Tim Reimers’ Post

Federally qualified health centers face unprecedented operational and financial challenges, which has led to more partnership, merger, and acquisition possibilities. Learn more about why transactions fail to meet objections, affiliation types, and managing impacts on revenue. Thanks for your insight, Ryan Petrucelli, CPA; Kinman Tong; Richard Riter, CPA; Mandy Mori, MBA; Denise Stark. https://lnkd.in/gTst3Q4P

Analysis by H2C Securities Inc. (H2C), a part of Fifth Third Capital Markets, shows a rise in hospital M&A activity during Q2 '23 compared to the previous year, with a total of 19 announced transactions compared to 11 in the comparable quarter in 2022. 2022 ended with the lowest volume of hospital M&A in over a decade with only 40 transactions announced, but the transaction activity thus far suggests 2023 volume will outpace 2022. Given the increasingly challenging operating environment, a flight to safety will likely follow. The regulatory environment continues to be challenging for companies attempting to acquire or merge, specifically, in-market transactions. In June, the New Hampshire Attorney General approved the merger between Beth Israel and Exeter, but this is one of the few favorable rulings. The FTC continues to aggressively review transactions. For example, despite obtaining a Certificate of Public Advantage (COPA), the FTC in April sued to stop Louisiana Children’s Medical Center (LCMC) from integrating three HCA hospitals that it recently acquired. The FTC said the transaction defied federal law by consummating the $150 million acquisition without reporting it to U.S. antitrust authorities and without observing the mandatory waiting period. The FTC has successfully challenged 4 other hospital mergers over the last 24 months. Notable Q2 Transactions: • The boards of Washington Health System (WHS) (Washington, PA) and UPMC (Pittsburgh, PA) signed a letter of intent to integrate WHS into UPMC. The two systems have collaborated for several decades across numerous service lines and WHS was one of the original members of the UPMC Health Plan. • BJC HealthCare (St. Louis, MO) and St. Luke's Health System (Kansas City, MO) have signed a non-binding letter of intent to form an integrated academic health system. Their vision is to become the premier Midwest destination for patient care, research, and medical education. With combined revenue of $10 billion, they aim to serve over 6 million residents in Missouri, Illinois, and Kansas. The deal, pending regulatory approval, is expected to close by the end of 2023, with BJC's CEO becoming the integrated health system's CEO. • In May, Healthcare giant Kaiser Permanente (Oakland, CA) acquired Geisinger Health (Danville, PA) to form a new nonprofit health system, Risant Health. The transaction is not structured as a traditional purchase, but Kaiser Permanente is expected to provide ~$5 billion in funding for Risant Health. Geisinger is the initial system under the Risant umbrella, but plans are to incorporate around five additional systems and reach ~$35 billion in revenue over the next 5 years. Kaiser Permanente demonstrated strong financial performance with $233 million in operating income for Q1, reversing a $72 million loss from the same period in 2022. The Risant Health transaction is pending regulatory approval. Data in the exhibit reflect H2C’s analysis of industry M&A data.

