What to Watch as COVID-19 Cash Crunch Fuels Hospital M&A

A May 15 article in Law360, “What to Watch as COVID-19 Cash Crunch Fuels Hospital M&A,” discussed the wave of hospital mergers due to the coronavirus pandemic and its financial impact on healthcare facilities. The article also addressed possible antitrust enforcement actions against hospitals that must merge to remain financially viable. Rivkin Radler’s Robert Iseman and James Lagios were quoted in the article.

Regarding federal bailout money available to hospitals, Bob said, “Right now, we’re kind of on a precipice. We don’t know how much more money the government is going to be willing to print to bail out the health care industry.”

As for the impetus behind hospital mergers, Jim said, “What you’re certainly going to see are rescue mergers where some of the few remaining independent facilities will reach the end of their line. You might see circumstances where they are reaching out to larger systems to kind of come in and be a savior to keep the local, small hospitals still viable.”

The merged hospitals themselves will change, according to Bob: “What’s going to be accelerated here is the concept that people in particular markets are going to not expect a tertiary level of service to be as close to them as it once was. There will be this regional rationalization of services based upon the expense of the service and the sophistication of the service.”

Bob offered a forecast on smaller hospital systems: “You begin to see … vertical integration, with different levels of care other than acute care being integrated into these local systems that perhaps will relate to a regional center. Those are all market forces that were in place before COVID-19, but they certainly have been accelerated.”