Friday, December 10, 2010

Hospital For-Profiteering & Jeb's Windfall

CNBC reported on Community Health System's takeover bid for Tenet Healthcare.  Tenet snubbed the offer, while their stock soared 53%.

Red Jeb Bush's holdings rose to $1.44 million, while Blue Bob Kerrey's topped $1.38 million.  Both serve on the board of Tenet.

Tenet believes the $6 a share offers is inadequate.  In their "Dear Wayne letter," Tenet cites the value of $1 billion in net operating loss carry forward and an expected $320 million federal payment under the HITECH Act.

A CNBC guest expects more buyout activity on the nonprofit hospital side.  PPACA's three year wait for widely expanded coverage should stress safety net hospitals, enabling for-profiteers to buy them on the cheap. 

Should CHS succeed in buying Tenet at the offer price, corporate debt would soar to $15 billion.  Two prior buyouts, CHS-Triad and KKR-HCA,  added over $2 billion in interest expense to America's health care costs.

PPACA sets the table for more greed in health care.  Extrinsic motivators do severe damage to an intrinsically noteworthy mission of healing.  Ignore the curious history of John Ellis Bush at Lehman Private Equity and his appointment to the Tenet Board.  The decade of mean and greedy leaders is far from over.

Update 1-21-11:  Tenet adopted a "poison pill" strategy to defend against the CHS takeover.  Tenet's NOL carryforward somehow doubled to $2 billion.  Note the bad taste in the poison pill defense, given Tenet's 35 patient deaths in Memorial Medical Center after Hurricane Katrina.  While W. sat on his hands, patients suffered terribly, none of which made the White House Lessons Learned report.  Tenet did lobby the Executive Office of the President on corporate governance changes.  The next new board member added was Jeb Bush.

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