Why healthcare investors should consider teaching hospitals

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Nov. 26 2019, Updated 10:36 p.m. ET

Consider teaching hospitals

An overview of teaching hospitals can help you predict future trends in hospital industry workforce management and, finally, the companies’ overall expenses.

According to the American Hospital Association (the AHA), in 2007, there were about 1,007 teaching hospitals in the U.S. Most of these teaching hospitals were either non-profit or Church-owned.

According to the AHA’s 2007 data, there are 102 for-profit teaching hospitals and 596 not-for-profit hospitals. Teaching hospitals also provide specialized services such as burn care, neonatal intensive care, heart transplant services, and other services that aren’t easily available in non-teaching hospitals.

Need for new teaching hospitals

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With factors like an aging population and an increase in chronic diseases in the U.S. at play, the Association of American Medical Centers has projected a shortage by 1,30,000 physicians by 2025. The implementation of coverage provisions through the Patient Protection and Affordable Care Act (or ACA) will increase the insured patient population, leading to further shortages of 35,000 physicians in 2025. These shortages will drive up physician salaries, affecting hospitals’ final profits.

The expanding teaching hospital industry

For-profit hospital systems have the necessary capital to invest in future workforce development for the hospital industry. So there’s a trend of for-profit hospitals actively consolidating with teaching hospitals or opening their own medical teaching centers.

HCA Holdings (HCA) has planned a major expansion of its medical residency programs in coordination with the University of South Florida’s medical school.

Tenet Healthcare Corp. (THC) has five teaching hospitals in its network. It plans to add a teaching hospital in El Paso, Texas.

LifePoint Hospitals, Inc. (LPNT), Universal Health Services (UHS), and Community Health Systems (CYH) also include teaching hospitals in their networks.

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