IRVINE, Calif., June 21, 2021 (GLOBE NEWSWIRE) — The urgent race to stave off the coronavirus and its host of insidious variants has dominated the news cycle for the last 18 months. However, there is another, lesser-discussed aspect of the battle against COVID-19 that is not part of the mainstream conversation, but has certainly not escaped the notice private equity company Plutos Sama Holdings, Inc.: the healthcare landscape is rife with attractive investment opportunities.
“The financial burden of the pandemic on the health care system has been tremendous,” commented a spokesperson from Plutos Sama Holdings Inc., which takes control positions in domestic and international distressed and contentious residential and commercial real estate ventures, micro-lending, securitizations, law firms, restaurants, mortgage servicing platforms, and eSports. “The loss of revenues has led to salary reductions, loss of benefits, layoffs, and furloughs. What’s more, over the past decade growing number of health care organizations such as hospitals, urgent care facilities, clinics, primary care practices, and secondary care practices have relied on private equity — which puts them at a higher risk of downstream bankruptcy. This presents an attractive opportunity for investors that can facilitate a rational, structured, and ultimately profitable reorganization or consolidation.”
While the pandemic has accelerated and exacerbated the cash crunch woes that many health care organizations are facing, it is not the only factor. According to Plutos Sama Holdings Inc., other reasons why organizations are struggling to stay afloat include: increasing administration costs, the constant need for re-investment, and the shift to in-home care.
With respect to increasing administration costs: for decades, policymakers, analysts, practitioners and patients alike have been calling for increased competition in the health care space as a way to facilitate more efficient — and ultimately cheaper —operations. However, while there has been some limited progress on the competition front in recent years, this has not necessarily translated into bottom-line savings for a tedious and predictable reason: chronic administrative complexity and systemic waste. In fact, administrative costs now account for a staggering 34.2 percent of all U.S. healthcare expenditures — prompting David U. Himmelstein, MD, a professor at the City University of New York School of Public Health at Hunter College, to comment that “much of the money that patients, employers and the government in the U.S. are spending for health care is wasted on bureaucracy that adds no value.”
“People outside of the healthcare space and many members of the general public fail to appreciate that health care organizations face large, ongoing overhead costs,” commented a spokesperson from Plutos Sama Holdings Inc. “And despite various efforts and investments, the inability to control these skyrocketing costs severely drains capital reserves — if there are any — and can threaten organizational survival. Investors who come to the table with ample cash-in-hand, and who have the resources, competence, leadership, relationships and capacity to turn things around, can potentially earn an attractive ROI within a few years. And the prospect of keeping an important and valuable health care organization in the community afloat is also appealing, because it means more support and services to local patients who might otherwise have to travel much farther, and at greater expense and inconvenience.”
Regarding the constant need for re-investment: while organizations in all sectors are under pressure to continuously acquire and upgrade technologies, tools, systems and personnel, this expectation is much more pronounced in the healthcare space — because failing to stay on the leading-edge can result in a mass exodus of patients to other providers, and extreme difficulty attracting new ones.
“Investing in something like a new Electronic Health Record system can easily exceed $200,000,” commented a spokesperson from Plutos Sama Holdings Inc. “And many physicians and clinics have used private equity funding to purchase rather than rent their medical building, which offers the potential for long-term equity growth, tax incentives, and greater control over services offered and building use. Without an infusion of capital, some of these entities are going to have an increasingly difficult time not paying for current investments, and adopting new ones.”
And as for the shift to in-home care: a growing number of seniors are choosing to receive in-home care vs. stay in an assisted living facility; especially since many nursing homes are deteriorating due to a chronic lack of upgrades and investments.
“The pandemic laid bare that many nursing homes are in dire need of improvements in infrastructure, staffing, oversight and accountability,” commented a spokesperson from Plutos Sama Holdings Inc. “And while the mass distribution of vaccines is having a markedly positive impact in facilities across the country, at the height of the pandemic’s second wave in November and December of 2020, nursing homes were experiencing record-breaking cases and deaths. In order to recover from this and return to profitability, some facilities are going to need a significant and rapid infusion of capital — which is where investors enter the picture.”
While all of these factors bode well for investors targeting distressed assets, it is nevertheless vital to conduct due diligence, and not rush into any acquisitions that may look attractive on the surface but are financial nightmares underneath.
“This is very exciting time and speed is of the essence, because competition for distressed assets is fierce,” commented a spokesperson from Plutos Sama Holdings Inc. “But the need to conduct solid research and perform due diligence remains intact. Investors who neglect these fundamentals do so at their peril. Frankly, they will have nobody but themselves to blame if things go bad, and anticipated profits turn into alarming losses. There is no substitute for experience and expertise.”
About Plutos Sama Holdings, Inc.
Plutos Sama Holdings, Inc. is a private equity company in the business of taking control positions in domestic and international distressed and contentious residential and commercial real estate ventures, micro-lending, securitizations, law firms, restaurants, mortgage servicing platforms, and eSports. For more information, visit www.plutosholdings.com.
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