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Practices: Mergers and Acquisitions (Healthcare)

Asset purchases and sales in the healthcare industry are among the most complex of all business transactions. There are intricate regulatory approval, governance issues and financing concerns whether the deal involves for-profit and not-for-profit healthcare facilities. The widely varying business models and competitive concerns of single hospitals, multi-hospital systems, physician practices, surgery centers, imaging centers and long-term care providers require special documentation and structuring of an acquisition, merger or divestiture. If you have management responsibility for a healthcare entity involved in any aspect of a business combination, you can turn with confidence to Ungaretti & Harris and know that the deal will be done right and your fiduciary responsibilities will be properly carried out.

Transactional Experience

In transactions valued at less than $100 to over $1 billion, buyers and sellers of healthcare operations rely on our experience to handle the financing, tax, regulatory and employment issues involved. Healthcare provider organizations in Illinois and the Midwest have turned to us as counsel of a wide range of business combinations, including:

The sale of a not-for-profit hospital to a for-profit health system, liquidation of the hospital and formation of a liquidating trust to resolve remaining liability claims.
The sale of a secular not-for-profit community hospital to a Catholic-sponsored health system with more than 100 healthcare facilities.
The national acquisition and divestiture program of a developer of senior care and senior living facilities.
The acquisition, by a private equity fund focused solely on the healthcare industry, of multiple medical device and services companies in North American and European transactions valued at well over $1 billion.
The $785 million sale, by our private equity fund client, of a medical device manufacturer and its seven separate businesses to a Canadian pharmaceutical company.

Comprehensive Services

Whether as buyer or seller, your healthcare organization receives comprehensive services in any transaction that we handle for you. Our lawyers work with senior administrators and boards of directors in every step of the transaction process, drawing on the firm’s full resources to:

Provide strategic planning.
Design the acquisition vehicle’s legal structure.
Select and retain investment bankers or other financing sources.
Evaluate labor, employment and benefit issues.
Resolve licensing and certification concerns.
Manage real estate and environmental matters.
Coordinate taxation and tax-exemption considerations.
Address questions of religious sponsorship.
Assess and resolve any antitrust problems.

Regulatory Approval

Healthcare merger, acquisition and divestiture transactions can take several months to a year for completion. Particular complexity arises in the sale of not-for-profit institutions to for-profit ones. Numerous health systems have relied on our excellent working relationships with the regulatory authorities for completion of all the necessary steps:

Secure state Attorney General approval.
Set up a non-profit foundation to fund community healthcare programs with assets not directly involved in the transaction or otherwise used to settle liability claims.
Address regulatory concerns of the state facilities planning board.
Guide the hospital board in resolving third party claims.
Work with the purchaser to resolve issues ranging from environmental and real estate concerns to employment.
Address licensure certification and provider number issues.
Work through debt-related restrictions imposed under the seller’s and purchaser’s financing documents.

Tax Exemption

If you are a not-for-profit healthcare provider, preservation of your 501(c)(3) tax exemption is crucial in any business combination that you undertake. If state taxing authorities seek to use a merger or acquisition as an opportunity to reassess property and sales tax exemption, our insight into the exemption process can often help us ensure continuity of your tax exempt status.

Practical Help

Many firms advise on corporate mergers and acquisitions; but for your transaction to be truly successful you need a firm that understands the health care industry. Our practical experience with business combinations of all sizes, and the fiduciary and regulatory concerns they involve, means that the details of your transaction will be handled efficiently and effectively. You get to focus on the real importance of your transaction – better serving your patients.