Buying or selling a hospital is unlike any other type of business transaction, with an unparalleled amount of regulatory oversight and legal complexity. There are Medicare and Medicaid ramifications, multiple licenses (hospital, lab, pharmacy, etc.), provider numbers, payor and physician contracts to review, unique building and safety codes and hazardous equipment (e.g. nuclear medicine). Frequently, there are antitrust implications, and the Federal Trade Commission must approve the transaction. If the hospital is governmental or non-profit, the state attorney general might be involved.
This list does not include the many laws and regulations specific to health care, such as HIPAA, the Stark law on self-referrals and the federal Anti-Kickback Statute. There is likewise a risk of Medicare audits extending years into the future – and payments made years earlier that might be recaptured, if billing errors are identified.
Despite the complexity of the transaction, the hospital cannot miss a heartbeat. Business must go on as usual, 24 hours a day, 7 days a week, without a lapse in access, services, operations, or financing.
Baker Donelson's Health Law Department has experience with health system and hospital transactions that few law firms can match, with more than 200 sales and acquisitions completed in 15 different states. We have worked on transactions large and small, representing both for-profit and nonprofit hospitals, public and private, as buyers and sellers. We've handled transactions involving acute care hospitals, behavioral hospitals, rehabilitation hospitals and others. We’ve helped buyers secure bank financing, worked on private equity and venture capital deals, and handled joint ventures between and among physicians for profit and non-profit partners.
Our approach is unique – from the very beginning of each transaction, we focus not just on the deal itself but the client’s objectives. Is price the prevailing consideration, or is it picking the right partner? Are continuing covenants involved? Are the covenants significant and extraordinary, or usual and customary? With the client's objectives in mind, Baker Donelson can focus on adding value, in quantifiable ways, and not merely on documenting the deal.
Hospital transactions involve both art and science. Baker Donelson attorneys serve as long-term counsel to hospitals and health systems: We know what an extraordinary change a sale represents to employees, physicians, patients and communities. Lives – and livelihoods – are at stakeWe also have the sensitivity required to work on delicate transactions, such as the sale of a community-based, publicly-owned hospital to a for-profit entity, where the stakes and emotions are high. The hospital is a vital community asset, a pillar of the community, perhaps the largest employer in town. Its sale affects virtually everyone. And the process is even more complicated, with independent valuations and Requests for Proposals and oversight by state and local officials. A communications plan is essential. An experienced communicator is invaluable.
With intense pressure on the entire health care industry for cost efficiencies, the surge among hospitals and health systems to consolidate is expected to continue and even accelerate. We excel in representing clients in complex situations and transactions. We have been there before, and our experience is evident.