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

TexasFlagOn Thursday, July 16, 2015, the Texas Health and Human Services Commission (HHSC) held a public meeting regarding its request to seek an extension of its Section 1115 Medicaid Transformation Waiver. The current waiver covered a five year period ending September 30, 2016. Under the waiver Texas has expanded Medicaid managed care, created a funding pool to offset uncompensated care and provided incentives for hospitals and other providers to develop delivery system infrastructure in Texas. Over the waiver period, Texas will commit $29 Billion to the uncompensated care and delivery system payment pools (approximately 58% or $16.82 Billion represent federal funds).
Continue Reading

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

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

On June 25, 2012, the U.S. Supreme Court granted the Federal Trade Commission’s request for certiorari review in FTC v. Phoebe Putney Health System, Inc., a hospital merger case on appeal from the U.S. Eleventh Circuit Court of Appeals and the U.S. District Court for the Middle District of Georgia.

At issue in the case is the FTC’s challenge to a hospital merger that would give the acquiring health system 100% market share in its county and more than 90% market share of the multi-county region in rural southern Georgia.  Applying the state action doctrine, both the trial court and the Eleventh Circuit held that the merger of two private hospitals, Phoebe Putney Memorial Hospital and Palmyra Park Hospital, was immune from antitrust laws even though all parties agreed that the merger created a monopoly.  State action immunity applies when a policy that displaces competition is “clearly articulated” and “actively supervised” by the state.  The doctrine can extend to private actors when they act pursuant to a clearly articulated state policy to displace competition, and they are actively supervised by the state.  Clear articulation is found when a restraint of trade is a “foreseeable” consequence of the action taken by the state.   
Continue Reading