News-Home

The Looming Deadline: Repayment of COVID-19 AAP Loans

CMS’ Accelerated and Advance Payment (AAP) Program has been a lifeline for healthcare providers during the COVID-19 pandemic which loaned hospitals and others $100B.  Repayment of these loans begins August 1, 2020 – compounding the financial stress for many hospitals still grappling with the pandemic response.

In Waller’s latest episode of their podcast PointByPoint, Jordan Shields, a Managing Director with Juniper Advisory, joins Denise Burke, a partner in Waller’s healthcare compliance and operations group who advises hospitals and other healthcare clients across the country, to discuss the legal, financial and strategic implications for hospitals that received AAP loans.

Listen or read the transcript here. 

 

 

Evaluating Opportunities for Government-Sponsored Hospitals

Government hospitals have been increasingly active in mergers and acquisitions in recent years, particularly as regional markets have further consolidated and investor-owned systems’ development streaks have waned. For some government health systems, this means growing their footprint in the region they serve. For others, it means assessing their long-term sustainability as a government-sponsored entity and seeking a private partner.

As pressures compound on the healthcare industry, including the ongoing stress of the COVID-19 pandemic recovery, elected officials and healthcare administrators will continue to weigh the advantages and drawbacks of government hospitals.

Read more. 

Dealmaking in the Sunlight: Navigating Public Hospital M&A

Public hospitals have a uniquely open relationship to the communities they serve, which invites a level of transparency as they consider potential mergers and acquisitions. So what kind of M&A deal activity options are out there for public hospitals dealing with financial pressures, and how can parties navigate regulatory, financial and public opinion to get the deal done?

In this episode of Collaborative Transformation podcast series, Rex Burgdorfer, managing director at Juniper Advisory, joins McDermott Will & Emery partner Megan Rooney to discuss:

  • The major trends driving public hospital M&A
  • How M&A can strengthen hospitals financially and the regulatory and external challenges contributing to financial pressures
  • Unique regulatory and financial challenges faced by public hospitals
  • Benefits of privatization in the hospital industry
  • The role public sentiment can play in public hospital transactions

Listen to the podcast. 

Assessing Hospital Preparedness for COVID-19 by Affiliation Status

Overview

System hospitals tend to have more ICU beds, higher case mix indices and are more likely to be a part of physician integration networks compared to like-sized standalone hospitals. These attributes are particularly important findings during the COVID-19 pandemic, where ICU beds are at a premium; experience managing complex cases is essential; and the ability to care for patients in appropriate settings is of utmost importance.

We reached these conclusions by analyzing CMS Medicare Cost Report data, the most comprehensive set of financial and clinical data available for comparisons of U.S. hospitals. We used this data set to create regression models which can be found here. These regressions allow us to assess the impact of independence on ICU beds, CMI and ACO/CIN membership. We performed this analysis on a subset of all hospitals, namely those with 80 or fewer ICU beds. Intuitively, facilities with more than 80 ICU beds tend to be ‘hub’ facilities and there are almost no independent hospitals with greater than 80 ICU beds. Further, by excluding these ‘hub’ facilities, we review a data set where both system and standalone hospitals are well distributed and lower the

Provider Realignment Post-Pandemic

The COVID-19 crisis exposed the high cost of fragmentation within the healthcare industry and will serve as the seminal event that ushers in an era of greater provider integration and concentration. COVID-19 will accelerate U.S. healthcare’s transformation toward a future characterized by the blurring of traditional lines between care delivery and financing. There will be no going back to the industry as it existed, only a going through to a stronger, more hardened, and, in some cases and in some geographies, a materially scaled healthcare system.

Three phases are anticipated as the industry moves forward:

  • A turbulent restart through the remainder of 2020, marked by initially sluggish M&A activity as at-risk providers seek the shelter of cautious buyers.
  • A shake-out will follow over the next couple of years, characterized by strong regional systems, insurers, and private equity-backed disruptors seizing the opportunity to drive performance and efficiency through scale.
  • In a final phase, rise of the titans, national mega-systems will emerge, dwarfing today’s largest systems. These behemoths will compete directly with scaled, non-traditional, ambulatory-centric networks (e.g., integrated insurance companies) a marketplace that no longer adheres to traditional delivery vs. financing distinctions. These organizations will

COVID-19 Impact on Healthcare M&A

The COVID-19 pandemic has upended our nation and our healthcare delivery system. The extreme pressure being put on hospitals during this crisis will permanently change the way healthcare is sought and provided. In addition to the sweeping changes we can expect in clinical standards and care delivery models, we will also see changes in how hospitals approach partnerships. Following are seven observations on the impact the pandemic will have on the healthcare merger and acquisition market:

  • We are entering a buyers’ market. Hospitals and health systems are experiencing financial strain during the pandemic. The loss of revenue from non-urgent procedures along with the increase in supply and workforce costs is dramatic. The burden is being felt most acutely by hospitals that were near or in financial distress pre-pandemic. Stressed hospitals are already seeking infusions of cash and other support to keep their doors open. In the aggregate, there will be more sellers than buyers in the market post-pandemic. As a result, sellers will need to be more flexible as the composition of transaction consideration will change. Hospitals that seek relationships with academic medical centers should also be aware of the anticipated

Are Hospitals Prepared for a Recession?

