Thursday, April 8, 2010

PEU Barbarians to Knock Down Health Care Wall

Private equity underwriters (PEU's) crashed through the health care gate with their purchase of U.S. Oncology, LifeCare Hospitals, ManorCare, HCA and MultiPlan. They borrowed heavily to finance buyouts and in HCA's case to fund dividend payments to owners.

Salivating over 30% annual returns under health reform, PEU's bolstered their top talent. Reuters reported:

Global private equity firm The Carlyle Group said it has hired Robert Essner, former chief executive of pharmaceutical company Wyeth, as a senior adviser to its Global Healthcare group.

Essner, who was CEO at Wyeth for about seven years, retired in 2008 before the company's takeover by drugmaker Pfizer Inc.

Former Procter & Gamble Co Chief Executive A.G. Lafley joined private equity firm Clayton, Dubilier & Rice as a special partner

Having tasted the nectar of health care profits, PEU's see a bonanza under health reform.

"We see a range of opportunities in the U.S. and globally for private capital to help strengthen and improve the efficiency and effectiveness of the healthcare sector," Essner said in a statement.

Who will benefit from financial barbarians implementing their misdeeds in health care? Not clinicians, not the patient. It's on their back PEU's will generate their engorged returns.

Update: The Blackstone Group added a pharma specialist to its health care team.