Analysis by H2C Securities Inc. (H2C), a part of Fifth Third Capital Markets, shows a rise in hospital M&A activity during Q2 '23 compared to the previous year, with a total of 19 announced transactions compared to 11 in the comparable quarter in 2022. 2022 ended with the lowest volume of hospital M&A in over a decade with only 40 transactions announced, but the transaction activity thus far suggests 2023 volume will outpace 2022. Given the increasingly challenging operating environment, a flight to safety will likely follow. The regulatory environment continues to be challenging for companies attempting to acquire or merge, specifically, in-market transactions. In June, the New Hampshire Attorney General approved the merger between Beth Israel and Exeter, but this is one of the few favorable rulings. The FTC continues to aggressively review transactions. For example, despite obtaining a Certificate of Public Advantage (COPA), the FTC in April sued to stop Louisiana Children’s Medical Center (LCMC) from integrating three HCA hospitals that it recently acquired. The FTC said the transaction defied federal law by consummating the $150 million acquisition without reporting it to U.S. antitrust authorities and without observing the mandatory waiting period. The FTC has successfully challenged 4 other hospital mergers over the last 24 months. Notable Q2 Transactions: • The boards of Washington Health System (WHS) (Washington, PA) and UPMC (Pittsburgh, PA) signed a letter of intent to integrate WHS into UPMC. The two systems have collaborated for several decades across numerous service lines and WHS was one of the original members of the UPMC Health Plan. • BJC HealthCare (St. Louis, MO) and St. Luke's Health System (Kansas City, MO) have signed a non-binding letter of intent to form an integrated academic health system. Their vision is to become the premier Midwest destination for patient care, research, and medical education. With combined revenue of $10 billion, they aim to serve over 6 million residents in Missouri, Illinois, and Kansas. The deal, pending regulatory approval, is expected to close by the end of 2023, with BJC's CEO becoming the integrated health system's CEO. • In May, Healthcare giant Kaiser Permanente (Oakland, CA) acquired Geisinger Health (Danville, PA) to form a new nonprofit health system, Risant Health. The transaction is not structured as a traditional purchase, but Kaiser Permanente is expected to provide ~$5 billion in funding for Risant Health. Geisinger is the initial system under the Risant umbrella, but plans are to incorporate around five additional systems and reach ~$35 billion in revenue over the next 5 years. Kaiser Permanente demonstrated strong financial performance with $233 million in operating income for Q1, reversing a $72 million loss from the same period in 2022. The Risant Health transaction is pending regulatory approval. Data in the exhibit reflect H2C’s analysis of industry M&A data.

Analysis by H2C Securities Inc. (H2C), a part of Fifth Third Capital Markets, shows a rise in hospital M&A activity during Q2 '23 compared to the previous year, with a total of 19 announced transactions compared to 11 in the comparable quarter in 2022. 2022 ended with the lowest volume of hospital M&A in over a decade with only 40 transactions announced, but the transaction activity thus far suggests 2023 volume will outpace 2022. Given the increasingly challenging operating environment, a flight to safety will likely follow. The regulatory environment continues to be challenging for companies attempting to acquire or merge, specifically, in-market transactions. In June, the New Hampshire Attorney General approved the merger between Beth Israel and Exeter, but this is one of the few favorable rulings. The FTC continues to aggressively review transactions. For example, despite obtaining a Certificate of Public Advantage (COPA), the FTC in April sued to stop Louisiana Children’s Medical Center (LCMC) from integrating three HCA hospitals that it recently acquired. The FTC said the transaction defied federal law by consummating the $150 million acquisition without reporting it to U.S. antitrust authorities and without observing the mandatory waiting period. The FTC has successfully challenged 4 other hospital mergers over the last 24 months. Notable Q2 Transactions: • The boards of Washington Health System (WHS) (Washington, PA) and UPMC (Pittsburgh, PA) signed a letter of intent to integrate WHS into UPMC. The two systems have collaborated for several decades across numerous service lines and WHS was one of the original members of the UPMC Health Plan. • BJC HealthCare (St. Louis, MO) and St. Luke's Health System (Kansas City, MO) have signed a non-binding letter of intent to form an integrated academic health system. Their vision is to become the premier Midwest destination for patient care, research, and medical education. With combined revenue of $10 billion, they aim to serve over 6 million residents in Missouri, Illinois, and Kansas. The deal, pending regulatory approval, is expected to close by the end of 2023, with BJC's CEO becoming the integrated health system's CEO. • In May, Healthcare giant Kaiser Permanente (Oakland, CA) acquired Geisinger Health (Danville, PA) to form a new nonprofit health system, Risant Health. The transaction is not structured as a traditional purchase, but Kaiser Permanente is expected to provide ~$5 billion in funding for Risant Health. Geisinger is the initial system under the Risant umbrella, but plans are to incorporate around five additional systems and reach ~$35 billion in revenue over the next 5 years. Kaiser Permanente demonstrated strong financial performance with $233 million in operating income for Q1, reversing a $72 million loss from the same period in 2022. The Risant Health transaction is pending regulatory approval. Data in the exhibit reflect H2C’s analysis of industry M&A data.

