The proposed acquisitions of large not-for-profit systems in Boston and Detroit by for-profit organizations could provide stiffer competition for hospitals and smaller systems that remain independent and ultimately spur more deals, according to Moody's Investors Service.
Boston, Detroit deals may spur others: Moody's
The credit-rating agency said the pending acquisitions of Caritas Christi Health Care, Boston, and Detroit Medical Center by Cerberus Capital Management and Vanguard Health Systems, respectively, signal a push by investor-owned entities into markets previously dominated by not-for-profit providers. The operating environment of flat volume and declining reimbursements also favor strategies that boost economies of scale, further enticing large players to get even larger, Moody's said.
As these two systems and others gain access to capital from deals with for-profits, they will be tougher competitors for not-for-profits that don't have the same capital access, Moody's said. That pressure, in turn, could increase deals between not-for-profits.
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