Heart hospital operator MedCath Corp. (NASDAQ: MDTH) could vanish within a year, Modern Healthcare reports.
Back in April, Forbes predicted that the healthcare reform bill would spell the end for physician-owned specialty hospitals. Now it looks like MedCath may earn the dubious distinction of being the first hospital company to liquidate, because healthcare reform killed it, according to Forbes.
In late August MedCath Corp. announced it would sell its stake in Avera Heart Hospital of South Dakota to Avera McKennan for $20 million. Charlotte, N.C.-based MedCath had owned a one-third stake in the hospital. Earlier this year, MedCath explored options for selling the company in whole or in pieces, Modern Physician reports. In August, the company announced its decision to sell its stake in 59-bed Arizona Heart Hospital, Phoenix, to Vanguard. And back in February, MedCath sold the 58-bed Heart Hospital of Austin (Texas) to St. David's HealthCare.
The Forbes article casts the reform bill and MedCath's piecemeal sell-off as cause and effect. In a gift to general acute-care hospitals, the bill banned new physician-owned hospitals and restricted the growth of existing ones. Two big hospital lobbies, the American Hospital Association and the Federation of American Hospitals, pitched the ban for years, Forbes reports, because they didn't want physicians who were on their hospitals' medical staffs to divert lucrative heart and orthopedic patients from general acute-care facilities. Because of regulatory changes, physician-owned hospitals have been cornered and are finding growth opportunities to be limited.
An analyst told Modern Healthcare that buyers interested in MedCath assets likely already have a significant presence in the local markets.
To learn more:
- read these Forbes articles: the April prediction and the more recent article
- read the Modern Healthcare article (registration required)
- see the Modern Physician article (registration required)