M&A and Other Transactions

Recent press reports are speculating that CVS Health Corporation is seeking to acquire the health insurer Aetna.  The rumored transaction would create a new type of health care company that doesn’t currently exist:  one that combines a commercial health insurer with a retail pharmacy chain and a pharmacy benefit manager (PBM).  According to most reports, CVS would pay $66 – $70 billion to acquire Aetna (with Aetna stockholders receiving cash and CVS stock).  It’s said that the parties are trying to enter into a definitive agreement by year-end.     Continue Reading CVS Health – Aetna Transaction: Understanding the Business and Legal Issues

Technology -circuit board-144346637An entrepreneurial company may face an early decision as to how it can afford to develop new technology, particularly new technology that does not fit within the technical specialties of that entity. Whether a new company needs to develop a new website, new software, or a compatible piece of technology, that company might consider entering into a contractual alliance with another party to develop that technology. Continue Reading Let’s Stay Together: Negotiating a Successful Joint Technology Development Agreement

HB initials LogoNational healthcare publication Modern Healthcare yesterday announced Husch Blackwell LLP is the seventh-largest healthcare law firm in the U.S. according to its 2015 rankings, up from No. 12 last year. Utilizing differing measurement techniques, American Health Lawyers Association also ranked healthcare practices, placing Husch Blackwell as fifth-largest in the country in its 2015 list, released earlier in June.

AHLA is the nation’s largest, nonpartisan, 501(c)3 educational organization devoted to legal issues in the healthcare field. Currently 152 Husch Blackwell professionals are AHLA members, and the firm ranks first in membership in Texas and second in both Missouri and Colorado.

The recognition from Modern Healthcare and AHLA validates Husch Blackwell’s focus and investment in the healthcare industry. “We are committed to continuing to add additional depth and expertise to our national platform in an effort to better serve our clients and fulfill our industry first brand promise,” said Curt Chase, partner and leader of the firm’s healthcare, life sciences and education practice.

Husch Blackwell’s healthcare attorneys have extensive experience representing clients in all types of transactional litigation, regulatory enforcement actions and investigations covering all facets of the industry. The firm represents leading hospitals and health systems, academic medical centers, post-acute centers, physicians and other healthcare providers; life sciences investors and research facilities; and pharmacies, prescription drug benefit managers, drug manufacturers and other stakeholders in the supply chain.

HandshakeBecause the healthcare industry is heavily regulated and complex, most healthcare deals involve a sign-then-close structure; that is, they have a period of time between signing the agreement and the closing date. This built-in period after signing the purchase agreement gives the parties time to obtain necessary approvals or perform necessary pre-closing covenants. Continue Reading Unique Considerations in Healthcare M&A Part 3 – Closing/Post-Closing

ContractSignature_iStock_000013778118MediumAs with any transaction, a healthcare deal typically starts with a Letter of Intent (“LOI”) or Term Sheet to outline the base agreements on the business deal. The LOI or Term Sheet should include not only the purchase price (or range), purchase price adjustments, payment terms, closing conditions, confidentiality, exclusivity, and other common items, but also the transaction structure – for example, asset sale, stock/membership interest sale, merger, joint venture, affiliation, etc. Continue Reading Unique Considerations in Healthcare M&A Part 2 – Negotiation/Drafting

Gavel with Flag_000013950634SmallThe U.S. Court of Appeals for the 9th Circuit affirmed a lower court’s findings Feb. 10, 2015, that the acquisition by St. Luke’s Health System (“St. Luke’s”) of Saltzer Medical Group (“Saltzer”), a physician group consisting mostly of primary care physicians, violated Section 7 of the Clayton Act. This is the first case in which the Federal Trade Commission (“FTC”) litigated through trial a challenge to a physician acquisition. Continue Reading UPDATE: FTC victory creates challenge for physician acquisitions

Due diligence is often perceived as a mundane part of the mergers & acquisitions (M&A) process, but its importance in healthcare transactions is critical. Due diligence is one of the first steps of any transaction and involves a buyer undertaking an in-depth examination of the target to evaluate the business and uncover potential issues or liabilities. In the healthcare industry, diligence is especially important considering the heavy regulation of the industry, the unique areas of risk, and the significant liabilities that could be imposed upon a buyer if issues and liabilities are not identified before the transaction closes. Continue Reading Unique Considerations in Healthcare M&A Part 1 – Due Diligence

The FTC recently provided yet another warning to healthcare organizations that they must take the time to analyze potential antitrust implications when considering an acquisition or consolidation.  On August 6, the FTC  and Nevada Attorney General announced the filing of a lawsuit and proposed consent decrees settling litigation filed against Renown Health, the largest hospital provider in Reno, Nevada.  Here is a summary of the background facts:

  • The lawsuit was based on Renown’s acquisition of the two largest cardiology practices in Reno, which gave the hospital 88% of the cardiology market. 
  • Renown required the cardiologists to sign non-compete agreements to prevent them from joining medical practices that competed with Renown. 
  • As a result of the acquisitions and non-compete provisions, Renown allegedly employs 88% of cardiologists in the Reno area.   
  • The antitrust agencies challenged Renown’s acquisitions and non-compete requirements on the basis they decreased competition and could raise prices for cardiology services. 

The FTC consent degree requires Renown to suspend the non-compete provisions for 30 days while the consent decree is open for public comment.  During the suspension, up to 10 cardiologists will be able to terminate their employment with Renown without breaching the non-compete provisions or incurring any other penalty.  If the FTC approves the consent decree, the non-compete provisions will be suspended for an additional 30-day period.  The suspensions will continue to be extended until six cardiologists have terminated their employment.  In addition, the settlement requires Renown to provide notice of future cardiology-related acquisitions, implement an antitrust compliance program, and reimburse the attorney general’s fees and costs from the investigation.

Our Insight.  Your Advantage.  The Renown lawsuit is just the latest in the recent trend of enforcement actions brought against healthcare providers by federal regulators.  The Renown matter is significant in that it signals regulators’ willingness to challenge physician practice acquisitions in addition to more commonly reviewed hospital mergers.  In this regulatory climate, the antitrust implications of any type of provider consolidation should carefully be reviewed in advance of the transaction.