John Gleason Quoted in “Hospital M&A Complicates Fundraising”

Modern Healthcare

John F. Gleason, Member of the Firm in the Health Care and Life Sciences and Corporate Services practices, in the firm’s New York office, was quoted in Modern Healthcare, in “Hospital M&A Complicates Fundraising,” by Tara Bannow.

Following is an excerpt:

In an industry experiencing an accelerated pace of mergers and acquisitions, health systems must grapple with how to structure their fundraising operations, especially as they absorb not-for-profit hospitals and systems with existing foundations. During acquisitions, leaders try to cut redundant work to make the deal worthwhile, but centralizing fundraising often comes with regulatory barriers and hospital-level pushback.

It’s an important consideration because while fundraising produces only about 3% of health systems’ revenue, that’s close to the size of many health system operating margins in recent years.

And the total amount that healthcare organizations are raising is going up: from about $8 billion in 2006 to more than $10 billion in 2016, an increase of about 25%, according to the Association for Healthcare Philanthropy. …

More generally, relations can get tense when an acquiring system also tries to absorb the hospital’s foundation, pulling away what could feel like its last semblance of control.

“The hospital that’s being subsumed into a larger system has an interest in maintaining whatever level of control that it can now that it’s giving up the keys to the larger system,” said Jack Gleason, an attorney specializing in healthcare with the New York law firm Epstein Becker & Green. “That’s just a natural gravitational pull.”