Even though the healthcare industry has seen a surge in hospital mergers and acquisitions of late, the deals are not automatically set in stone. Case in point, the University of Louisville (Ky.) Hospital, whose proposed merger with two private faith-based facilities has been questioned, can pull out of the union if something goes wrong, reports the Louisville Courier-Journal.
The escape hatch allows the hospital to undo the merger if Catholic restrictions impair physician training, or if a court determines the merger is illegal after it's completed.
If University of Louisville unwinds the merger, it will be able to acquire all the downtown medical facilities involved in the deal, notes the Courier-Journal. However, the price for the facilities wouldn't be determined "until later," and would hinge on what caused the breakup.
Legal rulings--and even the threat of them--have unwound past hospital mergers, such as when a Florida judge overturned the merger of Bert Fish Medical Center and Adventist Health System.
Hospitals looking to join other facilities in response to rising costs and shrinking reimbursements may consider having an escape hatch in case the merger doesn't work out, but should remain wary of the associated costs.
U of L's escape hatch has led to concerns from Kentucky legislators that it will need state funds to buy back the hospitals if the deal is undone. "What if you can't agree on the buyback price?" asked Rep. Darryl Owens, and "where do you get the money?"
For more:
- read the Courier-Journal article