More than a fifth of the nation’s 5,000 hospitals are owned by governments and many of them have high debts due to rising costs, more uninsured patients, cuts in Medicare and Medicaid reimbursements and paying off bonds for past construction projects.
Many of these hospitals are solo operations, which Moody’s Investors Service said would be challenged to invest in information technology and handle bundled payments.
James Burgdorfer, a partner with investment banker Juniper Advisory in Chicago, predicted most public systems would end in the next two decades because the industry has become too complex for local politicians. “By the nature of their small size, their independence and their political entanglements, they are poorly equipped to survive,” Mr. Burgdorfer said.
For-profit companies in particular are gearing up to buy some public hospitals. The pace of all hospital sales is reaching a rate not seen since the 1990s, according to hospital consultants and financial analysts.
One acquisition model allows the government to become a minority partner. For example, when for-profit LHP Hospital Group acquired 250-bed Portneuf Medical Center in Pocatello, Idaho, 77 percent of ownership went to the company and 23 percent went to a foundation, and a community benefit board chosen by both parties governs the operation.
Read the Wall Street Journal report on public hospitals.
Read more coverage on public hospitals:
– Public Hospitals Face Enormous Challenges under Health Reform
– Only 2% of Hospitals Can Meet New Federal EMR Standards
– New York’s Public Hospital System to Cut Workforce 10% Over 2 Years
