Performing due diligence can seem like a “check the boxes” exercise as organizations verify material facts, gain a clear view of the risks involved, and more. But there is strategic value in due diligence, especially in identifying the impact of the transaction on existing partnerships and relationships. Such insight empowers post-transaction planning and sets the […]
Twelve years after launching the retail health insurgency with the purchase of the start-up MinuteClinic, CVS Health is upping the ante. In the biggest deal of 2017, CVS Health acquired Aetna in December. At this point, all predictions about how this merger will impact hospitals and health systems are conjecture. However, hospital leaders would be […]
Hospital M&A deals continue at a rapid pace. Evaluating a prospective deal requires a more detailed process of transaction due diligence than ever before, as tightening reimbursement and pressures to lower costs mean decreasing margins for error in decision making.
When a healthcare organization is considering an acquisition, there are two imperatives: It should know both the fair market value (FMV) of the target organization (the value to a hypothetical buyer) and its investment value (the value to a particular buyer), and it should understand the difference between these values. An acquirer should carefully […]
Daniel M. Grauman discusses the importance of an independence assessment amongst merger activity.
Consolidation among healthcare providers has continued at a significant rate over the last decade. In 2005, 45% (2,220) of acute, non-federal community hospitals were independent; by 2015, the figure had fallen to 34% (1,677)[1]. Factors driving this consolidation have been well articulated and thoroughly examined, and include financial distress, competitive pressures, the challenges of success […]
Acquiring physician practices may be the key for hospitals and health systems to strengthen market position.
Having a well-known brand name can provide negotiating leverage and enhance an organization’s reputation for physician and staff recruitment.
Although the Bipartisan Budget Act of 2015 made hospital-physician joint ventures less financially attractive, those arrangements could still be strategically smart. Michael Rovinsky discusses the benefits of hospital-physician joint ventures.
Once a letter of intent (“LOI”) is executed for the acquisition of a community hospital or health system, a due diligence process that assesses all aspects of the target organization will ensue. A key component of the due diligence process is developing a deep understanding of the likely future financial performance of both the organization […]