Private Equity/Health Care

The Health Care & Life Sciences Group and the Private Equity Group of Benesch, Friedlander, Coplan & Aronoff LLP have extensive experience representing private equity firms in their investment in the health care industry. We have also represented health care companies and providers, including long term care providers, institutional pharmacies, preferred provider organizations, third party administrators, psychiatric hospitals and managed care organizations. With this background, Benesch is uniquely situated to provide representation of private equity firms in their merger and acquisition transactions and ongoing representation of the portfolio companies in this dynamic industry.

Private Equity Specialists

The Private Equity Group at Benesch is experienced in mergers, going private transactions, leveraged buy-outs, non-control investments, recapitalizations, tax-free reorganizations and SPACs. Benesch lawyers have been able to leverage this experience to handle private equity investments in the health care industry.

Transactional Representation. Benesch has been lead corporate and regulatory counsel as well as ongoing day-to-day counsel for sellers, purchasers and investors in transactions ranging from psychiatric clinics to chains of nursing homes. Governmental mandates, lending requirements, and financial realities often result in complex ownership structures that cannot be accomplished without the type of thoughtful analysis and knowledgeable legal advice and documentation for which Benesch is known. Benesch has also represented mezzanine fund investors in a wide variety of investments, including nursing facilities, institutional pharmacies, psychiatric hospitals, acute care centers and home health care providers. Benesch’s extensive history of transactional experience in the health care industry has involved management arrangements, lease relationships, partnership investments, asset sales, and, of course, equity infusions.

Benesch is a law firm qualified to assist investors in evaluating opportunities and in structuring and executing private equity transactions. We know the private equity industry. We have been working with private equity funds since the infancy of the industry in the early 1970s. We know the market, the people and the latest financing terms and techniques. Many firms do some private equity work. We do a substantial amount of private equity work. Our legal experience, business insight, network of contacts and knowledge of industry trends offer a compelling competitive advantage. Our goal is to provide our clients with the sophisticated advice and practical guidance needed to achieve business objectives. We can assist our clients in maximizing value by capitalizing on our broad understanding of the private capital markets and our knowledge of the industry.

The private equity market is complex and competitive. Funds need a law firm that understands the complexities, including technical rules that affect your fund and its portfolio companies. In our integrated cross-discipline approach, the Private Equity Group combines knowledge of securities law, tax, ERISA and intellectual property with our firm’s health care industry experience in order to assist and support clients. Our practice allows us to offer our clients a complete understanding of the issues and concerns on both sides of capital financing and allows us to create business relationships between company clients and investors we represent.

Covering All The Bases. What sets Benesch apart from many other law firms competing in the private equity arena is the ability to provide a holistic perspective on the challenges and intricacies of the health care industry based on a depth of understanding in areas ranging from health care lending, Medicare and Medicaid reimbursement, private insurance, antitrust, federal and state fraud and abuse laws, licensure, and survey and certification. Benesch’s health care clients appreciate the ability to evaluate transactions from a health care perspective and with a knowledge of how health care facilities operate on a day-to-day basis. In the end, it is the familiarity with health care laws and the business of providing long term care that insure that Benesch will remain a powerhouse in the health care industry for years to come. Through the Health Care & Life Sciences Group, Benesch is familiar with the health care industries in which private equity funds invest and understands the potential benefits and risks associated with investing in this industry. After assisting a private equity investor client with an investment in the health care industry, Benesch continues to add value by supporting and advising the fund in its ongoing relationship with its portfolio company by providing seamless “end-to-end” know-how.

Long Term Care and Post-Acute Care

Within the last 30 years, few industries have undergone more change than the long term and post-acute care industry. With each restructuring of federal and state funding programs, each fluctuation in the investment environment and the roller-coaster enforcement climate, Benesch has led its clients with sound advice and guidance. When the implementation of the Medicare prospective payment system (PPS) forced inefficient nursing home operators out of business in the early 1990’s, Benesch helped the healthy survivors identify and acquire undervalued nursing facilities. Benesch’s strong relationships with lenders also helped clients obtain financing during that uncertain time. By the late 1990’s, nursing facilities had adjusted to PPS and were developing strategies for optimal reimbursement for services. As reimbursement and regulatory forces changed the industry, Benesch guided many facility owners and operators through the next industry investment trend involving sale-leasebacks and operator-realty company separations.

