Issue link: https://beckershealthcare.uberflip.com/i/1405817
12 CFO / FINANCE California anesthesia practice files for bankruptcy after hospital contract lapse By Alia Paavola C iting a contract lapse with a California hospital network, Community Region- al Anesthesia Medical Group in Fresno, Calif., filed for Chapter 11 bankruptcy June 16, according to e Business Journal. e anesthesia group provided services to Fres- no-based Community Medical Centers' three major hospitals. However, the contract between the hospitals and the anesthesia group expired. e anesthesia group said it had expected Com- munity Medical Centers to renew its contract before allowing it to lapse. "For over 20 years [Community Regional An- esthesia] took great pride in providing excellent services to Community Medical Center and its facilities," Carolyn Larsen, executive director of Community Regional Anesthesia Medical Group, told e Business Journal. "It is very dis- appointing that [Community Regional Anesthe- sia] has gotten caught up in the political battle raging in Fresno, and that [Community Medical Centers] elected to allow the contract to lapse." Community Medical Centers said it put out a request for proposals for anesthesia groups and that Community Regional Anesthesia didn't submit one. "In line with common, prudent business prac- tices, and in advance of the expiration of the CRAMG agreement, Community requested bids from interested anesthesia service providers. Unfortunately, CRAMG did not provide a re- sponse to our request for a proposal," a spokes- person for Community Medical Centers told e Business Journal. "However, Community [Med- ical Centers] will continue to provide the same high-quality services from highly skilled anes- thesia providers as we always have." In the bankruptcy filing, the anesthesia group listed its assets between $1 million and $10 mil- lion and said it owes Community Medical Cen- ters $5.1 million. n Hospital M&A shifts to regional partnerships: Kaufman Hall By Alia Paavola M erger and acquisition revenue remains high as hospitals and health systems shift their focus to acquisitions of small, indepen- dent hospitals and regional partnerships, according to an analy- sis published July 8 by healthcare consulting firm Kaufman Hall. Total M&A revenue in the first and second quarters totaled $17.2 billion on 27 transactions. In 2020, revenue for the same period was $17 billion with 43 transactions. In the second quarter, M&A volume was below historic volume, with 14 transactions. However, the quarter saw a high number of transactions with revenues above $500 million. Some of the most significant transactions in the second quarter include Grand Rapids, Mich.-based Spectrum Health and Southfield, Mich.- based Beaumont Health's plan to form a combined system in Michigan with $13 billion in annual operating revenue; Atlanta-based Piedmont Healthcare's plan to acquire four Georgia hospitals from Nashville, Tenn.-based HCA Healthcare; and Charleston-based Medical Universi- ty of South Carolina's plan to buy three South Carolina hospitals from Brentwood, Tenn.-based LifePoint Health. "Many of this quarter's most significant transactions reflect the trend to- ward regionalization, with an emphasis on building depth within local markets and breadth through expansion to neighboring geographies," Kaufman Hall said July 8. n How 3 dozen US health systems are pursuing for-profit ventures abroad By Katie Adams A bout three dozen of the largest health systems in the U.S. have augmented their revenues by establishing an overseas presence, Kaiser Health News reported June 22. Cleveland Clinic, Pittsburgh-based UPMC, Baltimore-based Johns Hop- kins Medicine and Cincinnati-based Bon Secours Mercy Health are among the health systems pursuing such ventures, which usually are erected in Europe and the Middle East. Since they provide charity care and services that benefit local communi- ties, these nonprofit health systems pay little or no taxes in the U.S. How- ever, research shows that the cost of U.S. health systems' charity care usu- ally is lower than the taxes from which they are exempted. American health systems' international ventures are more brazenly com- mercial, as they usually offer profitable elective surgeries and don't pro- vide less lucrative services, such as emergency care. These ventures at- tract mainly American expatriates, patients who value the health system's reputation and those dissatisfied with their country's healthcare services. "As we go to different areas around the world, we learn and we continu- ously improve for all our patients," Brian Donley, MD, CEO of Cleveland Clinic's $1 billion dollar venture in London, told Kaiser Health News. n