Imagine you’re buying a house.
The current owner is a ruthless real estate tycoon who never loses money on a deal. He suddenly puts up a for-sale sign and says he needs it gone immediately.
That’s your first warning sign.
Then a professional flipper shows up. Spends six months inspecting everything. The foundation. The plumbing. The roof. Then, they quietly pack up and disappear without making an offer.
That’s your second warning sign.
Knowing all that, a third buyer swoops in. The local government. They pay 10% more than the asking price.
That’s the OU Health transaction.
The Players
October 2016: HCA Healthcare announces it’s selling OU Medical Center, Children’s Hospital, and Presbyterian Tower in Oklahoma City. HCA is the heavyweight champion of for-profit healthcare. They don’t sell because they feel charitable. They sell when the math stops working.
March 2017: SSM Health, a sophisticated nonprofit system, walks away after six months of forensic due diligence. No lowball offer. No negotiation. They just left.
February 2018: The University Hospitals Authority closes the deal at $825 million.
The Price Mystery
The Oklahoma Supreme Court approved a $750 million purchase in December 2017. Two months later, the deal closed at $825 million.
A $75 million jump with no documented amended petition. No record of the court reviewing the new price. It just happened.
The Aftermath
Today, OU Health carries $1.5 billion in debt. Moody’s downgraded them to B3 in 2023. Junk status. A recent upgrade to B1 is still junk status. Still speculative grade. Still, the worst room in the junk house.
The operating model has completely transformed. The new business model is maximizing every government transfer payment and federal loophole to cover losses. 340B revenue. Medicaid supplemental payments. Direct state appropriations.
In FY 2024, the legislature pumped in another $96 million.
The Pattern
This isn’t just Oklahoma. The University of Michigan acquired Sparrow Health. Banner Health has been buying community hospitals in Arizona. Vanderbilt restructured in Tennessee. The same playbook is running in Ohio, Indiana, North Carolina, Texas, and California.
Take a taxpaying business.
Turn it into a tax-exempt entity.
Hope you can make the math work by chasing government subsidies.
The Bottom Line
When HCA owned that hospital, if they lost money, shareholders took the hit.
A CEO didn’t get a bonus.
Now with $1.5 billion in debt and junk credit rating, the taxpayer is the final backstop. If that hospital needs another $100 million to make payroll, it comes out of your pocket.
You are now the insurance policy for a business that the smartest people in the room didn’t want to touch.
The next time you see a headline about the state “saving” a hospital, look at the price tag.
Follow the money.
-Rojas out.
