Non-profit hospital systems often under pressure to behave like for-profits

Non-profit hospital systems are coming under increasing pressure from the investor community to behave more like for-profit operations, providing a level of transparency that would be closer to that of a publicly-traded firm, The Wall Street Journal reported.

That's primarily because many non-profit systems, such as California-based Dignity Health and Michigan-based Trinity Health, have become much larger in recent years through mergers and acquisitions. Moreover, many of them have borrowed billions of dollars through the bond market, making their transparency of greater concern to potential purchasers.

M&A activity has become so prevalent in recent years that it is fundamentally reshaping some markets, such as in the Midwest. Such activity recently caught the attention of U.S. Federal Trade Commission Chairwoman Edith Ramirez, who recently expressed concern in a speech that competition among providers could be stifled.

However, it is also causing concern among the investment community. "It's alarming to these public bondholders that there's not more information made available," John Cheney, a managing director at Ponder & Co., told WSJ.

As a result, Dignity and Catholic Health Initiatives have begun holding phone calls with financial analysts to discuss their financial performances, much like for-profit publicly traded firms do. Trinity has even hired an investor relations executive.

But some systems have balked at this level of transparency, according to the WSJ, out of fear of disclosing too much information to rivals. And Dignity has declined to release operational information pertaining to its hospitals in specific markets.

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