Sisyphus Had It Easy: Best Practices in Executing a Hospital Transaction, in AHLA’s Business Law and GovernanceMarch 1, 2014
Katherine Lofft, a Member of the Firm in the Corporate Services and Health Care and Life Sciences practices, in the Washington, DC, office, and Colin McCulloch, an Associate in the Health Care and Life Sciences practice, in the Washington, DC, office, wrote an article titled "Sisyphus Had It Easy: Best Practices in Executing a Hospital Transaction."
Following is an excerpt:
Representing a for-profit or nonprofit client in a hospital transaction (whether the client is the buyer or seller) can be a challenging engagement. These deals are often ascribed mythic or epic qualities—participants will refer to the "draconian" terms demanded by the counterparty, the "herculean" effort required to achieve consensus, and/or the "pyrrhic" victory represented by the final negotiated deal terms. As anyone who represents hospitals in transaction well knows, the effort required to align and satisfy the interests of the various stakeholders, including management, the medical and administrative staff, regulators, and the public, to achieve a successful outcome justifies much of the hyperbole that is commonly employed.
In fact, the success or failure of a hospital transaction may be more aptly characterized by a widely applied aphorism: "the devil is in the details." While the client may seek to execute a transaction to fulfill broader strategic objectives, the real key to a successful deal is in the client's tactical planning. Although the ebb and flow of any hospital transaction may make the participants feel like Sisyphus—pushing a rock up the hill, only to watch it roll back at them—careful planning, together with effective coordination and communication, can help the client stay focused on and achieve its key objectives. In this article, we offer practical guidelines to avoid some of the common pitfalls and minimize some of the key frustrations and risks presented by a hospital transaction.