Hospital transactional activity has soared over the last decade, and many public hospitals are evaluating M&A opportunities against the backdrop of the Coronavirus (COVID-19) pandemic. In our previous post on public hospital M&A, we discussed financial pressures on public hospitals, trends driving M&A, and external factors shaping public hospitals’ choices of M&A partners and formats. In this installment, we’ll cover strategies for gaining stakeholder buy-in as hospital board members, senior leaders and advisors move through the transaction process. For a deeper dive into these topics, listen to our podcast, Driving the Deal: Public Hospital M&A and Stakeholder Buy-In.

Stakeholders: Who’s Who

Public hospital M&A is a team sport. Assessing and advancing a potential deal involves engagement with a wide variety of stakeholders, each with their own perspectives, objectives and priorities. Key players can include elected public officials, community leaders, hospital management and board members, physicians, employee unions, patients and the general public. It is critical to navigate the diverse viewpoints of these important stakeholders without ceding decision-making to a non-fiduciary.

As a first step in navigating that challenge, hospital boards should distinguish between stakeholders that have the right to approve or deny the proposed transaction, and those that are important to the deal’s success but do not have approval authority. Depending on the jurisdiction and deal structure, the former category of stakeholders could include the local municipality’s board, the State Attorney General or even registered voters, in the case of a public [...]

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