Category Archives: Mergers & Acquisitions

Molina readies for ‘significant’ Medicaid member bump as more lose jobs

Posted on by • Posted in ACA, Coronavirus, Employer-Based Health Insurance, Health Insurance Coverage Adequacy, Health Insurance Industry, Medicaid, Medical Loss Ratio (MLR), Mergers & Acquisitions, Net Income, Undermining, Unemployment, Unemployment Insurance, Uninsured • Leave a comment

https://www.healthcaredive.com/news/molina-readies-for-significant-medicaid-member-bump-as-more-lose-jobs/577191/

Molina Healthcare's purchase of Medicaid managed care provider ...

Dive Brief:

  • Molina executives said it will likely experience a “significant” increase of Medicaid and exchange members as the pandemic continues to wash over the country and forces more out of work and job-based coverage, according to comments made during Friday’s first quarter earnings call.   
  • The company reaffirmed its 2020 earnings outlook with “enhanced confidence” given the “net-positive” effects likely to stem from the impact of novel coronavirus, as executives noted a steep decline in elective procedures and utilization very late in March and the limited impact COVID-19 has had on costs so far.
  • Overall for the first quarter, Molina beat Wall Street expectations on earnings per share and revenue which increased to $4.5 billion. Yet, it was only one of two managed care organizations to miss on medical loss ratio targets, which increased to 86.3% due to higher costs in its marketplace business. 

Dive Insight:

Another 3.8 million Americans filed for unemployment last week, bringing the total of out-of-work Americans to more than 30 million since the outbreak unfolded.

That presents an opportunity for insurers like Molina that are primarily positioned in Medicaid and Affordable Care Act exchange lines of business. Medicaid coverage is based on income and reserved for low-income Americans and the marketplace, or exchanges, tie coverage to income and financial help for those with incomes below a certain threshold.

Although its membership is likely to swell due to current economic conditions, Molina CEO Joe Zubretsky cautioned investors Friday by saying, “by how much we do not yet know.”

Zubretsky said Medicaid has proven it’s a stress-tested model that works in both robust economies and those in a recession.

So far, through April 27, 950 of Molina’s members have been hospitalized with COVID-19, a small fraction of Molina’s 3.4 million membership base. The average length of stay was about 10 days for these members, but they have not been able to assess the costs per episode yet, executives said Friday.

Its plans in Washington, California and Michigan were most affected. However, its Michigan plans have experienced the highest number of cases. 

By business line, Medicare members have experienced the highest percentage of COVID-19 diagnoses followed by Medicaid and marketplace members, in line with reports of the disease disproportionately affecting older Americans.

Molina also said it had entered into a definitive agreement to acquire Magellan Complete Care for $820 million in cash. The deal is expected to close in the first quarter of 2021. The deal gives Molina about 155,000 more members. Last year, Magellan generated more than $2.7 billion in revenue, according to Molina.

Magellan operates in six states, three of which would be new for Molina, including Arizona, Virginia and Massachusetts. 

 

 

 

 

Healthcare CFOs weigh-in on the challenges ahead

Posted on by • Posted in Capital Budget, Cash, Cash Reserves, Cash-Flow Improvements, CFO, Change, Change Management, Communication, Contact Tracing, Coronavirus, Cost Management, Cost Reduction, Crisis, Crisis Management, Cybersecurity, Economic Crisis, Economy, Employee Benefits, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Employee Protections, Leadership, Leadership Cares, Leadership Flexibility, Mergers & Acquisitions, Net Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Personal Protective Equipment (PPE), Quarantine, Recession, Remote Work, Sick Leave, Social Distancing, Supply Chain, Telemedicine, Uncertainty, Worker Protection • Leave a comment

https://www.pwc.com/us/en/library/covid-19/pwc-covid-19-cfo-pulse-survey.html

What CFOs think about the economic impact of COVID-19

How finance leaders see a return to work

Business perspectives on what it will take to shift from crisis mode are solidifying. US finance leaders are focused on shoring up financial positions, as US businesses head into a period of even more operational complexity while they orchestrate a safe return to the workplace. Back-to-work playbooks put workforce health first, as companies set course for a phased-in return to the workplace that will not be uniform across the US or internationally, findings from the survey show. Returning employees and customers are going to experience a work environment that will differ in marked ways as a result. Another change likely to endure post-crisis is the strong role corporate leaders have taken within their communities, placing a renewed emphasis on environmental, social and governance (ESG) efforts going forward.

