Monday, July 24, 2006

The HCA deal is done

The closing probably won't be till the 4th quarter, assuming the federal regulators bless it and the board doesn't get a better offer, but HCA's board has approved the sale of the company to an aglomeration of investment bankers and the founding Frist family. Of course, no one can quite agree whether the deal is worth $21 billion, $31 billion, or $33 billion, but what's a few billion here or there?

The biggest disparity in the reported figures is probably attributable to the $10.6 billion of debt that's being assumed. Once the reporting settles on the value of the deal, it will be in the $31-33 billion range. As Forbes is reporting, their estimate of $31.6 billion would make this the largest leveraged buyout in U.S. history, exceeding KKR's $31.1 billion purchase of RJR Nabisco in 1989. (KKR is also involved in the HCA deal.)

From a health policy perspective, I expect the pundits to ask the question whether for-profit health care ought to be so profitable that it would lead savvy business people to shell out this kind of money. Forbes' title for one of its on-line stories this morning unintentionally sums it up nicely: "Health Is Wealth." When a health care provider can throw of this amount of wealth for private investors, it's bound to fuel questions about whether patients and payers, including the federal government, are paying too much for what they receive.

The investors are also giving us their take on the long-term future of health care in this country. From Forbes: "Apart from betting that economic conditions in the U.S. will remain stable, the suitors will be hoping that the aging American population continues to prompt higher spending on health care, and that the government eventually resolves the problem of uninsured patients."

posted by Tom Mayo, 9:05 AM

Health care law (including public health law, medical ethics, and life sciences), with digressions into constitutional law, poetry, and other things that matter