Bad Times Means Good Time to Enter Healthcare Debt Market

The economy is weakening. The nation’s uninsured population is growing. And some heavyweight debt buyers who once saw healthcare debt as having the most growth potential are backing away from the market.

So why does Adam Holzhauer think it’s a good time to buy healthcare debt?

Because the economy is declining, the uninsured population is growing and some buyers are exiting the market.

“The economy is in a weak position and there will be spillover into the medical field,” Holzhauer told insideARM. “Although margins have increased over the last four to five years, there will be cash pressures on hospitals.”

Holzhauer announced last week the formation of his new debt purchasing company, Master Ventures. The San Antonio, Texas-based firm will focus on buying aged receivables from small- and medium-size hospitals facing closure and those in or facing bankruptcy. It also will seek out portfolios that include patient accounts that have been outsourced to third party collection agencies, non-transferred accounts to new computer systems and in house self-pay accounts.

“It’s a good opportunity,” said Holzhauer, the sole owner of Master Ventures. “Several people vacated the space which is going to put pressure on pricing to come down.”

Holzhauer has more than 40 years experience in healthcare, including work as a hospital controller and administer and as co-founder of several health care companies. He is an American College of Health Care Executives Fellow and most recently he was senior vice president of Premium Asset Recovery Corporation, which specialized in the purchase of hospital aged accounts receivables. The company is an affiliate firm of Asset Acceptance Corporation.

Holzhauer said he’s looking forward to calling the shots again. “I’m more comfortable in an entrepreneurial small company environment.”

Holzhauer said he will tap private investors to help him purchase some portfolios. And he has selected a few collection agencies to handle the paper he buys.

“I’ll reevaluate to see if it makes sense to bring it back in house. But I’m not anticipating that for a year or two,” he said.

Nonetheless, Holzhauer said he will be selective about the portfolios he buys. “You have to be able to really understand the dynamics and service. Those things dictate the pricing and how to service the paper,” he said.