Analysis by H2C Securities Inc. (H2C), a part of Fifth Third Capital Markets, shows a rise in hospital M&A activity during Q2 '23 compared to the previous year, with a total of 19 announced transactions compared to 11 in the comparable quarter in 2022. 2022 ended with the lowest volume of hospital M&A in over a decade with only 40 transactions announced, but the transaction activity thus far suggests 2023 volume will outpace 2022. Given the increasingly challenging operating environment, a flight to safety will likely follow. The regulatory environment continues to be challenging for companies attempting to acquire or merge, specifically, in-market transactions. In June, the New Hampshire Attorney General approved the merger between Beth Israel and Exeter, but this is one of the few favorable rulings. The FTC continues to aggressively review transactions. For example, despite obtaining a Certificate of Public Advantage (COPA), the FTC in April sued to stop Louisiana Children’s Medical Center (LCMC) from integrating three HCA hospitals that it recently acquired. The FTC said the transaction defied federal law by consummating the $150 million acquisition without reporting it to U.S. antitrust authorities and without observing the mandatory waiting period. The FTC has successfully challenged 4 other hospital mergers over the last 24 months. Notable Q2 Transactions: • The boards of Washington Health System (WHS) (Washington, PA) and UPMC (Pittsburgh, PA) signed a letter of intent to integrate WHS into UPMC. The two systems have collaborated for several decades across numerous service lines and WHS was one of the original members of the UPMC Health Plan. • BJC HealthCare (St. Louis, MO) and St. Luke's Health System (Kansas City, MO) have signed a non-binding letter of intent to form an integrated academic health system. Their vision is to become the premier Midwest destination for patient care, research, and medical education. With combined revenue of $10 billion, they aim to serve over 6 million residents in Missouri, Illinois, and Kansas. The deal, pending regulatory approval, is expected to close by the end of 2023, with BJC's CEO becoming the integrated health system's CEO. • In May, Healthcare giant Kaiser Permanente (Oakland, CA) acquired Geisinger Health (Danville, PA) to form a new nonprofit health system, Risant Health. The transaction is not structured as a traditional purchase, but Kaiser Permanente is expected to provide ~$5 billion in funding for Risant Health. Geisinger is the initial system under the Risant umbrella, but plans are to incorporate around five additional systems and reach ~$35 billion in revenue over the next 5 years. Kaiser Permanente demonstrated strong financial performance with $233 million in operating income for Q1, reversing a $72 million loss from the same period in 2022. The Risant Health transaction is pending regulatory approval. Data in the exhibit reflect H2C’s analysis of industry M&A data.

Analysis by H2C Securities Inc. (H2C), a part of Fifth Third Capital Markets, shows a rise in hospital M&A activity during Q2 '23 compared to the previous year, with a total of 19 announced transactions compared to 11 in the comparable quarter in 2022. 2022 ended with the lowest volume of hospital M&A in over a decade with only 40 transactions announced, but the transaction activity thus far suggests 2023 volume will outpace 2022. Given the increasingly challenging operating environment, a flight to safety will likely follow. The regulatory environment continues to be challenging for companies attempting to acquire or merge, specifically, in-market transactions. In June, the New Hampshire Attorney General approved the merger between Beth Israel and Exeter, but this is one of the few favorable rulings. The FTC continues to aggressively review transactions. For example, despite obtaining a Certificate of Public Advantage (COPA), the FTC in April sued to stop Louisiana Children’s Medical Center (LCMC) from integrating three HCA hospitals that it recently acquired. The FTC said the transaction defied federal law by consummating the $150 million acquisition without reporting it to U.S. antitrust authorities and without observing the mandatory waiting period. The FTC has successfully challenged 4 other hospital mergers over the last 24 months. Notable Q2 Transactions: • The boards of Washington Health System (WHS) (Washington, PA) and UPMC (Pittsburgh, PA) signed a letter of intent to integrate WHS into UPMC. The two systems have collaborated for several decades across numerous service lines and WHS was one of the original members of the UPMC Health Plan. • BJC HealthCare (St. Louis, MO) and St. Luke's Health System (Kansas City, MO) have signed a non-binding letter of intent to form an integrated academic health system. Their vision is to become the premier Midwest destination for patient care, research, and medical education. With combined revenue of $10 billion, they aim to serve over 6 million residents in Missouri, Illinois, and Kansas. The deal, pending regulatory approval, is expected to close by the end of 2023, with BJC's CEO becoming the integrated health system's CEO. • In May, Healthcare giant Kaiser Permanente (Oakland, CA) acquired Geisinger Health (Danville, PA) to form a new nonprofit health system, Risant Health. The transaction is not structured as a traditional purchase, but Kaiser Permanente is expected to provide ~$5 billion in funding for Risant Health. Geisinger is the initial system under the Risant umbrella, but plans are to incorporate around five additional systems and reach ~$35 billion in revenue over the next 5 years. Kaiser Permanente demonstrated strong financial performance with $233 million in operating income for Q1, reversing a $72 million loss from the same period in 2022. The Risant Health transaction is pending regulatory approval. Data in the exhibit reflect H2C’s analysis of industry M&A data.

