Nonprofit Hospital Acquisitions: Structuring and Regulatory Considerations

Summary

This practice note discusses the transactional and legal distinctives of nonprofit hospital acquisitions. Most hospital acquisitions are of nonprofit hospitals and health systems (systems of nonprofit healthcare providers related by ownership or control). These transactions usually take one of four forms: membership substitution; acquisition or merger, if the acquirer is nonprofit; or asset acquisition, if the acquirer is for-profit. Membership substitution is somewhat analogous to a stock acquisition in a for-profit context. This practice note briefly summarizes the membership structure of nonprofit hospital systems and hospitals, proceeds to address the four kinds of transactions, and addresses some salient planning considerations bearing on the transactions for M&A attorneys.