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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  • Albert

    As PE tries to find places to put their money they are starting to step out of their wheelhouse…they are going to regret getting into the healthcare business. I see a bunch of MBA’s sitting around thinking they can wring some efficiencies out of a group of hospitals only to find out that the hospital business is one of the most backward industries in the universe, a place where synergistic efficiencies and economies of scale go to die. If they come out of this in the black at all, I will be shocked.

  • This week’s Business Week has a funny article (Sign Of An Apocalypse In Private Equity?) on the prospect of Microsoft being bought out and taken private. Many good points are made. For example, perhaps there’s more private value than public (my gut suspects there is).

  • Sam

    Just an average size deal these days.

  • Sam

    Just an above average size deal these days.

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