Analysis by H2C Securities Inc. (H2C), a part of Fifth Third Capital Markets, shows a rise in hospital M&A activity during Q2 '23 compared to the previous year, with a total of 19 announced transactions compared to 11 in the comparable quarter in 2022. 2022 ended with the lowest volume of hospital M&A in over a decade with only 40 transactions announced, but the transaction activity thus far suggests 2023 volume will outpace 2022. Given the increasingly challenging operating environment, a flight to safety will likely follow. The regulatory environment continues to be challenging for companies attempting to acquire or merge, specifically, in-market transactions. In June, the New Hampshire Attorney General approved the merger between Beth Israel and Exeter, but this is one of the few favorable rulings. The FTC continues to aggressively review transactions. For example, despite obtaining a Certificate of Public Advantage (COPA), the FTC in April sued to stop Louisiana Children’s Medical Center (LCMC) from integrating three HCA hospitals that it recently acquired. The FTC said the transaction defied federal law by consummating the $150 million acquisition without reporting it to U.S. antitrust authorities and without observing the mandatory waiting period. The FTC has successfully challenged 4 other hospital mergers over the last 24 months. Notable Q2 Transactions: • The boards of Washington Health System (WHS) (Washington, PA) and UPMC (Pittsburgh, PA) signed a letter of intent to integrate WHS into UPMC. The two systems have collaborated for several decades across numerous service lines and WHS was one of the original members of the UPMC Health Plan. • BJC HealthCare (St. Louis, MO) and St. Luke's Health System (Kansas City, MO) have signed a non-binding letter of intent to form an integrated academic health system. Their vision is to become the premier Midwest destination for patient care, research, and medical education. With combined revenue of $10 billion, they aim to serve over 6 million residents in Missouri, Illinois, and Kansas. The deal, pending regulatory approval, is expected to close by the end of 2023, with BJC's CEO becoming the integrated health system's CEO. • In May, Healthcare giant Kaiser Permanente (Oakland, CA) acquired Geisinger Health (Danville, PA) to form a new nonprofit health system, Risant Health. The transaction is not structured as a traditional purchase, but Kaiser Permanente is expected to provide ~$5 billion in funding for Risant Health. Geisinger is the initial system under the Risant umbrella, but plans are to incorporate around five additional systems and reach ~$35 billion in revenue over the next 5 years. Kaiser Permanente demonstrated strong financial performance with $233 million in operating income for Q1, reversing a $72 million loss from the same period in 2022. The Risant Health transaction is pending regulatory approval. Data in the exhibit reflect H2C’s analysis of industry M&A data.

Analysis by H2C Securities Inc. (H2C), a part of Fifth Third Capital Markets, shows a rise in hospital M&A activity during Q2 '23 compared to the previous year, with a total of 19 announced transactions compared to 11 in the comparable quarter in 2022. 2022 ended with the lowest volume of hospital M&A in over a decade with only 40 transactions announced, but the transaction activity thus far suggests 2023 volume will outpace 2022. Given the increasingly challenging operating environment, a flight to safety will likely follow. The regulatory environment continues to be challenging for companies attempting to acquire or merge, specifically, in-market transactions. In June, the New Hampshire Attorney General approved the merger between Beth Israel and Exeter, but this is one of the few favorable rulings. The FTC continues to aggressively review transactions. For example, despite obtaining a Certificate of Public Advantage (COPA), the FTC in April sued to stop Louisiana Children’s Medical Center (LCMC) from integrating three HCA hospitals that it recently acquired. The FTC said the transaction defied federal law by consummating the $150 million acquisition without reporting it to U.S. antitrust authorities and without observing the mandatory waiting period. The FTC has successfully challenged 4 other hospital mergers over the last 24 months. Notable Q2 Transactions: • The boards of Washington Health System (WHS) (Washington, PA) and UPMC (Pittsburgh, PA) signed a letter of intent to integrate WHS into UPMC. The two systems have collaborated for several decades across numerous service lines and WHS was one of the original members of the UPMC Health Plan. • BJC HealthCare (St. Louis, MO) and St. Luke's Health System (Kansas City, MO) have signed a non-binding letter of intent to form an integrated academic health system. Their vision is to become the premier Midwest destination for patient care, research, and medical education. With combined revenue of $10 billion, they aim to serve over 6 million residents in Missouri, Illinois, and Kansas. The deal, pending regulatory approval, is expected to close by the end of 2023, with BJC's CEO becoming the integrated health system's CEO. • In May, Healthcare giant Kaiser Permanente (Oakland, CA) acquired Geisinger Health (Danville, PA) to form a new nonprofit health system, Risant Health. The transaction is not structured as a traditional purchase, but Kaiser Permanente is expected to provide ~$5 billion in funding for Risant Health. Geisinger is the initial system under the Risant umbrella, but plans are to incorporate around five additional systems and reach ~$35 billion in revenue over the next 5 years. Kaiser Permanente demonstrated strong financial performance with $233 million in operating income for Q1, reversing a $72 million loss from the same period in 2022. The Risant Health transaction is pending regulatory approval. Data in the exhibit reflect H2C’s analysis of industry M&A data.

