Vanguard Health Systems
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THE DMC/ VANGUARD ACQUISITION
By Steven Malik Shelton
The Blackstone Group is a private equity firm that acquired a majority equity stake in Vanguard Health Systems with a $1.75 billion dollar investment in 2004.
According to Josh Kosman, business reporter for the New York Post, private equity firms purchase businesses through leveraged buy-outs in which the majority of the money for the acquisition comes from loading the purchased company down with debt. Kosman states that Vanguard actually borrowed the money to fund its buyout by the Blackstone Group, and “for the year ending June 30, 2008, Vanguard spent 122 million on debt payments which contribute to a 4 million dollar loss from continuing operations. If something doesn’t change, Vanguard may not be able to pay its interest and certainly won’t be able to pay its principle, which is due in September of 2011.” 1
But according to a recent article in The New York Times, (October 28, 2010) Blackstone is improving its investment portfolio by aggressively refinancing the debt of companies under its management. “More than 50 percent of the debt carried by Blackstone companies has either been refinanced at a lower cost or modified with better terms.” 2 (“Debt Fuels Private Equity Revival,” by Peter Lattman and Michael J. de la Merced. Accessible online at www.nytimes.com/2010/10/29/business/29blackstone.html)
According to a study that appeared in the Canadian Medical Association Journal, investor-owned hospitals have almost 20% higher charges than non-profit hospitals. The researchers although based in Canada, conducted their study based on data from hospitals located throughout the United States.
Dr. Steffie Woolhandler, says that for-profit hospitals show a tendency to charge higher prices for inferior care, and to skimp on nurses while spending lavishly
THE DMC/ VANGUARD ACQUISITION
By Steven Malik Shelton
The Blackstone Group is a private equity firm that acquired a majority equity stake in Vanguard Health Systems with a $1.75 billion dollar investment in 2004.
According to Josh Kosman, business reporter for the New York Post, private equity firms purchase businesses through leveraged buy-outs in which the majority of the money for the acquisition comes from loading the purchased company down with debt. Kosman states that Vanguard actually borrowed the money to fund its buyout by the Blackstone Group, and “for the year ending June 30, 2008, Vanguard spent 122 million on debt payments which contribute to a 4 million dollar loss from continuing operations. If something doesn’t change, Vanguard may not be able to pay its interest and certainly won’t be able to pay its principle, which is due in September of 2011.” 1
But according to a recent article in The New York Times, (October 28, 2010) Blackstone is improving its investment portfolio by aggressively refinancing the debt of companies under its management. “More than 50 percent of the debt carried by Blackstone companies has either been refinanced at a lower cost or modified with better terms.” 2 (“Debt Fuels Private Equity Revival,” by Peter Lattman and Michael J. de la Merced. Accessible online at www.nytimes.com/2010/10/29/business/29blackstone.html)
According to a study that appeared in the Canadian Medical Association Journal, investor-owned hospitals have almost 20% higher charges than non-profit hospitals. The researchers although based in Canada, conducted their study based on data from hospitals located throughout the United States.
Dr. Steffie Woolhandler, says that for-profit hospitals show a tendency to charge higher prices for inferior care, and to skimp on nurses while spending lavishly