The local community directors of a Mayo Clinic affiliate health system retained Warbird’s M&A professionals after the Mayo Clinic shared its desire to vacate its role as the sole member of the $150M net patient revenue health system in Waycross, GA. The affiliate system was experiencing an annual operating loss of $24 million, leaving the local community directors with concerns about the long-term sustainability of the hospital.
Strategic Options Analysis. During this transition period, the Warbird professionals served as an advisor to the affiliate system’s board of directors. In this role, Warbird’s professionals were initially tasked with managing the separation process, identifying the long-term strategic needs of the system, and assisting the board in executing on the necessary initiatives to ensure the sustainability of the health system. After an assessment of the hospital’s strategic and operational needs, the board of directors concluded that a new operating partner would be needed post-separation from Mayo.
Transaction Process Management and Deal Negotiations. The Warbird professionals aggressively marketed the affiliate system, resulting in seven proposals received from six potential partners. Within six months of being retained, the parties executed a Letter of Intent (“LOI”) with HCA Healthcare. A separate LOI was executed with a national nursing home operator for the two skilled nursing facilities that were a part of the affiliate’s system.
After the LOIs were executed, Warbird’s M&A professionals continued to work with the affiliate system to manage the transaction process and lead in ongoing deal negotiations and navigate through a required state regulatory review process.
Performance Improvement Assessment. To effectively secure a new partner organization, Warbird’s M&A professionals understood that identifying the affiliate’s performance improvement opportunities was also critical. Warbird’s professionals worked with the hospital board, leadership, and the system parent (Mayo Clinic) to identify and quantify opportunities for enhancing the affiliate’s operating performance.
Sourcing of Interim CEO, CFO and Director of Revenue Cycle Leadership. Additionally, Warbird’s professionals provided the affiliate with requested interim leadership in the form of an interim CEO, CFO and Director of Revenue Cycle. Collectively, this identification of performance improvement opportunities and the recruitment of practitioner executives enhanced the affiliate’s financial performance and bolstered the affiliate’s strategic value in the eyes of potential partners.
Approximately a year after Warbird’s professionals were retained, the parties successfully closed both the hospital and skilled nursing facilities transactions. Together, these transactions delivered $80M in cash consideration, generous capital investments into both facilities over the next 5-years, and important service commitments to ensure ongoing and enhanced access to healthcare services in the community.
Importantly, the transaction resulted in a net benefit for all stakeholders: the local community, Mayo Clinic, HCA Healthcare, and the new owner of the skilled nursing facilities. For the local community, an allocation of the transaction proceeds was deposited into a 501(c)(4) organization, governed by community representatives. This community foundation controls over $75M in assets and is not responsible for funding indigent and charity care at the hospital.