Fear surrounds deal between nonprofit hospital, for-profit company

As nonprofit hospitals become increasingly attractive to for-profit companies looking to capture more of the hospital market, one question that looms is whether the non-profits will be able to stay true to their mission. Some worry that patients could lose out, according to Kaiser Health News/USA Today.

For example, Detroit Medical Center's (DMC) network of eight hospitals has long served as a safety net for poor patients. But because it's been cash-poor, it has not been able to borrow the money to upgrade technology, let alone keep the facilities operating properly.
After DMC CEO Michael Duggan approached Vanguard, though, the private equity firm offered a way out. It agreed to pay DMC $417 million to reduce its debt and promised to invest another $850 million in DMC's facilities. The deal has yet to be approved by the state attorney general.

Vanguard, which is best known for buying Chrysler--which was later bailed out by the federal government--pledged to keep the system's five acute-care hospitals open, and to continue its commitment to charity care for at least 10 years. But Rev. Skip Wachsmann, a pastor at the Genesis Lutheran Church on the city's east side for 34 years, said he worries about how the sale will affect poor people. He told KHN: "What happens in 10 years and one day?"

"You can probably expect more stories like this, with the uptick in M&A activity. That's because the health overhaul law's eventual extension of coverage to another 32 million people made urban hospitals more attractive acquisition targets. "Health reform gets rid of a big chunk of the uncompensated care problem," Jack Wheeler, a professor of health management and policy at the University of Michigan told KHN.

To learn more:
- read the USA Today/Kaiser Health News story