News coverage of a possible economic recession flared late this summer with a yield curve inversion, a bond market phenomenon that is historically associated with a financial downturn. The curve came with a 3% drop in the Dow and S&P. Healthcare-related stocks took an even larger fall. The Federal Reserve’s interest rate cut failed to immediately bolster the market.

While economists can’t precisely pinpoint the start of the next recession, this market volatility should serve as a wake-up call to vulnerable healthcare organizations. As we saw during the Great Recession (Dec. 2007- June 2009), an economic downturn can be particularly harmful to standalone and government hospitals and health systems currently eking out the slimmest of margins. Hospitals should be preparing now to absorb the financial impact of a recession.

The hospital business is highly subject to consumer utilization patterns. Out-of-pocket healthcare costs continue to be burdensome for many Americans with the proliferation of high-deductible health plans. Half of adults surveyed by the Kaiser Family Foundation in March 2019 said they have put off seeking medical care in the past year due to costs. This comes despite the U.S. currently experiencing one of the greatest

Summa Health would become wholly-owned subsidiary of Beaumont Health

Southfield, Michigan-based Beaumont Health and Akron, Ohio-based Summa Health have signed a Letter of Intent to develop a strategic partnership. The arrangement would strengthen both organizations’ cost-effective approaches to partnering with communities in new ways to improve quality of care and overall health. Juniper is advising Beaumont on this transaction.

The Letter of Intent signals the beginning of the process to draft definitive agreements to bring the two not-for-profit health systems together under Beaumont Health. The arrangement would allow for continued growth and expansion to serve patients better in Michigan and Ohio. Summa Health would maintain local leadership, including a local board.

“Beaumont Health and Summa Health are already strong and successful health care leaders. By welcoming Summa into the Beaumont family, both organizations will share expertise, invest in each other and continue to thrive as the industry evolves,” Beaumont Health CEO John Fox said. “As we expand into Ohio, we will continue to invest in our Michigan employees and operations. This year, we will launch 30 new urgent care centers.

PA Hospital with Minority Owner Joins New Regional Partner

The Huntingdon, PA-based J.C. Blair Health System has officially joined Penn Highlands Healthcare, effective June 1. J.C. Blair Memorial Hospital, a 71-bed, non-profit community hospital, is now known as Penn Highlands Huntingdon, making it the fifth hospital in the Penn Highlands Healthcare system. Juniper advised J.C. Blair on the transaction.

Juniper designed for J.C. Blair an effective and efficient process tailored for its complex circumstances that achieved the key partnership objectives set forth by the Board of Directors:

  • Protect and expand high-quality acute care services and jobs in the community
  • Preserve a meaningful local role in the hospital’s governance

Juniper specifically tailored the partnership process to address J.C. Blair’s unique ownership structure, given that a separate, large regional health system owned a minority interest in the hospital. The transaction included concurrent negotiations with the minority owner to ensure J.C. Blair’s full membership interest was conveyed to Penn Highlands Healthcare, meeting the needs of the hospital and all constituents involved in the transaction.

“This affiliation represents an exciting new chapter in our growth,” said Steven M. Fontaine, Chief Executive Officer of Penn

Santa Clara County Succeeds in Securing the Future of Endangered Local Hospitals

The County of Santa Clara (Calif.) assumed responsibility for the operation of O’Connor Hospital in San José, St. Louise Regional Hospital in Gilroy, and De Paul Health Center in Morgan Hill on March 1, 2019. This transaction advances the County Board of Supervisors’ strategic goal to grow the size and scope of the County’s public healthcare delivery system. Juniper Advisory advised Santa Clara County on this transaction.

The two hospitals and health center were acquired from Verity Health, a health system that filed for Chapter 11 protection in late August 2018, triggering the potential sale of all six of its hospitals and other related assets in California. The County purchased the three Verity Health facilities located in Santa Clara County for $235 million.

“We are excited to bring these community hospitals into our health system as we expand and enhance the high-quality care that so many Santa Clara County residents have come to rely on,” said County Executive Jeffrey V. Smith, M.D., J.D. “Our new partners share our mission, values, and passion to serve. We expect O’Connor and Saint Louise