Private Equity Interest
Qualify for a free subscription to HealthLeaders magazine.
Another exit strategy may also be through an initial public offering or a straight sale. This past spring, Vanguard Health Systems, which since 2004 has been majority-owned by private equity firm Blackstone Group, filed with the U.S. Securities and Exchange Commission to raise $600 million via an IPO.
The filing came not long after for-profit health system HCA raised $3.8 billion through the largest private equity-backed U.S. IPO on record. Due to the status of the pending IPO with the SEC, representatives from Vanguard Health Systems were not able to offer comment.
Regardless of how and when the profit is parceled out, once a private equity firm has made the investment, its primary objective is to generate a rate of return for its investors. To ensure some control, many private equity agreements require a majority stake in the partnership. In doing so, they may supplant or supplement the healthcare organization's management team or change the governance structure.
"We do an assessment of the quality of management team," says Brideau of how Oak Hill partners and Ascension approach managing the organizations they acquire. "If our assessment is that there is strong management but they are not succeeding because they are capital starved or because of some historic decision that put them in the hole, then those things are fixable—then you're crazy to want to turn over the leadership. High-quality leadership is scarce in healthcare."
Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
- Primary Care Docs Average More Hospital Revenue Than Specialists
- 69% of Employers Plan to Offer Healthcare Coverage After 2014
- Building a Better Healthcare Board
- Q&A: Catholic Health Initiatives' New Senior VP for Capital Finance
- CMS Seeks to 'Rapidly Reduce' Medicare Spending with $1B in Grants
- Quiet ORs Better for Patient Safety
- CMS Releases Hospital Pricing Data
- Evidence-Based Practice and Nursing Research: Avoiding Confusion
- Hospital Pricing Data Dump Won't Hurt You, Yet
- Telemedicine is Retail Health Clinics' Newest Tool