The actions CFOs are taking show how US businesses continue to adjust to very difficult current conditions with an eye toward an evolving post-COVID world. The level of concern related to the crisis is holding steady. It is high but stabilizing, with 72% of respondents reporting that COVID-19 has the potential for “significant impact” to their business operations vs. 74% two weeks ago.

Key findings

Back-to-work playbooks reshape how jobs performed
49% say remote work is here to stay for some roles, as companies plan to alternate crews and reconfigure worksites.

Protecting people top of mind
77% plan to change safety measures like testing, while 50% expect higher demand for enhanced sick leave and other policy protections.

Substantive impacts expected in 2020 results
Half of all respondents (53%) are projecting a decline of at least 10% in company revenue and/or profit this year.

Cost pressures intensify
A third (32%) expect layoffs to occur, as CFOs continue to target costs, while 70% consider deferring or canceling planned investments.

Economic events shaping CFO response last week

This survey, our fourth since emergency lockdowns took effect in the US, reflects the views of 305 US finance leaders during the week of April 20. It was a week when oil futures traded below $0 as energy markets confronted downshifting global demand, Congress replenished emergency funding of $480 billion for small firms and healthcare systems, and everyone heard the call to get ready to go back to work as the US and Europe firmed up plans to ease quarantines.

Post-crisis world taking shape in plans to reboot the workplace

Health and safety are top priorities for leaders as they prepare to bring people back to on-site work. More than three-quarters (77%) are putting new safety measures in place, while others are taking steps to promote physical distancing, such as reconfiguring workspaces (65%). Findings also show where the virus may have longer-lasting impact on ways of working. Half (49%) of companies say they’re planning to make remote work a permanent option for roles that allow. That’s even higher (60%) among financial services organizations.

Takeaways

Among the small percentage of companies that are beginning to bring people back, returning to work will not mean a return to normal. Companies should consider how to help frontline managers lead with empathy, to communicate transparently and make decisions quickly so employees understand where they stand, have access to the resources available to them, and can share feedback to ensure they feel safe and get what they need. Tools such as workforce location tracking and contact tracing can help support employees with suspected or confirmed infections, while also helping to identify the level of risk exposure. Companies looking to make remote work a permanent option will need to enable leaders to manage a blended workforce of on-site and remote workers during the next 12 to 18 months.

Given that many people may be wary of returning to on-site work, there’s an opportunity for companies to create more targeted benefits to help make the transition easier. Paid sick leaves and worker protections, help with childcare, private transportation to and from work, or other benefits could help employees who may need extra flexibility or who want additional support as they prepare to come back.

Forecasting substantive impacts on 2020 performance

A majority of respondents (80%) continue to expect a decline in revenues and/or profits in 2020. Projections by sector vary, with consumer markets likely the hardest hit: one-third (32%) of CFOs expect a 25% or greater decline in revenues and/or profits this year, compared to 24% of respondents in all sectors.

Takeaways

Outlooks for financial results have held relatively steady in the survey over the last month, and are probably indicative of actual impact. Companies have had the time to evaluate the effects. CFO projections for declining revenue and profits coincide with a widening realization that the US economy is in recession. Since mid-March, jobless claims have soared past 26 million, and Congress passed relief packages of $2.5 trillion. CFOs are evaluating a wide range of scenarios that cover the health situation, the shape of the economic recovery, the spillover into the financial markets, and the resulting impacts on their business. This crisis is setting a new benchmark standard for “unknowable.”

Cost pressures intensifying

CFOs are considering additional ways to scale back on planned investment and/or other fixed costs amid volatility in demand. A third (32%) expect layoffs to occur in the next month, up from 26% two weeks ago. Protecting cash and liquidity positions is paramount. Financial impacts of COVID-19, including effects on liquidity and capital resources, remain the top concern of CFOs (71%). Over half (56%) say they are changing company financing plans, up from 46% two weeks ago.

Among other actions, 43% plan to adjust guidance, which is consistent with responses two weeks ago. This figure will likely increase as companies go through the earnings season over the next two to three weeks. Separately, 91% of respondents are planning to include a discussion of COVID-19 in external reporting. Depending on the type of company, this can mean inclusion in financial statements and/or in risk factors and MD&A results of operations, earnings release or MD&A liquidity sections.

