Archive for the ‘Finance’ Category

Consumers today need to take ownership understanding their physician’s motivation when they recommend surgery especially when it entails implantable products for surgical procedures such as a spinal fusion, knee or hip replacement. This motivation may be more than to help address a patient’s medical issue. It may also be a means for the physician to increase their personal income.

There is a growing trend in the healthcare industry that some physicians would not like consumers to know about. This trend is the development of physician owned distributors (PODs).  A physician owned distributor is a medical products supplier to hospitals that is partially owned by a physician or group of physicians. The primary role of the physician owned distributor is to provide products to its physician investors at the hospitals they practice medicine.

An example would be an orthopedic surgeon that performs hip and knee replacement surgery. This surgeon is an investor in the physician …

Continue reading Your physician’s business relationships may be hazardous to your health »

According to the consulting firm Irving Levin Associates, hospital merger and acquisition deals have experienced a significant boast in the past year and half.  As seen below, the number of deals increased by 40% from 2009 to 2010, where total deal value rose from $1.7 billion to $12.6 billion for that same period.  This year is set to continue the pace, having 23 deals in the first quarter alone.  

This comes as no surprise to hospital leaders.  From a recent survey by HealthLeaders Media (“Hospital Mergers and Acquisitions:  Opportunities and Challenges,” November 2011), 86 percent of hospital leaders are expecting increased acute care M&A activity across the next 12 months.  In addition, 87 percent expected the Patient Protection and Affordable Care Act, if enacted, will drive volume.  That same survey showed that the top three physician specialties for M&A activity are hospitalists (70%), primary care (69%), and cardiology (66%).     

How do we here in …

Continue reading M&A Activity on the Rise, Georgia No Exception »

When one speaks on topics like healthcare reform and the future model of healthcare delivery in the United States, we will often hear about innovative technologies that are going to revolutionize the healthcare system and solve all of its inequities.  Technologies that tell your elderly family members when to take their medication; or, tools that allow people to track their medical history via the Internet – these types of things are often presented as the future of the US healthcare system.  The multitude of innovative solutions flooding into the industry on a daily basis promise to enhance the quality of healthcare services and decrease costs associated with these services for patients.

Technological innovation will be a critical component of any US healthcare model that is adopted in the future.  Our medical services are too vital not to embrace advanced tools, resources and technologies that can absolutely make the system better.  But aside from technology’s role …

Continue reading Clinical Integration and the Healthcare System of the Future »

Hospitals across America are faced with the daunting task of choosing an EHR solution, planning the implementation and funding the cost of the project. Compared to typical capital expenditures, these projects are very large. There are a few key points to keep in mind related to the total cost, “creep” and structuring your financing properly.

“Creep” is the growing cost of your project as you add new devices, software and additional functionality to your EHR during your implementation phase.

Continue reading Tackling the capital aspect of your EHR Implementation »

In thinking about the most relevant topics for today’s healthcare industry, the two issues that practically every healthcare executive and industry stakeholder that I speak with want to hear about are:  (A) healthcare reform; and, (B) consolidation.  While the focus of my work relates to consolidation, specifically meaning mergers and acquisitions between healthcare businesses, these two important topics are certainly not mutually exclusive of each other, because the former indeed plays a significant role in fully understanding the latter.

Being an investment banker that works exclusively with healthcare organizations, consolidation (i.e., mergers and acquisitions, financings, transactions, etc) is what I focus on every day.  My job is to advise various types of healthcare entities through a transaction process, whether it is assist with an acquisition (”buyside advisory”), facilitate a sale (”sellside advisory”), work with lenders to facilitate capital or restructure an …

Continue reading What Consolidation Means for the Future of Healthcare in America »

Historically, the Internal Revenue Code has provided no specific standards for hospitals to satisfy in order to obtain tax exempt status.  Instead, hospitals have obtained tax-exemption as a derivative of the general charitable purpose of serving those in need. Since 1969 the IRS has recognized the promotion of health as a specific charitable purpose. However, now as a result of the enactment of healthcare reform legislation, hospitals must satisfy certain statutory requirements to obtain and maintain tax exempt status.

The Patient Protection and Affordable Care Act contains four specific requirements that hospitals seeking tax exemption are or will be required to meet.  One of these requirements, related to conducting and implementing a community health needs assessment, is phased in to law over a three year period. The other three requirements take effect for taxable years beginning after March 23, 2010 (the date of enactment).  Essentially, all tax exempt hospitals …

Continue reading Passing the Bill so that You Can Find Out What Is In It »

Many hospitals are showing record margins through YE2010, with historically high “excess cash.”  Investment Bankers agree, now’s the time to make a positive change for the future of your hospital or system by preserving that cash, improving your days-cash-on-hand and increasing your chances of a positive move in your investment grade.

Coming off two years of spending freezes and delayed, critical equipment and systems upgrades, means you have some spending to do.  Burning up that excess cash and not considering a revised approach to your overall capital strategy could be a costly mistake. 

 The bond market remains largely off track especially for non-rated or non-investment grade hospitals.  However, even for the highest rated hospitals and systems, longer term rates for tax exempt bonds are actually higher than commercial bond rates right now. Re-investing in your operation, expanding services and upgrading technology can all be done with mid-term financing; 3-5 year …

Continue reading More Excess Cash, Days Cash on Hand? »