Mergers and Acquisitions

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1. Higher Jurisdictional Thresholds For HSR Filings

On January 22, 2024, the Federal Trade Commission announced revised, higher thresholds for premerger filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The jurisdictional thresholds are revised annually, based on the change in Gross National Product (GNP).Continue Reading Higher Jurisdictional and Filing Fees Thresholds for HSR Act Premerger Notifications and Interlocking Directorates Announced

Starting January 1, 2024, healthcare facilities and provider organizations engaging in certain transactions in Illinois, such as mergers and acquisitions, will have new reporting requirements. Illinois recently joined a growing number of states, including California and New York, in requiring expanded oversight and transparency of transactions involving healthcare facilities and provider organizations. Illinois’ Public Act 103-0526 (the “Act”), enacted in August 2023, amends the Illinois Antitrust Act, the State Finance Act and the Illinois Health Facilities Planning Act to increase oversight by the Illinois Attorney General’s (the “IL AG”) of certain “covered transactions” for healthcare facilities and provider organizations.Continue Reading Illinois Proposes Heightened Oversight for Healthcare Transactions

At HLTH 2023, we saw a focus on certain themes, including the shift in investments and M&A activity, hospital and health system innovation and transformation, the implementation of AI, and healthcare management. Below are our top 10 takeaways from what we heard, and did not hear, at HLTH 2023.Continue Reading Sheppard Mullin’s Top 10 Takeaways from HLTH 2023

The FTC announced today a notice of proposed rulemaking (“NPRM”)[1] proposing extensive revisions to both the rules that implement the Hart-Scott-Rodino Antitrust Improvements Act (the “Act” or “HSR Act”), and the Premerger Notification and Report Form (the “Form”) that merging parties must submit under the Act. The NPRM would also implement the Merger Filing Fee Modernization Act of 2022. Continue Reading Notice of Proposed Rulemaking: FTC Proposes to Redesign and Dramatically Expand the Scope of the HSR Act Filing Process

California has a new regulatory review process that could have implications for healthcare mergers and acquisitions and similar transactions in the state. By way of background, after nearly two years of negotiations with state legislators, Governor Gavin Newsom signed into law healthcare omnibus bill SB 184 on June 30, 2022, which created the new Office of Health Care Affordability (OHCA). With this new law and state agency, California joins several other states, including Massachusetts, New Jersey, Oregon, Washington and Nevada in implementing oversight and funding measures geared towards healthcare cost growth targets and containment. While the goal of the law appears to be clear – monitoring and managing the costs of healthcare in California – healthcare industry stakeholders seeking to carry out applicable transactions will now need to be mindful of OHCA’s regulatory review authority.Continue Reading California Office of Health Care Affordability: Another Regulatory Hurdle for California Healthcare M&A Transactions?

In its December Hospital Flash Report, Kaufman Hall identified and reviewed the continued, negative impact of COVID-19 on hospital operating margins. After a dramatic drop in hospital margins during the height of the pandemic in 2020 and early 2021, hospitals experienced a fluctuation of decreasing and increasing margins in the latter-half of the year. Overall, hospital margins remain significantly narrower than they were in 2019, before the pandemic. As a result, the industry may see an increase in hospital transactions in 2022 to offset the operational and financial hardships that continue to burden the health care system, as described in greater detail below.
Continue Reading COVID-19 Impacts and Outcomes on Hospital Margins in 2021: Increased Activity in Hospital Transactions in 2022?

The American Hospital Association (“AHA”) recently released a report that concludes that hospital acquisitions result in better care for patients at lowers costs. The study described in the report consisted of structured interviews with the leaders of about 20 hospital systems and an econometric analysis of hospital acquisitions.
Continue Reading The AHA Reports Economic Benefits Associated with Increased Hospital Consolidation

Since 2014, there has been a steady increase in mergers and acquisitions in the Rehabilitation sector, with a total of 40 deals announced in 2016.  This is almost double the number of deals in 2014 (a total of 21), and includes deals with both publicly traded corporations as well as privately held acquirers.  Similarly, after seeing a sharp decline in M&A activity in 2015, the home health and hospice sectors saw an increase of 12% in M&A activity in 2016 with a total of 57 deals announced, including several deals involving private equity investors.
Continue Reading Merger and Acquisition Activity in the Rehabilitation, Home Health and Hospice Sectors Increased in 2016, But Will this Trend Continue?

The ancient Chinese curse – “May you live in interesting times” – certainly springs to mind these days.  What does the election of Donald Trump mean for the healthcare industry, the Affordable Care Act (ACA) and current healthcare market trends?  Let’s take a quick look at the likely effects of the election, but first let’s set the stage:

Background Data:

  • Per a July 2016 federal Department of Health and Human Services study, it is estimated that 18% of 2016 personal income in aggregate will be spent on healthcare, with 5% of the population accounting for nearly half of the estimated $3.3 trillion 2016 healthcare spending and 50% of the population spending less than $3,000 each.
  • The healthcare cost reduction effect of the Great Recession has dissipated, with an anticipated healthcare cost increase of over 5% per year projected through 2025. The economic drag on the U.S. economy of healthcare spending has returned to almost pre-recession levels, and accountable care organization (ACO) savings to date have been relatively nominal.
  • Once aged in, Medicare will have over 70 million Baby Boomer generation seniors to care for…and with rising life expectancy comes greater lifetime healthcare costs.
  • The United States will have a shortfall of doctors before 2025, with a significant primary care shortfall expected, a significant shortage of doctors available who accept Medicaid and the U.S. ranked as the 24th of 28 countries by the number of doctors per thousand people among the Organization for Economic Development countries.
  • 20 million people were afforded insurance under ACA programs, including over 9 – 11 million (varies depending on source studies) in 2016 through the insurance exchanges and the remainder through Medicaid expansion in 32 states (as of September 2016).
  • Approximately 73 million Americans were covered by Medicaid or CHIP. Federal subsidies for Medicaid expansion are to trend downwards to 90% by 2020.  A growing number of states are moving toward managed Medicaid programs in an effort to contain costs that, in some instances, previously threatened to bankrupt state budgets in the absence of further tax increases.

Continue Reading “May You Live in Interesting Times” – Some Healthcare Predictions for the Trump Administration’s First Year

In almost all corporate transactions, the first piece of written documentation the parties exchange and execute (after a non-disclosure agreement) is a letter of intent or term sheet (“LOI”), which is intended to summarize the main deal points. And as many corporate transactions involve entities organized in Delaware, these documents often select Delaware as the governing law.
Continue Reading When Is a Non-Binding Term Sheet or Letter of Intent Enforced as a Binding Contract?