Takeaways

Many CFOs have focused on how they can manage their cash pressures to ride out the crisis. Common approaches have included stop-gap measures, such as hiring freezes and tightening controls on discretionary costs to put an end to travel and events, or the use of contractors. Findings show that these types of cost actions are likely to continue, and they remain at the top of the CFO agenda.

Of those who say they’re considering deferring or canceling planned investments, 80% are considering facilities and general capital expenditures. At the same time, investment programs in areas that are considered important to future growth — including digital transformations, customer experience, or cybersecurity and privacy — are less likely to be targeted. CFOs will increasingly look for ways to prioritize costs in these areas, as businesses grow more confident in recovery prospects — even though current demand is subdued.

Priorities to de-risk supply chains

As companies continue to wade through mitigation efforts and start to think about recovery, many are planning changes to make their supply chains more resilient. Findings show CFOs prioritizing specific actions: 56% cite developing alternate options for sourcing, and 54% say better understanding the financial and operational health of their suppliers.

Takeaways

Findings confirm an emphasis on de-risking supply chains, as companies prioritize the health and reliability of their supplier base among changes they’re planning as a result of COVID-19. In particular, there is a focus on managing risk around supply elements, such as reducing structural vulnerability with other sourcing options.

Some companies are starting to invest in creating data-backed profiles of their supplier base so they know where and when to look for second sources. Others are increasing communication with suppliers to better understand financial health. For many, conducting deeper financial and health reviews of suppliers will become a regular part of their business reviews. Physical supply chain relocations will likely happen only as a last resort, given the costs involved. However, automation of certain elements of the supply chain — to eliminate time-consuming manual tracking efforts and check tariff structures, for example — will likely become more common as companies seek better data to make more informed decisions.

Strategies yet to change, but tech likely to drive M&A

The impact of the outbreak on mergers and acquisitions (M&A) strategies remains mixed. While 40% of respondents say their company’s M&A strategy is not being affected by COVID-19, compared with 34% two weeks ago, one in five say it’s too difficult to assess what changes, if any, will need to be made to strategy. CFOs within the technology, media and telecommunications industry stand out in particular. They are less likely to report decreasing appetite for M&A due to COVID-19, compared with peers in other sectors, and 55% say the crisis hasn’t changed their M&A strategy.

Takeaways

These findings highlight the fundamental strengths of the tech sector and suggest it will be among those driving M&A in the months ahead.  Tech giants, in particular, have large cash reserves. Moreover, demand for some tech products and services is strong as businesses return to work — 40% of CFOs say they will accelerate automation and new ways of working as they transition back. Additionally, technologies such as drones, artificial intelligence and robotics, will likely enjoy wider adoption in the post-COVID-19 environment. This leaves tech better-positioned to weather the pandemic’s economic fallout and to execute on inorganic growth strategies. M&A is likely to recover faster than the US economy, with tech among the cash and capital-rich sectors leading the charge. PwC studies show that a combination of factors has been driving a decoupling of deals from the broader economy.

Business recovery timeframes have extended

Organizations are realizing the business recovery from the impacts of the virus will take longer. The March measures of manufacturing and services activities show sharp drops. Demand is not only declining, it’s shifting. Moreover, even as some US states start to reopen, difficulties in setting up testing could keep some states in a holding pattern. As a result, for CFOs, the time required to return to “business as usual” the moment that COVID-19 ends continues to lengthen. Currently, 48% believe it will take at least three months to return to normal, up from 39% two weeks ago.

Takeaways

As reality sets in and companies understand the true impacts to their operations, CFO perceptions of the length of time to business recovery has extended. According to our analysis of how companies gauge their response to the crisis in PwC’s COVID-19 Navigator diagnostic tool, the expected impact of COVID-19 on businesses globally remains high, with consumer markets and manufacturing the most susceptible among industries. Put another way, businesses that are less reliant on a large, complex supply chain to deliver products, or are able to work relatively effectively while remote, are also likely to be among the least exposed.

