High Stakes

Three Takeaways from AHLA Transactions 2017

Top Three Takeaways From AHLA Transactions 2017

Last week, Nashville played host to the AHLA Transactions Conference.  Hot topics were anti-trust enforcement, cultural fits and House politics. From our three days in the company of hundreds of the nation’s top healthcare lawyers at the Gaylord Opryland Resort & Convention Center, we offer the following insights:

Antitrust overhang

Antitrust enforcement remains high in healthcare even with the Trump administration sounding more amenable to consolidation in other industries. The conference included several well-attended sessions on antitrust considerations in healthcare, and even those that weren’t solely focused on antitrust covered that ground well.

Two individuals involved with a recent blockbuster healthcare antitrust investigation – one that ultimately blocked the proposed merger of Advocate Health Care and NorthShore University Health System in the Chicago area – made a very candid presentation on their experience. Eric Tower, associate general counsel of Advocate, and Leigh Oliver, a partner at Hogan Lovells, which represented Advocate during the litigation phase of its battle with the Federal Trade Commission, offered a mix of practical advice and behind-the-scenes details.

Organizations gearing up for an antitrust battle need to know it won’t be easy, Tower warned.

In another session, antitrust attorneys said merging organizations must be able to show efficiencies tied directly to the transaction. The FTC and the courts are skeptical about efficiencies, so the case is difficult to make.

The bottom line with mergers, as with so many things, is that intentions matter. A strategic transaction that delivers real benefits to patients and those who pay for care – from employers to federal and state governments – has an argument to make. It is a difficult argument to make, but it can be made.

Culture, culture, culture

References to culture, and ensuring a good cultural fit, also peppered the sessions.

One presenter said mergers that look good on paper falter over culture all the time, but mergers with compatible cultures can overcome modest financial difficulties. A few presenters noted that different transaction models offer a chance to determine whether the cultural fit is there before going through a full, hard-to-reverse merger.

Healthcare and, especially, its politics are complicated. (Who knew?)

Keynote speaker Peter M. Leibold, chief advocacy officer of Ascension, said Republicans are united on a few things in healthcare. All campaigned on “repeal and replace” of the Affordable Care Act, and both the Freedom Caucus and the Tuesday Group are concerned about the unlimited federal budget responsibility in the ACA’s Medicaid expansion. But the question of health insurance coverage splits them.

The broader plans of the Trump Administration and congressional Republicans revived efforts to pass the American Health Care Act, Leibold said. Republicans are counting on savings in healthcare – to the tune of $800 billion over 10 years on Medicaid – to offset the cost of cutting taxes.

And all of that covers just the politics in the House, Leibold said.

Leibold did not offer a prediction beyond saying he expected the next month to be very interesting.

 

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