Jul 30 2006

The Largest Private Equity Deal to Date

Last week, a private equity group led by KKR, Bain Capital, and Merrill Lynch announced that they were acquiring HCA for $33 billion.  HCA is the largest hospital operator in the United States, owning or operating 176 hospitals, 92 freestanding surgery centers and facilities for outpatient and ancillary services in 21 states, England and Switzerland.

Stan Feld (my dad – a retired endocrinologist and – among other things – the inventor of “the neck check“) – who has been writing a blog for several months titled Repairing the Healthcare System – sees this deal as another step backward.  He’s spent the past few months deconstructing the problems with today’s healthcare system in the US and is starting to put together the building blocks for his solution.  He shines a light on some of the potential second order effects of a deal like this which he concludes:

If I am correct, rather then decreasing the cost of care through efficiency of care and an increased quality of care to decrease complications of chronic disease, we will see an increase in cost of care.

The deal is far from done and there’s plenty of chatter about other potential syndicates forming to make an offer along with the predictable shareholder lawsuits to block the deal, presumably with the goal of increasing the price on the deal.  Regardless of the ultimate outcome, the largest private equity deal to date will undoubtably be interesting to watch unfold.

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