1) Genesis HealthCare bankruptcy report puts PE under the microscope
Read: Healthcare Dive; Private equity owners led to Genesis HealthCare’s bankruptcy
PPS take: This one really gets me going. Basically, this PE group bought tons of SNFs at high leverage and essentially stripped them of equity, leaving them with immense debt and formerly owned property leases. Good for their investors. Bad for the SNFs, their patients, and their healthcare workers. The end result: bankruptcy. I’m not saying all PE is bad for healthcare, but there can be competing goals that impact doctors and patients alike. For physicians tied to PE backed practices, this story isn’t purely academic. This can happen to you.
Do this now:
- For employed doctors, maintain an emergency fund of at least 9-12 months and foster back up employment plans
- For practice owners, diversify payer mix and maintain 90-day cash runway
- For those relying on referrals from PE backed healthcare, diversify your referral base
- And for those looking to sell to PE, vet your buyers very carefully
2) Mortgage rates hover near a 10-month low
Read: Fortune; 30-year mortgage rate holds steady at lowest level in nearly 10 months
PPS take: Yes, this is an attractive headline. However, not a ton has actually happened. Mortgage rates remain in the mid 6%’s and are currently stable over the past couple of months. Certainly that’s better than increasing. But, even if the Fed cuts interest rates, fears of inflation could leave mortgage rates at this level or higher. So, if you are considering buying a new home/practice or refinancing your current one, continue to tread cautiously.
Do this now:
- Get at least 2–3 rate quotes (include a physician-mortgage lender)
- Ask about no-PMI options and rate locks with float-down clauses (in unexpected event rates do drop)
- If refinancing, model how many months it would take to break-even (closing costs ÷ monthly savings) to see if it makes sense or it’s better to stand pat
3) Markets jump as Powell signals rate cuts may be near
Read: Investopedia; Market wrap after Jackson Hole
PPS take: It’s always funny to me how investors and the market as a whole try to read the tea leaves. Last Friday, I randomly checked my phone and saw that the S&P500 was up like 1.5%, a pretty big jump. Anytime I see extreme gains or drops in the market I’m always curious why. In this case, it was a speech from the Fed chair in which lower interest rate expectations buoyed stocks. For physicians, that means 2 things: near-term portfolio tailwinds (assuming a healthy stock allocation) for cash-like instruments. I wouldn’t make any short term adjustments to your portfolio from this but it serves as a good reminder of some solid financial principles.
Do this now:
- Rebalance your asset allocation at least yearly or when >5% from target allocation
- Keep 6–12 months of practice/personal reserves in high-yield cash. If you plan to invest them in bonds or CDs, consider doing that ahead of cuts
- If you hold rate-sensitive debt, keep your eyes out for opportunities to refinance to lower rates (see article above)
4) Big-box earnings hint at tariff-driven price pressure ahead
Read: ABC News; What did earnings from Walmart, Target reveal about tariff-driven price hikes?
PPS take: Yikes. Although not totally unexpected. Big retail stores are signaling rising costs as tariffed inventory rolls in. Basically, they have to pay more so we have to pay more. There was some hope that companies wouldn’t pass on the cost hike to consumers based on pressure from Washington, but that doesn’t seem to be happening. That means rising prices at home, but also at work, where the margin can be much thinner.
Do this now:
- Audit practice spending on essentials and non-essentials (supplies, disposables, PPE, snacks/amenities)
- Negotiate terms with vendors (bulk buys, longer price holds)
- Build a 3–6 month consumables buffer for critical items if storage allows
- And if you are employed, focus on tracking your RVUs/collectibles to justify compensation in preparation for any proposed MD/DO income cuts
- As a practice owner, I also encourage you to have frank conversations with employees who may be feeling the pressure of rising costs
Bonus) A Tweet from the Week!