Consumer-facing companies reconfigure physical sites as shutdowns start to lift

Companies in consumer-facing sectors continue to contend with both sides of the demand equation, as consumers sheltering in place focus single-mindedly on essential products to the exclusion of other offerings. Consumer markets (CM) CFOs are more likely to list a decrease in consumer confidence and spending as a top-three concern than they were two weeks ago (66% vs. 50%). For CM CFOs, consumer confidence trends translate almost directly to revenues, with 32% projecting an adverse impact on revenue and/or profit of at least 25% in 2020, compared with 24% of respondents across all industries.

In response, almost three-quarters of CM CFOs (73%) are considering deferring or canceling planned investments, targeting mostly general capital expenses, such as facilities. They also say technologies that can improve their understanding of changes in customer demand are a top-three priority as they plan changes to their supply chain strategies (41% vs. 30% for all sectors).

CM CFOs are planning workplace safety measures (86% vs. 77% for all sectors) and reconfiguring work sites to promote physical distancing as part of their transition back to on-site work (77% vs. 65% for all sectors). They recognize that consumers want the assurance of a safe physical environment above all else, especially because the majority of CM products and services require a physical component, despite the continuing shift to online.

Takeaways

Consumer-facing companies continue to be among the hardest hit, as the public health crisis keeps the majority of consumers confined to their homes for now. As they grapple with immediate challenges, CM companies are pulling back on capital investments. However, most are still planning to shore up their digital presence in response to accelerated online demand that could last well beyond the recovery period.

Health system pivots to new ways of working

What’s on the mind of financial leaders in the health industry? As they plan to bring more of their workforce back on-site, they are more likely than leaders in other industries to be leaning on technology to help them manage staffing uncertainties. Fifty-four percent of healthcare CFO respondents said they plan to accelerate automation and new ways of working, compared with an average of 40% across all industries.

Healthcare organizations are simultaneously solving two critical issues: uncertainty about demand and protecting their workforce. Health organization CFOs (70%) were more likely than executives from other industries (an average of 50%) to report that they expect higher demand for employee protections in the next month. Meanwhile, consumer anxiety over their own safety is driving up uncertainty about demand for healthcare and medical products. Forty-one percent of healthcare finance leaders listed tools to better understand customer demand as a top-three priority area when considering changes to their supply chain strategies, compared to 30% of financial leaders in all sectors. Fifty-one percent of healthcare finance leaders said they are making staffing changes as a result of slowed demand.

Takeaways

A survey conducted by PwC’s Health Research Institute in early April found that some consumers are delaying care and medications amid the pandemic. In this latest PwC survey of CFOs, healthcare leaders report uncertainty about how much of their business will return as the threat of the pandemic ebbs, making staffing decisions difficult.

As the nation continues to grapple with the pandemic, getting back to work is top of mind for US financial leaders overall, but this is an especially pressing issue for health leaders. They must plan for their own workforces, while dealing with an unfolding financial calamity — 81% expect their company’s revenue and/or profits to decline this year as a result of COVID-19. On par with other industries, they expect this decline, even though their organizations play central roles in addressing the human toll of the pandemic. One strategy is to use telehealth technology to virtually care for patients, thereby protecting patients and caregivers during the pandemic.

Financial firms see fewer layoffs, but slower recovery

Financial services (FS) CFOs are bracing for a longer road back to normal. About a third (35%) now think it could take six months to get back to business as usual, up sharply from 15% just two weeks ago. They’re also more optimistic about the bottom line. More than a quarter (27%) of FS survey respondents expect revenue and/or profits to fall by 10% or less. Across all industries, only 18% felt as confident.

Takeaways

Banks are playing a critical role in helping stabilize the economy, as they work on the front lines to distribute CARES Act provisions. Along with insurers and asset managers, they also rely heavily on workers with specialized technical and institutional knowledge. This may explain why FS CFOs expect fewer layoffs (15% vs. 32% overall) or furloughs (17% vs. 44% overall) over the next month. Now, they’re trying to focus on keeping workers healthy and safe.

Conversations are starting to shift toward when and how to transition back to physical offices. For some employees, work may look very different: More FS CFOs are considering making remote work a permanent option for roles that allow it (60% vs. 49% overall). To better protect their employees, they’re also looking to evaluate new tools to support workforce tracking and contact tracing (32% vs. 22% overall) as part of the return-to-work process.

