1. The Evolving M&A: From Affiliations to Acquisitions
Jim Lape, Consultant
Jim Mc Creath, VP/Trinitas Regional Medical Center
October 15, 2015

2. Strategic Issues: Changing Landscape
Health Ins. Consolidation
Healthcare Costs
Competing Costs (Pension)
Medicaid

3. Strategic Issues/Landscape
Service Delivery Reform (FFS, ACO, Medical Home)
Other Issues (Incarceration, Substance Abuse)

4. Are We Ready? Recent Investment Bank observation:
More than 2 dozen companies are actively investing in mental health facilities
MH is considered a “highly fragmented space,” ripe for consolidation
Molina buys Providence Services:200 million
Acadia acquisitions = 232 BH facilities in 37 states
UHS acquires FRN for 350 million

5. Strategic Restructuring: Why?
Because working harder may not be enough!
Reduce cost
Improve efficiency
Enhanced strength for negotiating fees
Integrate new services
Serve new populations
Expand geographies
Participate in “population health” initiatives

6. Not All Corporate Activity is a Merger
View strategic restructuring on a continuum:
From complete corporate autonomy to full integration
Additionally, realignment can include administration only or program only or both

7. Collaboration Affiliation agreements Administrative consolidation
Joint programming

8. Corporate Integration
Management Services Corporation
Joint venture

9. Merger
Asset transfer
Integrated boards
Parent/subsidiary

10. Considerations: Do’s and Don’t
Strategy
Culture
Service compatibility
Geographic fit
Reputation
All initiatives start with a champion
Initiate from strength; negotiating when in crisis is a strategic weakness

11. Learn what to do/what not to do
Summary
Landscape is changing
Look at all the options
Learn what to do/what not to do
Act now