Analysis by H2C Securities Inc. (H2C), a part of Fifth Third Capital Markets, shows a rise in hospital M&A activity during Q2 '23 compared to the previous year, with a total of 19 announced transactions compared to 11 in the comparable quarter in 2022. 2022 ended with the lowest volume of hospital M&A in over a decade with only 40 transactions announced, but the transaction activity thus far suggests 2023 volume will outpace 2022. Given the increasingly challenging operating environment, a flight to safety will likely follow. The regulatory environment continues to be challenging for companies attempting to acquire or merge, specifically, in-market transactions. In June, the New Hampshire Attorney General approved the merger between Beth Israel and Exeter, but this is one of the few favorable rulings. The FTC continues to aggressively review transactions. For example, despite obtaining a Certificate of Public Advantage (COPA), the FTC in April sued to stop Louisiana Children’s Medical Center (LCMC) from integrating three HCA hospitals that it recently acquired. The FTC said the transaction defied federal law by consummating the $150 million acquisition without reporting it to U.S. antitrust authorities and without observing the mandatory waiting period. The FTC has successfully challenged 4 other hospital mergers over the last 24 months. Notable Q2 Transactions: • The boards of Washington Health System (WHS) (Washington, PA) and UPMC (Pittsburgh, PA) signed a letter of intent to integrate WHS into UPMC. The two systems have collaborated for several decades across numerous service lines and WHS was one of the original members of the UPMC Health Plan. • BJC HealthCare (St. Louis, MO) and St. Luke's Health System (Kansas City, MO) have signed a non-binding letter of intent to form an integrated academic health system. Their vision is to become the premier Midwest destination for patient care, research, and medical education. With combined revenue of $10 billion, they aim to serve over 6 million residents in Missouri, Illinois, and Kansas. The deal, pending regulatory approval, is expected to close by the end of 2023, with BJC's CEO becoming the integrated health system's CEO. • In May, Healthcare giant Kaiser Permanente (Oakland, CA) acquired Geisinger Health (Danville, PA) to form a new nonprofit health system, Risant Health. The transaction is not structured as a traditional purchase, but Kaiser Permanente is expected to provide ~$5 billion in funding for Risant Health. Geisinger is the initial system under the Risant umbrella, but plans are to incorporate around five additional systems and reach ~$35 billion in revenue over the next 5 years. Kaiser Permanente demonstrated strong financial performance with $233 million in operating income for Q1, reversing a $72 million loss from the same period in 2022. The Risant Health transaction is pending regulatory approval. Data in the exhibit reflect H2C’s analysis of industry M&A data.

Legislation changes create a constantly evolving landscape for the healthcare industry. In the past year, as mergers & acquisition trends have been slowly increasing after the COVID-19 pandemic, there have been more eyes on the industry and its innerworkings than ever before. This is a great article laying out the potential guidelines that may be enacted and it is important that we stay up to date on current protocols and potential changes. Thanks for sharing, Katie! #manda #mergersandacquisitions #modernhealthcare #legislation #healthcare