Deeper insight into health of suppliers is top priority for industrial products

The industrial products (IP) sector is in full-throttle cost-cutting mode. Nearly all IP CFOs (96%) report considering cost containment measures, compared with 87% two weeks ago. Some of this comes in the form of layoffs: 49% of IP CFOs expect layoffs to occur vs. 36% two weeks ago. The longer the crisis lasts, the longer the impact on recovery times for their business. When asked how long it would take for their business to return to business as usual if the COVID-19 crisis were to end today, 15% of IP CFOs said less than one month, down from 25% two weeks ago.

Meanwhile, they’re closely examining challenged supply chains. When asked to list their top-three priority areas when planning changes to supply-chain strategies, 66% of IP CFOs identified understanding the financial and operational health of their suppliers, compared to 54% of CFOs across all industries. A majority (56%) also cited developing additional and alternate sourcing options as a priority. And the extent of the financial damage is sinking in: 65% of IP CFOs estimate 2020 revenues and/or profits will drop at least 10%.

Takeaways

IP CFOs are signaling they’re in the thick of the crisis, as they absorb historical lows in production, with March US industrial output plunging to levels not seen since the end of WWII. Continued cost actions are still in the cards.

IP finance leaders are looking ahead to get back to business, with some already bringing workers back on-site. Some are expecting changes to the workplace. Thirty-nine percent of IP CFOs are considering making remote work a permanent option for roles that allow, and 31% are considering accelerating automation and new ways of working. While these are still early days for US producers in returning to work, bringing millions of workers back into the fold may well usher in more change management than the industry now expects.

Tech, media and telecom well-positioned to power the recovery

Technology, media and telecommunications (TMT) companies are well-positioned for recovery from the initial blow of COVID-19. As they stabilize operations in response to the crisis, the percentage of TMT CFOs anticipating revenue and/or profit declines is down 19 percentage points from two weeks ago to 65%. The data suggest that TMT companies are preparing for a future in which virtual work options gain greater acceptance over traditional office settings. TMT companies are more likely to reduce their real estate footprint as they transition back to on-site work (38% compared to 26% for all sectors), and 55% say they’re planning to make remote work permanent for positions that allow.

Of those who said they’re considering deferring or canceling planned investments, TMT companies are less likely to reduce digital transformation investments (13%) than all sectors (22%). Their increased optimism about digital investment as they strategize for the future is further borne out by the data: Two weeks ago, of those who said they were deferring or canceling planned investment, TMT was on track to reduce digital investments at the same rate as other sectors (25%).

Takeaways

The resilience of TMT companies is evident in their approach to this crisis. Bolstered by robust liquidity, the majority of companies in the sector are looking ahead to a recovery they will power by using both organic growth and M&A. In the wake of a crisis that has accelerated more widespread virtual connectivity, look for new emerging-tech-enabled business models to take shape.

Where to focus next

COVID-19 has put businesses under enormous strain to drive new ways of working. When the pandemic began, many companies put their people’s health and safety at the center of their decision-making, and they appear to be doing the same as they prepare to ramp up business. With most firms expecting to bring people back on-site in phases, leaders will need to help employees adjust to a changed environment while still managing the well-being, engagement and productivity of all workers. Purpose-led communication will continue to be critical to keep people informed, and leaders should demonstrate empathy while helping employees adjust to what will likely be an extended transition period. 

 

 

Beaumont-Summa merger on pause as COVID-19 batters hospitals

Posted on by • Posted in Antitrust, Competition, Coronavirus, Crisis, Crisis Management, Employee Furlough, Employee Layoffs, Employee Pay Cuts, Health System, Hospital, Hospital Industry, Market Consolidation, Market Uncertainty, Mergers & Acquisitions, Strategy • Leave a comment

https://www.healthcaredive.com/news/beaumont-summa-merger-on-pause-as-covid-19-batters-hospitals/576535/

Dive Brief:

  • Michigan’s largest health system, Beaumont Health, is delaying its merger with Ohio-based Summa Health as the two continue to battle the coronavirus pandemic. “We didn’t plan this, but we are deferring that [the merger] until we have a little more clarity about the impact of this crisis,” Beaumont Health CEO John Fox said Wednesday.
  • Beaumont said it is temporarily laying off more than 2,400 employees, or nearly 7% of its workforce, as the pandemic has forced the system to halt inpatient and outpatient surgeries, cutting off an entire revenue stream. Among the job cuts, 450 positions have been permanently eliminated, while most of the other 2,400-plus positions involved administrative staff and others who are not directly caring for patients. Administrators have also said they’re taking pay cuts and Fox’s pay has been reduced by 70%.
  • The deal was recently approved by state and federal regulatory agencies, Summa Health told Healthcare Dive.

