Under the Radar: Foreign Investments in Our Health Care

The debate over universal coverage vs. the marketplace rages on, but little attention has been paid to  foreign investment in our health care system. Investments and ownership range from physician practices, to hospital systems and now home health and hospice care through mergers and acquitions.

The O’Connorreport first reported on these foreign investments in 2014 with a little known fight that started at a hospital in Eugene, Oregon between the hospital, its hospitalists and Peace Health over Peace Health’s decision to contract with a private for profit company, Sound Health, for hospitalist services.  http://oconnorreport.com/2015/03/european-companies-financing-american-health-mergers-under-the-radar/

Sound Health is a private for-profit physician services organization of hospitalists and post-acute services based in Tacoma, Washington.

In July of 2014, Fresenius Medical Care, based in Germany, invested $600 million in Sound Health.  In November 2014, Sound Health purchased Cogent Health. Cogent Health is another provider of hospitalist and Intensivist physicians.  Reuters News Service estimated the sale price exceeded $375 million, with expected $250 million in sales in 2015.

Fresenius was the majority share holder of Sound Health in 2014 when the purchase occurred.  Other Sound Health strategic partners were Ascension and Dignity Health, two Catholic Health Systems.  TowerBrook Capital was also an investor.

Fresenius intended to “build a $5 billion care coordination business by 2020 to offer a wider range of care for the chronically ill as part of an initiative to almost double group sales to $28 billion by 2020”  according to Reuters.

Fresenius is the world’s largest integrated provider of kidney dialysis products and services for people with chronic kidney failure. It is the world’s leading provider of dialysis products.

On Another Front

In October, a Chinese billionaire whose fortune comes from online gambling purchased 12.9% of Community Health Systems shares for $31.9 million. CHS is a hospital chain of primarily rural hospitals and has been bleeding money and spinning off its least profitable hospitals. CHS is the largest provider of general hospital services in terms of acute care facilities.

In October, Almost Family acquired 80% ownership of Community Health Systems’  home health and hospice business for $128 million. When finalized this will make the joint venture the third largest Medicare provider for home health and hospice services in the country, according to HealthLeaders.

CHS Home Health operates 74 home health and 15 hospice branch locations in 22 states. When the deal is finalized, Almost Family will operate 340 branches across 26 states with annual net revenues expected to exceed $800 million.  These are all for-profit facilities.

The CHS stock lost nearly 50% last week.  The story of foreign investment in CHS will be interesting to follow.

While these investments may mean jobs for US health care workers, it also makes our health care companies beholden to foreign investors who have little to no stake in our health or delivery system other than making a return on their investment.

We must address the issue of foreign business investors making money from our health care system and having our health care dollars go overseas.

Kathleen O’Connor (c) October 30, 2016

Sources:

http://www.meddeviceonline.com/doc/fresenius-medical-care-acquires-cogent-healthcare-0001

http://www.beckershospitalreview.com/finance/chinese-billionaire-again-ups-stake-in-chs-this-time-for-9-55m.html

About Kathleen

Kathleen O’Connor: 30+ year health care consumer advocate, non-profit executive and author. For more information about Kathleen, please see "About" on the main content bar above.
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