Saturday, August 28, 2010

McDonald's of Health Care

Two stories, one political and one business, dealt with comparisons of health care companies to McDonald's. Rick Scott, Republican candidate for governor of Florida, once wanted Columbia/HCA to be the McDonald's of healthcare. Scott pushed the ethics envelope, leaving his CEO slot under the harsh light of improper billing. Columbia/HCA paid over $1.7 billion in fines.

The second story involves Priory Group, a UK rehab and mental health provider. RBS is ready to exit Priory. Bidders for the firm include The Carlyle Group, Bain Capital, KKR, Cinven, Advent International, and Blackstone Group. RBS could fetch $1.55 billion for Priory. Deal Flow Media reported:

One critic even goes so far as to accuse the Priory Group of operating its businesses 'like a McDonald's restaurant' and condemned its 'cynical' commercial drive to sell therapy to the mass market."
Rest assured private equity underwriters (PEU's) will study high margin diagnoses/procedures, replicating them for public consumption. However, they excel at mining government pocketbooks through a combination of purchased influence and strategic acquisitions.

If Rick Scott had to be on the ballot in any state, Florida fits. Former Governor Jeb Bush fined Tenet Healthcare for improper financial arrangements. Jeb later joined Tenet's Board of Directors, a high paying position. Tenet, like Rick Scott, has a history of unethical behavior. Together they could be viewed as the McDonald's of milking payors.

Jeb Bush did issue a statement on Rick Scott's surprise win:

“Yesterday, Floridians selected the Republican candidates who will carry forward the message of limited government, fiscal responsibility and personal freedom. Floridians are looking for strong leaders and responsible solutions and I am confident our party can meet this challenge. I congratulate Rick Scott and the Republican candidates who are answering the call to public service. We must now unite and work together for victory in November.”

It's a mad, mad world. Does Priory treat greediness or white collar crime? Should Carlyle win, would they give Rick or Jeb a discount on treatment?