Dive Insight:

The deal is still on the table and the two are working on finalizing a path forward, Summa Health told Healthcare Dive.

“That said, the immediate priority is for both Summa and Beaumont to focus first and foremost on caring for our patients, employees, physicians and communities as we are impacted by the COVID-19 pandemic,” a spokesperson said.

The marriage between the two health systems is supposed to give Beaumont Health a foothold in Northeast Ohio, putting it in closer competition with Cleveland Clinic. In addition to its four hospitals, Summa also operates its own health plan, SummaCare, which provides coverage to 46,000 people.

Beaumont operates eight hospitals with 145 outpatient sites and has 38,000 employees.

Earlier this year, the two signed a definitive agreement and, together, Beaumont and Summa, are expected to create a $6.1 billion system in terms of total annual revenue with $4.7 billion from Beaumont and $1.4 billion from Summa.

However, the fallout from COVID-19 is likely to hamper those figures.

Beaumont reported a net loss of about $278 million during the first quarter of 2020, compared to about $408 million during the prior-year period. The system reported the virus only started affecting it in the last two weeks of March.

 

 

 

 

Billionaire Dr. Patrick Soon-Shiong buys California hospital for $135M

Posted on by • Posted in Bankruptcy, Hospital, Hospital Bailout, Hospital Bankruptcy, Hospital Industry, Mergers & Acquisitions • Leave a comment

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/billionaire-dr-patrick-soon-shiong-buys-california-hospital-for-135m.html?utm_medium=email

Not just the richest man in LA, he is also a humanitarian

Patrick Soon-Shiong, MD, the billionaire owner of the Los Angeles Times, has purchased a Los Angeles hospital out of bankruptcy for $135 million. 

Dr. Soon-Shiong acquired St. Vincent Medical Center in Los Angeles from El Segundo, Calif.-based Verity Health. Verity filed for Chapter 11 bankruptcy in 2018 and closed St. Vincent Medical Center in January. 

Under the purchase agreement, Dr. Soon-Shiong will take over the state of California’s lease obligations at St. Vincent. In March, the state used emergency COVID-19 funding to lease St. Vincent. The state reopened the facility, now called the Los Angeles Surge Hospital, through a partnership with Los Angeles County, Oakland, Calif.-based Kaiser Permanente and San Francisco-based Dignity Health.

Dr. Soon-Shiong will use other buildings on the St. Vincent campus to conduct COVID-19 research. 

“St. Vincent is Los Angeles’ oldest hospital with a storied history of innovation and caring for the poor,” Dr. Soon-Shiong said. “Through the acquisition of this closed campus, we can ensure an ongoing legacy of preparedness against viral threats such as COVID-19.”

St. Vincent is the second hospital Verity has sold this month. On April 9, the health system announced it would sell St. Francis Medical Center in Lynnwood, Calif., to Prime Healthcare Services, a for-profit hospital operator based in Ontario, Calif.

 

 

 

 

A landmark post-COVID physician group acquisition in California

Posted on by • Posted in Cash, Cash Reserves, Coronavirus, Financially Distressed, Health Insurance Industry, Market Consolidation, Market Power, Mergers & Acquisitions, Physician Independent Network (IPA), Physician Multispecialty Network, Physician Practice Management, Strategy • Leave a comment

https://mailchi.mp/39947afa50d2/the-weekly-gist-april-17-2020?e=d1e747d2d8

Brown & Toland Reviews | Glassdoor

Blue Shield of California announced last Friday that its healthcare services division, Altais, is acquiring Brown & Toland Physicians, a multispecialty network of 2,700 physicians serving 350,000 patients in the greater San Francisco Bay Area. Brown & Toland, formed in 1993, is a clinically-integrated network of independent physicians that has received much attention nationally for its risk-based contracting as both a Medicare Pioneer Accountable Care Organization, as well for its landmark contract to manage state workers and retirees in the California Public Employees’ Retirement System (CalPERS).

