Nearly one year ago, the nation's largest Catholic health system said it would buy Catholic hospitals with private-equity backing.

That joint venture, between Ascension Health and Oak Hill Capital Partners, has yet to name its first acquisition, but the partners have already planned for the private-equity firm's eventual exit.

Whether Ascension and Oak Hill take the company public or sell, Ascension Health will remain an owner to ensure the joint venture's Catholic hospitals remain Catholic indefinitely.

“The Catholics take perpetuity very seriously,” Harry Eichelberger, a principal with Oak Hill Capital, said in Miami this month at a conference on not-for-profit hospital capital that featured speakers from private-equity hospital operators.

Private-equity healthcare deals in recent years have included a string of hospital acquisitions, and investors have said more deals will follow. But with an influx of private equity comes the inevitable exit of those very same investors, often within three to seven years. And those investors seek to leave with healthy profits, raising concerns that whatever profit they take could come at the expense of companies they own.

Recent deals have included stipulations by regulators or not-for-profit dealmakers that seek to set conditions on hospital operations long after transactions close.

In Boston, the sale of the Catholic Caritas Christi Health System to Cerberus Capital Management in November 2010 required the private-equity buyers to hold onto the system for at least three years.

Terms of the $895 million deal prohibit Cerberus from an initial public offering, sale or closure of the system or any hospital for three years, said James Karam, former board chairman for Caritas Christi, now Steward Healthcare Care System. Karam said the stipulation was intended to protect the health system from private-equity buyers who would rapidly exit the investment and the public outcry that would follow.

David Spackman, formerly director of the division of public charities for the Massachusetts attorney general, said regulators and the public question how private equity can deliver a return on distressed hospitals without service cuts or layoffs. “People won't invest without a return.” Spackman is now counsel with McDermott Will & Emery, which hosted the conference where Oak Hill's Eichelberger was a speaker.

Regulators seek to protect access and jobs with stipulations on the deal, Spackman said, and the Massachusetts attorney general required Cerberus to invest $1 million for an independent study of how the private-equity deal affected healthcare costs, treatment patterns and consumer choice. “We did not want to approve the transaction and lose the opportunity to learn from it,” he said.

Cerberus proposed a business model that would boost community hospital margins and lower overall healthcare spending by stemming the flow of patients to more costly teaching hospitals for care that could be received closer to home, Spackman said. Whether the private-equity owned health system can deliver remains unclear, he said.

Jeffrey Villwock, a managing director at Genesis Capital, an investment bank, said the capital-starved hospital sector presents an opportunity for private equity, though he believes the sector will disappoint investors.

Private equity may seek to grow hospital market share by investing capital to expand services in ways that competing hospitals that lack capital cannot match, Villwock said. But return on that investment “will be less than hoped,” he said, because of pressure to curb hospital spending during the next five to seven years.

Villwock said he sees a healthy appetite from private-equity funds for hospitals, which face significant capital demands and have limited margins to support investment. “Therefore the Cerberuses of the world become interested.”

Ralph de la Torre, president and CEO of Steward Health Care, said Cerberus' Boston-based health system will look for deals outside Massachusetts after swiftly acquiring four hospitals in its home state during its first year.

Oak Hill Capital's joint venture with Ascension will seek to invest in four or five markets, Eichelberger said.

Leo Brideau, chief executive of the joint venture, said in October that officials would enter into deals with hospitals or systems that already have sufficient market share or where markets could be consolidated for clout.

Addressing a meeting of the Association for Corporate Growth in New York last week, Brideau said small and midsized hospitals will find it increasingly difficult to remain independent as healthcare financing shifts away from payment tied to volume and toward payment tied to managing population health. Many healthcare executives say they will survive the financial strain of the transition with strategies to gain market share, he said. “Not everybody is going to make it up on market share.”

Hospitals need capital to meet demands as the industry undergoes transition—a market dynamic Eichelberger said private-equity firms find attractive. Oak Hill Capital agreed to invest $400 million and Ascension pledged another $100 million toward deals, he said.

In the event the partners find new buyers for the for-profit Catholic system or decide to take the company public, Ascension will hold onto 5% of the company, Eichelberger said. That will ensure Catholic hospitals have a Catholic sponsor.

Falcon Investors, the private-equity owner of MetroSouth Medical Center in Blue Island, Ill., acquired MetroSouth Medical Center, formerly St. Francis Hospital & Health Center, which was owned by SSM Health Care, a not-for-profit Catholic health system that was moving to close the money-losing hospital.

David Reis, Falcon's CEO, said he looked for another Illinois hospital operator—not another private-equity firm—as a potential buyer. Falcon agreed in December to sell MetroSouth Medical Center for a profit to Community Health Systems, a for-profit hospital chain based in Franklin, Tenn., that owns eight Illinois hospitals.

Hospitals require expertise that private-equity firms lack and hospital operators will reinvest in ways more short-term investors will not, he said. “I think there are easier ways for private equity to try to earn a profit” than a stand-alone hospital.

Reis, who has experience with nursing homes and continuing-care communities, said Falcon Investors relied on a hospital turnaround company to operate MetroSouth.

Reis said he plunged into hospital ownership after another buyer for St. Francis backed out. Falcon benefited from due diligence conducted by a prior suitor, he said. Turnaround efforts for MetroSouth benefited from the closure of Michael Reese Hospital in Chicago, which allowed MetroSouth to expand services, he said.

Only after he owned the hospital did he realize how complicated it would be to operate, and he would not try it again unless presented with similar circumstances, Reis said. “Some beds are more complicated to run than others,” he said. “Hospital beds are the most complicated to run.”