Mergers and Acquisitions: Is It the Right Time for You?
By Kathie Kane
“To be, or not to be: that is the question: Whether ‘tis nobler in the
mind to suffer the slings and arrows of outrageous fortune, or to
take arms against a sea of troubles, and by opposing end them?”
— Hamlet. Act III, Scene I
Did Shakespeare know of the difficult decisions that
would need to be made in 2017 healthcare? Or is
the need to adapt, be creative and fight against the
acceptance of your current plight as old as time?
Conference attendees learned that mergers and
acquisitions are ways to address the issues facing
providers of long term care and supports. Presented by
a panel that included: Jerry Archibald, partner/co-group
practice leader, The Bonadio Group; Michael Keenan,
president/CEO, Good Shepherd Communities; Jeni
Demarais, administrator, Chase Health Rehabilitation
and Residential Care; and Sean Doolan, principal,
Hinman Straub Attorneys at Law, conference attendees
learned about relevant issues pertaining to mergers and
acquisitions using a focused case study; the merger of
Chase Memorial Nursing Home and Good Shepherd
Communities.
No facility plans to merge with another, but things
happen. There should certainly be no judging because
an organization may be facing financial difficulty. It is
filled with good people, doing good work, in very tough
financial times. This was the case of Chase back in 2015.
While attending the LeadingAge New York Annual
Conference, Jeni Demaris, administrator of Chase Health
Rehabilitation and Residential Care, spoke with Mike
Keenan, president/CEO of Good Shepherd Communities
and asked if he would “adopt” her facility. She was facing
very tough decisions and dark times. Fast forward two
years, the organizations have merged and Chase is again
viable and able to keep the doors open - thanks to some
creative decisions and with the help of the board, staff,
bankers and attorneys - a rural facility will continue to
provide care to an underserved population.
A merger is like a relationship. It involves talking, dating
and getting to know each other, after which comes an
engagement and marriage. A partnership forms where both
sides understand the wants and needs of the other
partner and their hopes and expectations for the
future. There are many participants needed to
form and execute a solid merge plan. In addition
to the executive team of each entity, the team may
include, for example, banks, attorneys, boards and
employees. In the end, do what is best for the whole.
Transparency and communication is critical. It is a
balancing act of looking at each organization with
surgical precision. Can this be done, should it be
done and how will it be done?
There are three key elements of a successful
merger/acquisition:
1) Culture (culture, culture);
2) Board leadership and awareness/recognition
of reality;
3) Senior management and leadership who believe
in the future.
It started with a needs assessment of Chase that
included asking if there was a need for the beds,
what is the market area, who were the referral
sources and what services are lacking in the
community? In this case, a lack of ALP beds was
identified in the area. A transition grant could be
used to build a new nursing home and rehab the old
one to house ALP residents.
With the help of The Bonadio Group, the Hinman
Straub Law Firm, the Department of Health and
many other organizations and people along the way,
this merger has become a reality and the residents
of Chase will be able to stay residents of Chase with
the same familiar caregivers.
The final step is community education and
rebranding. Through print, radio, television, as well
as presentations to service clubs, rotary groups and
government office holders, Chase will continue to
stay in the community.
In the case of this specific merger, there was
immediate savings by merging with the larger Good
Shepherd Communities. Savings include back office
(continued)
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Adviser a publication of LeadingAge New York | Summer 2017