of private equity love profits, the good of society be damned.
And with far fewer financial reporting obligations, the new private equity-owned HCA cannot help but become more profit-minded.
"Profit-minded." Private equity inve$tor$ love that phrase.
But I have some phrases that I love.
National health insurance.
Single-payer health insurance.
Health care and pharmaceutical price controls.