While few details of the deal have been released, Altais says it will provide Brown & Toland with both capital for growth, and a technology platform that includes practice management, analytics tools, telehealth and electronic health record assistance. Brown & Toland’s CEO, Kelly Robinson, said the partnership would enable the group to expand geographically.

While Blue Shield’s purchase of Brown & Toland is the first noteworthy payer acquisition of physician practices we’ve seen in the post-COVID era, it’s likely just the first of many to follow in coming months. As we reported last week, the majority of physician groups—especially smaller independent practices—are suffering significant financial strain, which will likely make groups of all sizes more open to partnership options.

Recent reports suggest that payers in particular may be weathering the economic shocks of the crisis relatively well. This week UnitedHealth Group (UHG) announced it exceeded Q1 earnings targets, and would maintain its pre-COVID earnings guidance for the year, citing savings from cancelled routine care and elective procedures. Should payers continue to fare well, it’s likely that UHG and other health plans could enjoy an advantage in deploying the capital necessary to roll up distressed physician practices.

 

 

 

 

Hospital M&A update: 6 latest deals

Posted on by • Posted in Bankruptcy, Chapter 11, Health System, Hospital, Hospital Bankruptcy, Hospital Closure, Hospital Industry, Market Consolidation, Market Power, Mergers & Acquisitions • Leave a comment

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/hospital-m-a-update-6-latest-deals.html?utm_medium=email

Looking at Hospital M&A Activity in the Value-Based Care World ...

Six transactions involving hospitals and health systems announced, finalized or advanced in the last month:

1. Bankrupt Verity Health to sell 384-bed hospital to Prime Healthcare Services
Bankrupt Verity Health System will sell its 384-bed hospital in Lynnwood, Calif., to for-profit hospital operator Prime Healthcare Services.

2. Kootenai Health acquires 2 hospitals from Essentia Health
Coeur d’Alene, Idaho-based Kootenai Health has acquired two hospitals from Duluth, Minn.-based Essentia Health.

3. West Virginia hospital on brink of closure secures buyer
A bankruptcy court has approved a $3.7 million bid for Williamson (W.Va.) Hospital. The new owner, Williamson Health & Wellness Center, will take over the facility on April 30.

4. Christus Health finalizes acquisition of AdventHealth’s 170-bed hospital
Christus Health has finalized its acquisition of Central Texas Medical Center, a 170-bed facility in San Marcos.

5. CarePoint Health reaches deal to sell New Jersey hospital
After months of uncertainty about a potential sale, Jersey City, N.J.-based CarePoint Health has agreed to sell one of its hospitals to Bayonne, N.J.-based BMC Hospital.

6. Penn Highlands Healthcare to absorb Pennsylvania hospital
Tyrone (Pa) Hospital plans to integrate with DuBois, Pa.-based Penn Highlands Healthcare, the two organizations announced March 18.

 

 

 

$40M sale of 2 California hospitals includes commitment to COVID-19 patient care

Posted on by • Posted in Bankruptcy, Chapter 11, Coronavirus, Crisis, Crisis Management, Health System, Hospital, Hospital Bed Shortage, Hospital Industry, Mergers & Acquisitions • Leave a comment

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/40m-sale-of-2-california-hospitals-includes-commitment-to-covid-19-patient-care.html?utm_medium=email

Verity Health gets $610 million offer for four hospitals

Verity Health Gets $610M Offer to Buy St. Vincent, St. Francis and ...

El Segundo, Calif.-based Verity Health has agreed to sell two California hospitals to AHMC Healthcare and is seeking an expedited review of the transaction, according to Bloomberg Law.

Verity, which entered Chapter 11 bankruptcy in 2018, filed a motion with the bankruptcy court March 29, seeking approval for the sale. Under the proposed transaction, Verity would sell Seton Medical Center in Daly City, Calif., and Seton Coastside in Moss Beach, Calif., to AHMC for $40 million. The agreement also includes a commitment by AHMC to continue to support the state’s efforts to address the COVID-19 pandemic.

The proposed deal comes after California Gov. Gavin Newson announced March 21 that the state will use $30 million in emergency funding to lease Seton Medical Center and St. Vincent Medical Center in Los Angeles, which Verity closed in January. The state is leasing the hospitals for three months to expand capacity for COVID-19 patients.

