While I may be stating the obvious, hospitals and health systems are complex creatures that frequently drive local economies, culture and population health status (among other things). Accordingly, when considering a potential change of control transaction, it is critical that you examine what drives your organization and what [in the community] your organization drives. In particular, the latter is frequently overlooked in these circumstances.
What Drives Your Organization (Your Mission)
So, how do you begin to identify your organization’s priorities? I recommend starting with the low hanging fruit—the hospital’s mission. It is critical in the early stages of a … Continue Reading
Dale C. Van Demark
Not by much – but perhaps in a unique way.
The increased pace of hospital and health system merger activity we’ve seen in the marketplace has had little to do with the Patient Protection and Affordable Care Act (the “ACA”). Rather, broader market conditions, some of which are affected by the ACA, have been driving hospital market consolidation. The financial crisis, which negatively impacted many hospitals’ ability to raise capital or maintain their credit ratings, and the downturn in the broader economy, which resulted in fewer people seeking care, have created the primary incentive for hospital … Continue Reading
Every hospital merger has three critical components that board members and senior management need to consider, and which can provide a great analytic framework within which to evaluate options early in the process of consider a transaction. By no means are these three the most important in every transaction, but every hospital merger I’ve worked on required careful attention to, and a very clear understanding of, these components.
1. Structure: Transaction structure can seem a bit technical and legalistic, but understanding transaction structure is key to understanding core transaction dynamics – such as who will be financially responsible for long-term … Continue Reading