Thursday, April 15, 2010

Add HCA & Community Health Systems to Arthur Jensen's List

CCA Board Chair Arthur Jensen's world of business needs updating. When Network came out in 1976, HCA was a fledgling for-profit hospital company, trying to do for hospitals what Holiday Inn did for lodging. Community Health Systems (CHS) didn't exist.

In several profit-gasm iterations, HCA went private, then public. HCA's current owner is KKR, a private equity underwriter (PEU). KKR is planning HCA's fourth independent public offering (IPO). This comes after borrowing to pay $1.75 billion in dividends to PEU investors, mostly KKR.

CHS purchased Triad Hospitals, financing the deal with debt. The two buyouts added over $2 billion in interest expense to America's expensive health care system.

How influential are America's for-profit hospitals? A parade of politicians pandered at their annual trade gathering. None mentioned the cost of special dividends, management fees or interest expense. HHS Secretary Sebelius said:

Hospitals know the cost of delaying health reform, and “your leaders have seen the connection between quality and cost,” she observed. She also thanked the FAH and its members for being advocates for fixing the health system, adding that the FAH has “great credibility” when speaking out for health reform.

The man with great credibility is Chip Kahn, FAH's CEO. Chip created the Harry & Louise ads that destroyed health reform in the 90's. Partnering with the devil is a fractal in Obama's health reform, modeled after the Massachusetts experiment.

After three years under the Massachusetts system, Caritas Christi Health System will join Chip's camp. The largest Catholic nonprofit community hospital system in New England will sell out to hell hound Cerberus Capital Management. Chip will add heavy hitters, John Snow & Dan Quayle, to his dark political stable. Other PEU's see health reform as a windfall.

Should they do a remake of Network, add HCA, CHS and PEU's to the AT&T's and Exxon's. The Carlyle Group would not be mentioned in an effort to keep their good name. Arthur Jensen's prescient speech notes the movement of dollars through corporations in a country-less world. Anything else is theater for the masses.

P.S. The parade of pandering politicians included HHS Secretary Kathleen Sebelius, Sen. Bob Corker (R-TN), House Majority Leader Steny Hoyer (D-MD), Sen. Ben Nelson (D-NE) and Sen. Evan Bayh (D-IN)

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