 

 

 

New York hospital to split with Ascension after 18 years

Posted on by • Posted in Health System, Hospital, Hospital Industry, Mergers & Acquisitions • Leave a comment

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/new-york-hospital-to-split-with-ascension-after-18-years.html?utm_medium=email

St. Mary's Healthcare announces it will return to being an ...

St. Mary’s Healthcare in Amsterdam, N.Y., is slated to become an independent hospital after 18 years as a member of St. Louis-based Ascension, according to The Daily Gazette.

There are several advantages to being a member of a large health system like Ascension, but being an independent hospital with a local board of directors is the best option for St. Mary’s Healthcare, CEO Vic Giulianelli told The Daily Gazette. He said the hospital could save millions from the split.

“When you belong to a system, there are system expenses, and upstate New York hospitals, like St. Mary’s, are among the least expensive in the country and that gets back to where we reside and to where we deliver care, and the cost here has to be lower, because the [Medicare and Medicaid] reimbursements here are not stellar,” Mr. Giulianelli told The Daily Gazette.

St. Mary’s joined Ascension in 2002. In 2015, the two organizations began exploring opportunities for St. Mary’s “to pursue a future apart from Ascension,” according to a March 25 news release.

“We believe this is the best approach for the individuals and communities St. Mary’s serves as well as for its dedicated and compassionate associates, providers and volunteers,” Ascension Executive Vice President and COO Craig Cordola said.

 

 

 

 

Geisinger, AtlantiCare sever merger

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https://www.beckershospitalreview.com/hospital-transactions-and-valuation/geisinger-atlanticare-sever-merger.html

HFMA: Mergers will significantly impact care delivery system ...

Danville, Pa.-based Geisinger and Atlantic City, N.J.-based AtlantiCare have reached an agreement to part ways, the two health systems announced March 31. 

AtlantiCare has been part of the Geisinger system since 2015, when the Danville, Pa.-based system acquired it.

The decision to separate comes after months of negotiations between the two parties after AtlantiCare voted to break away from Geisinger in September 2019.

In response to the September vote, Geisinger sued AtlantiCare in an attempt to stop the health system from leaving. In the lawsuit, Geisinger accused AtlantiCare of violating the signed merger agreement.

The merger agreement, signed in 2014, allowed AtlantiCare to terminate the merger within 10 years, but only if Geisinger became controlled by a for-profit organization or affiliated with a religious organization. Neither of those circumstances occurred, according to the lawsuit.

The lawsuit didn’t disclose the reason the New Jersey health system wanted to regain its independence.

However, now the two parties have reached a mutual agreement to go their separate ways. 

Geisinger has also agreed to drop the lawsuit.

“Throughout this process, both Geisinger and AtlantiCare have been guided by the desire to do what is best for the people and communities we serve in Pennsylvania and New Jersey. We believe this agreement best supports the long-term health and wellness of our communities and makes the best use of our nonprofit resources today and into the future. We remain committed to working together to ensure the continued delivery of high-quality healthcare services,” the two systems said in a joint statement.

The separation of the two organizations is expected to take six to 18 months. 

 

 

 

 

 

California hospital secures $20M to stave off closure

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https://www.beckershospitalreview.com/finance/california-hospital-secures-20m-to-stave-off-closure.html?utm_medium=email

Image result for seton medical center daly city

The San Mateo County (Calif.) Board of Supervisors voted March 10 to allocate $5 million annually over the next four years to keep Seton Medical Center in Daly City, Calif., open, according to Bay City News.

The county supervisors voted 4-1 to give $20 million in funding to the company that buys the hospital from El Segundo, Calif.-based Verity Health. The funding package will come with conditions, including that the purchaser must keep the hospital open and fully functional.

Verity entered Chapter 11 bankruptcy in August 2018. In January, the health system closed St. Vincent Medical Center, a 366-bed hospital in Los Angeles, after a deal to sell four of its hospitals fell through. The system had been planning to close Seton Medical Center as soon as this week, according to the report.

There are currently two companies bidding to purchase the hospital in Daly City and Seton Coastside in Moss Beach, Calif. The funding will help ensure Seton Medical Center, which sees roughly 27,000 patients per year, keeps its doors open.