May 9, 2018
Investors are increasingly interested in micro hospitals and other specialty facilities like psychiatric hospitals because of their ability to offer lower cost, patient-centric care that is more highly-tailored to the applicable populations’ needs, according to panelists at McGuireWoods 15th Annual Healthcare and Life Sciences Private Equity and Finance Conference.
Experts on the panel included Sam Cappellanti, president of Bellwether Group, and Jeffrey Peterson, partner at McGuireWoods LLP. Rex Burgdorfer, vice president with Juniper Advisory moderated the panel.
The panelists agreed that micro-hospitals, in particular, can play a critical role in areas that can’t support a full-sized/full-service hospital. Moreover, they also can serve as a backup to community hospitals in other areas, and when part of a larger healthcare system, they can serve as a portal into the healthcare system for patients who are in danger of becoming even sicker.
Notably, much of the recent investment activity in the specialized hospital arena has involved partnerships and joint ventures between specialty operators, health systems, REITs, and private equity funds. For example, private equity-backed Emerus partnered Dignity Health and Baylor Scott & White Health, while REITs have jumped into these deals to defray some of the initial capital costs.
In response to the surge in micro-hospitals, CMS issued guidance in late 2017 on the statutory definition of “hospital” and whether a hospital is “primarily engaged” in providing inpatient services. According to the panelists, this guidance could impact the growth of micro-hospitals and specialty facilities.
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