Resources Mentioned in Today's Episode

• National Law Review Article: Proposed California Legislation Would Require State Approval for Health Care M&A and Prohibit Use of Health Care Market Power to Raise Price
• California Healthline Article: California AG Seeks More Power To Battle Merger-Hungry Health Care Chains
• The Bond Buyer Article: Two Big Midwest Hospital Mergers Canceled

Key Takeaways

Examples of canceled M&A plans.

• Michigan-based Beaumont Health and Ohio-based Summa Health called off their plans to form a $6.1 billion system after a definitive agreement was signed.
• Several South Side Chicago hospitals had planned to join forces as part of a $1.1 billion project that included building at least one new hospital and up to half a dozen community health centers.

For communicators who are part of a system moving forward with M&A plans or are considering looking for a partner.

• Emphasize how the proposed transaction will maintain or improve either quality or affordability, ensure access to care for communities, and address the financial challenges faced by health systems as a result of the pandemic.
  • Articulate how the M&A activity will stabilize affected health systems — allowing them to manage the COVID-19 crisis and future pandemics.
  • Speak to audiences in terms of value to all.
    • Center the messages around things like improved quality and stabilization to create a sustainable future in providing care for the community.
  • Communicate messages of job creation and facility creation.
    • People are concerned about job losses with M&A. Think through reactive messages within that context.
  • Highlight how these partnerships will facilitate continued care in a market, which otherwise might lose a valuable healthcare resource.
  • Share positive economic benefits the transaction will bring for local communities.
  • Communications that support the vision, rationale and benefits of a deal will also need to be relevant to the regulatory bodies whose approval may be required.
  • Ensure stabilization where there is only one healthcare agency within the community.
• This goodwill can be valuable as health systems seek stakeholder and community support for their transactions.
  • Public perception and support of healthcare providers have been extremely positive during the pandemic to date, as evidenced by homemade banners, balcony tributes, and praise on social media.
  • Health systems and their staffs have borne personal risk and financial pain by focusing on patients and public health at the expense of all else.
• But that goodwill can also be quickly forgotten.
  • As health systems race to the altar to beat out competitors for M&A targets and other strategic relationships, it is critical that they are thoughtful in structuring their deals and justifying the activity.
    • For example, acquisitions and partnerships involving lucrative executive compensation or severance packages will be viewed negatively if undertaken by a system that instituted large compensation reductions across the system or even furloughed or laid off employees during the pandemic.
• Internal communication has never been more important.
  • We always counsel clients to focus on internal audiences first when announcing an acquisition.
    • But this is even more critical right now since staff have been working tirelessly to treat patients with COVID-19 as well as recover financially from the last few months.
  • Any effective communication plan will need to clearly articulate the benefits to staff and allay any fears of layoffs.