Monday, July 12, 2010

Carlyle Group & GTCR Golder Rauner Shop for Health Insurers

Bloomberg reported:

Private-equity firms Carlyle Group and GTCR Golder Rauner LLC are looking to buy medical insurers, made newly attractive by a surge of customers expected from the U.S. health-care overhaul.

Experts say private equity underwriters (PEU's) are interested in companies providing coverage for the poor via state Medicaid programs. The federal government foots 65 to 70 cents, while states kick in the rest.

PEU's have a rich history of buying companies in areas Uncle Sam is ready to spend. The Carlyle Group and GTCR Golder Rauner have a history of dealing affiliates. One had deadly outcomes. Political connections kept Carlyle and GTCR's good name out of any investigations.

Bloomberg cited Tom Scully, for-profiteer par excellence with PEU Welsh, Carson, Anderson & Stowe (WCAS). WCAS and Carlyle announced the sale of MultiPlan, a huge preferred provider organization. Carlyle lauded its tripling of its investment. They didn't say how much the $3.1 billion sale would add to America's health care costs.

Carlyle sees medical insurers as “an attractive investment opportunity,” said Karen Bechtel, the managing director who heads the company’s health-care team. Carlyle “will likely continue to make investments in this sector.”

The article mentioned Medicaid insurer AmeriGroup. Did you know a noted health economist, who wrote numerous pieces for the NY Times, stands to win financially from the health reform bill? Dr. Uwe Reinhardt sits on the board of AmeriGroup. Uwe controls over 160,000 shares of common stock, restricted stock and stock options. Dr. Stuart Altman is on the board of health insurer Aveta. The aforementioned Tom Scully is on the board of Universal American, a health insurer.

Health reform is designed to profit privates. PEU's designed the bill. That they're betting on the reset, also known as Peter Orszag's "political economy of delayed implementation," should be no surprise.

Update 5-20-11:  GTCR founder Bruce Rauner called U.S. government policies “anti-business” and “unpredictable.” He said they have prevented the market from regaining stability.  If GTCR lands a health insurer, Rauner will count on the government to send clients.

Update 12-11-11:  Texas health plans do well off state and federal HMOs.