These hospitals are in trouble, the Wall Street Journal reports.
Local governments have less tax revenue coming in because of hard economic times, and more patients lack health-insurance coverage. Meantime costs keep rising, and many hospitals have debt to service. And looking forward to the next several years, all hospitals will be prodded by health-care overhaul legislation to make investments in electronic medical records and other health IT systems, and to better coordinate increasingly complex care. That’s tough to do without economies of scale.As a result, many governments are selling or forging partnerships with for-profit entities to offload their public hospitals. James Burgdorfer, a partner with investment banker Juniper Advisory, tells the Journal that most public systems won't be around in two decades because health-care is too complex for local politicians. “By the nature of their small size, their independence and their political entanglements, they are poorly equipped to survive.”
Ownership of hospitals in general is changing -- 25 purchases or mergers, involving 53 hospitals, totaling $3.1 billion in the first half of this year alone. Nonprofit hospitals are also takeover targets; private companies are betting on the industry, assuming that health-care overhaul will eventually yield more paying, insured customers.
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