625 625 Hospital M& A numbers Hospital M& A numbers From - - PDF document

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_________________________

Alternatives to a Merger or Acquisition

_________________________ _________________________

Alternatives to a Merger or Acquisition

_________________________

Dan Mulholland, J.D. Steve Rivkin Steven Tringale

“The ACA will accelerate hospital mergers, Moody’s says”

– Modern Healthcare

“The ACA has unleashed a merger frenzy”

– Former FTC deputy director

“The ACA will accelerate hospital mergers, Moody’s says”

– Modern Healthcare

“The ACA has unleashed a merger frenzy”

– Former FTC deputy director

625 625

• The total number of hospital

merger and acquisition transactions from 2003-2012, according to The Health Care M&A Report

• The total number of hospital

merger and acquisition transactions from 2003-2012, according to The Health Care M&A Report

Hospital M& A numbers Hospital M& A numbers

• From 2007 thru 2012, according to

the Foundation for American Hospitals, there were:

• 432 mergers and acquisitions,
• Involving 835 hospitals
• From 2007 thru 2012, according to

the Foundation for American Hospitals, there were:

• 432 mergers and acquisitions,
• Involving 835 hospitals

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% of Hospitals in Systems % of Hospitals in Systems

2000:

52%

2012:

61%

Source: AHA Hospital Statistics

2000:

52%

2012:

61%

Source: AHA Hospital Statistics

• - New York Times, Sept. 17, 2014

“Lots of hospitals are looking across the street at other hospitals merging. They also feel like they have to merge too, or else they’ll become insignificant or left out of health plan networks. Especially the smaller community hospitals feel they need larger scale to continue to be stable, to serve, or be financially viable.” “Lots of hospitals are looking across the street at other hospitals merging. They also feel like they have to merge too, or else they’ll become insignificant or left out of health plan networks. Especially the smaller community hospitals feel they need larger scale to continue to be stable, to serve, or be financially viable.”

• - Alexis James Gilman, deputy

assistant director, Mergers Division, Federal Trade Commission

Mergers Carry Major Risks Mergers Carry Major Risks

• The industry is littered with deals

gone bad

• Two-thirds of deals do not meet

expectations, according to a 2012 report from PricewaterhouseCoopers

• The industry is littered with deals

gone bad

• Two-thirds of deals do not meet

expectations, according to a 2012 report from PricewaterhouseCoopers

Why? Why?

• Inadequate due diligence
• Culture clashes
• Overpaying
• Excessive debt
• Loss of key employees
• Extended integration period
• Inadequate due diligence
• Culture clashes
• Overpaying
• Excessive debt
• Loss of key employees
• Extended integration period

_________________________

Alternatives?

_________________________ _________________________

Alternatives?

_________________________

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Affiliations Alliances Coalitions Collaborations JVs Partnerships

and…

Independence Affiliations Alliances Coalitions Collaborations JVs Partnerships

and…

Independence

“Hospital Alliances On the Rise.” “Hospital Alliances On the Rise.”

• They build population health

management capabilities

• Maintain the independence of members
• Provide vehicles for increasing

physician engagement

• They build population health

management capabilities

• Maintain the independence of members
• Provide vehicles for increasing

physician engagement

A Regional Alliance (Sept. 2013)

www.AllSpireHealthPartners.org

Founding Initiatives Founding Initiatives

• Group purchasing/sourcing and

distribution

• Population health management
• Sharing best clinical practices
• Information technology
• Group purchasing/sourcing and

distribution

• Population health management
• Sharing best clinical practices
• Information technology

Florida Times-Union, Jacksonville, FL

“ ” “ ”

• “Our systems serve contiguous areas, yet
• perate in distinct markets. We see this

as an opportunity to protect and strengthen what we’ve each always done, while positioning ourselves to thrive in the future as a network of locally- governed organizations.”

• “Our systems serve contiguous areas, yet
• perate in distinct markets. We see this

as an opportunity to protect and strengthen what we’ve each always done, while positioning ourselves to thrive in the future as a network of locally- governed organizations.”

4 PA Mountain Care Netw ork PA Mountain Care Netw ork

• 3 small hospitals: Clarion Hospital, Indiana

Regional, Punxsutawney Area Hospital

• Combined: 2,200 employees; 200 doctors;

$220 million net patient revenue

• Will keep individual identities and operate

under shared corporate umbrella

• Will collaborate on cost reductions and

service improvements

• 3 small hospitals: Clarion Hospital, Indiana

Regional, Punxsutawney Area Hospital

• Combined: 2,200 employees; 200 doctors;

$220 million net patient revenue

• Will keep individual identities and operate

under shared corporate umbrella

• Will collaborate on cost reductions and

service improvements

“Some of the biggest names in health care delivery are putting their brand names on systems far afield from their main campuses.” “Some of the biggest names in health care delivery are putting their brand names on systems far afield from their main campuses.”

February 25, 2013 9 members in its “Physician Network,” started in 2005. 23 affiliates with its heart, neuroscience, neurosurgery, transplant, TeleStroke and oncology service lines, according to news reports.

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