Private, for-profit healthcare companies may pose a bigger competitive threat to non-profit hospitals than public for-profit hospital chains. A Moody’s Investors Service special comment discusses the ability of these private companies, which are funded by hedge funds and private equity, to attract physician investors in high-growth markets without Certificate of Need regulations, such as Texas. As private companies, they aren’t required to disclose information about strategies, and they can more quickly expand into promising markets than can public healthcare companies. “In response, not-for-profit hospitals may be forced to accelerate capital spending and embark on new physician alignment strategies, resulting in greater debt or less cash reserves or some combination thereof to curtail the threat of these new providers," writes Moody’s. The ability of these companies to contract with managed-care plans will be the deciding factor in their success, which still remains to be seen, according to Moody’s. For more information about this special comment, call 212-553-4431.
