Tag Archives: hospital M&A

ZONING AND LAND USE ISSUES IN HOSPITAL M&A TRANSACTIONS

 

The age and complexity of hospital real estate often result in zoning and land use issues that must be addressed in hospital M&A transactions.  In larger transactions, purchasers and their lenders frequently obtain zoning reports prepared by one of the national companies, which summarize existing code requirements and potential non-compliance by the hospital.  For smaller transactions, it is common for purchasers and their lenders to rely on a letter from the local Planning & Zoning office, which is often limited to confirmation of the zoning classification and whether there are outstanding zoning and land use violations.  While zoning reports and letters are helpful in identifying potential issues, parties to a hospital M&A transaction must carefully analyze the findings to determine if there is a bona fide issue that needs to be addressed.  Described below are several issues commonly encountered and how those issues might be addressed.

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Avoiding “Code Blue”: Managing Potential Physician Resistance to a Hospital M&A Transaction

Hospital M&A activity has been increasing recently, and when these transactions are public knowledge, opposition from the physician community (as well as the hospital staff) to such types of transactions may also be a side effect.  Physicians are vital to the operation of a hospital, and any resistance from the physician community, could be a tremendous obstacle, either slowing down the transaction or causing the potential buyer to pull out of the deal.  Hospital administrators, along with their advisors, should do their best to foresee any opposition and manage physicians’ expectations through the transaction process.

There are many potential concerns that the physician community may have regarding a transaction.  Specifically, physicians, like most people, are probably fearful of change.  In an M&A transaction, the process can often be a stressful time because of the changes in the organization, which can include an unknown – a new operator.  If a new operator wishes to add (or subtract) certain services, hire additional physicians, modify the approval process for new equipment or medical devices, or institute a new arrangement that is historically different than the current norm, those physicians may question or push back on the proposed deal.

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