As transactions between large systems become more common, and more strategically focused on patient concentration and needs rather than geographic boundaries, state regulators are taking a closer examination of hospital business combinations.

From California to Illinois to Florida, state attorney generals have applied increased scrutiny to recent hospital transactions, regardless of tax status or ownership type. With healthcare expenditures increasing, consumers assuming a larger burden of the cost of care, and competition between systems heating up, regulators will continue to have a watchful eye on healthcare M&A activity.

In considering a business combination, a hospital board must be sure to:

  • Set goals to guide process decision making.
  • Leverage a controlled competitive process to elicit the market’s most
    optimal outcomes.
  • Demonstrate that proposals were objectively assessed based on how the
    terms met process goals.
  • Be prepared to illustrate to stakeholders, including regulators, that the
    process was robust and the resulting terms were fair and beneficial to the
    hospital and its community.

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