Unit 1

SHSMD University

August 13, 2013

• Healthcare public affairs firm

• Solely focused on the provider industry

• Assisted in $15 billion in announced transactions in 2012

• www.jarrardinc.com

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• Introductions

– What’s on your mind?

• Ground Rules

– Let’s make this a conversation

– Questions, please, during and after

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• Next four sessions

– Deal basics (Session 1)

• Structure

• Timeline

• Political thinking

– Ten Rules for Healthcare M&A

• The Campaign Strategy (Session 2)

• The Campaign Plan and Efforts (Session 3)

– Troubleshooting the Tough Spots (Session 4)

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Thinking about a partnership

More partnerships than ever before

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• Median net annual revenue base of merger partner– 2010 - $97.7 million

– 2012 - $137.0 million

– 38% increase

• Merger partner wealth– At least one partner with >$1 billion

• 2010 – 3

• 2012 – 8

– At least one partner with > $2 billion• 2010-2011 = 3

• 2012 = 4

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• Partnerships

– Acquisitions, alliances, collaborations

• Ownership structures

• Shares resources

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• Types of Deals

• Terms to Know

• Typical Deal Timeline

• Who Runs the Deal/ The Campaign Team

• Thinking Politically

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• Acquisition

• Affiliation

• Merger

• Joint Venture

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• Full integration and change of control

• Proceeds remain in the charitable stream

• Can offer scale, efficiencies, market strength

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• Two organizations agree contribute most, if not all, of their assets and liabilities

• Produces new company

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• Ownership, and sometimes control, is shared

• Common JV structure today: “80/20”– Acquiring

hospital/company owns 80%

– Hospital itself retains 20%

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• Conversion

• Due Diligence

• Reverse Due Diligence

• Letter of Intent

• Definitive Agreement

• Term Sheet

• Close

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• This is an emotional, political event in the life of your health system

• Defines your organization

– On paper

– In the hearts and minds of your audiences

• More than money and operations

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• Cultures have to match

• Mismatched cultures is the number 1 deal killer

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Source:

Don Seymour &

Associates

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• Well-orchestrated campaigns

– Energize teams and organizations

– Keep the message straight

– Excite patients and turn them to advocates

– Discourage competition and neutralize opponents

• Put your political strength to work for you

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• Active and visible leadership puts a face on your hospital

• Remember: people follow people

• Commitment is fundamental for success

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• Represents the following interests:

– Clinical

– Financial

– Operational

– Media

– Political and community interests

– Regulations

• Must be a coordinated approach

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• Sets the stage for “why” the partnership is necessary

• Define the vision for the future

• Transforms technical benefits into a solution

• Calls advocates to action

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• Relationships matter

• Dissect your audiences

– Internal versus external

– Internally: nurses vs. physicians, new vs. old

– Externally: supporters, opposing, neutral, reporters

• Identify advocates and opposition

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• Transactions are disruptive to a community

• Opposition has many sources

– Inside

– Outside

• Expect, plan for and quickly engage when resistance appears

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• It’s a campaign, not a news flash

• Takes many months of steady action

• Keep the “win” in mind

• It’s not over when it’s over

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Online questions for discussion• How might you approach a partnership communication

differently when highly or less integrated?• What are benefits of positioning your hospital as the

“candidate” of your campaign?• How does a long term campaign differ from a single

announcement? How does this perspective change in terms of resources, tactics, message?

• Talk about a point of view that needs to be brought to a Campaign Team, and what value that perspective brings to the conversation.

• Talk about why culture can kill a deal?

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• The first 5 Rules: Campaign Strategy

• Prep for it:

– Review the Health Leaders Media Intelligence Report, M&A: Hospitals Take Control

– http://content.hcpro.com/pdf/content/275032.pdf

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