Benesch’s specific industry experience has been utilized by small single-state facility groups and large multi-state chains alike in complex transactions. Currently, our experienced team is in the trenches with our provider clients as they go through another round of significant federal and state reimbursement challenges, consolidation transactions, distressed provider work-outs and increased enforcement activity.

Within our Health Care & Life Sciences Group, our attorneys have considerable experience as both outside advisors and in-house legal talent. The combination of experience as an outside advisor and member of an in-house legal team provides our attorneys with the unique ability to assist our long term and post-acute care clients as they navigate the operational, financial and legal issues they face on a daily basis.

Our health group attorneys are constantly at the forefront of legal and business issues affecting long term and post-acute care clients. Several of our attorneys are involved in leadership positions in the American Health Lawyers Association that specific to long term and post-acute care issues. Additionally, several of our attorneys are members of the legal committees of the national long term and post-acute care provider associations.

Benesch represents numerous publicly-held and privately-held long term care and post-acute care providers. Our clients include nursing facilities, long term care hospitals, hospices, rehabilitation hospitals, home care companies, institutional pharmacies, and ancillary service providers including, but not limited to, therapy, laboratory, diagnostic imaging and physician and physician extender providers. We provide a full range of transactional, reimbursement, and regulatory advice to our long term care and post-acute care provider clients including representation in mergers, acquisitions and realty leases and realty transactions, Medicare and Medicaid reimbursement matters, licensure and certification matters, financings, and survey and enforcement matters.

Institutional Pharmacy Providers

Institutional pharmacy providers face a complex and intricate web of business and regulatory challenges. Benesch prides itself on being a leader in providing innovative solutions to the institutional pharmacy providers to help them confront these issues. Lawyers in our group routinely write and speak about these issues. Some of our experience includes:

Compliance Issues. We assist clients with all types of compliance-related matters such as conducting internal investigations, drafting policies and procedures, implementing compliance programs, and training management and sales forces. We also assist in the drafting of corporate compliance plans for institutional pharmacy providers.

Contracting and Fraud and Abuse Counseling. We counsel manufacturers on matters such as agreements with third party payors, discounting and rebate practices, consolidated billing requirements, and handling gift and other business courtesies.

Government Investigations. We assist clients in responding to criminal and civil federal and state investigations on kickback issues as well as on matters arising under the False Claims Act. A number of the investigations we have handled have involved issues of great significance to the industry as a whole.

Pricing Counseling. We regularly counsel pharmaceutical companies facing issues related to Average Wholesale Price, class of trade pricing and Medicaid Rebates.

Civil Litigation. We have represented a publicly-held institutional pharmacy provider in litigation matters involving contracts with customers and providers, labor and employment issues, and regulatory matters.

Home Health Care

In recent years, governmental and private payors have recognized that the future of elder care rests in home based services. Home health care represents an alternative to the more expensive institutional care provided in nursing homes and other long term care facilities. As a result, home health care has received a great deal of attention from payors and investors. Benesch has, again, found itself at the cutting edge of this trend. Health care provider clients include large Medicare-certified home health chains, home and community-based service waiver recipients, large therapy companies and others. Benesch’s familiarity with these home health segments make it an ideal choice for home health investors evaluating and pursuing investments and acquisitions in the home health industry.

In addition to representing many providers in various segments of the home health industry, Benesch has represented large investors in the acquisition of interests in significant home health care provider chains. Recently, Benesch represented a major equity fund in its investment in one of the largest home health care provider chains in the Eastern United States. Benesch’s immediate on-site diligence, analysis of operational issues and assistance with transaction documents were key to assuring the health of the target and the success of investment. Combining corporate expertise with health industry experience is a hallmark of Benesch’s success.

Managed Care

Additionally, Benesch’s experience extends back to the beginning of the managed care industry. Benesch structured the earliest health maintenance organizations in Ohio and has been active in the industry ever since. In recent years, there has been a proliferation and consolidation of preferred provider organizations in response to the nation’s need for affordable health care. After representing various health care providers for many years, it was only natural that Benesch move to the forefront in representation of preferred provider organizations as they came into existence.

Transactional Experience. Benesch’s PPO representation ranges from a statewide physician network for a national insurer to the purchaser of a large, nationwide preferred provider network of hospitals and other health care providers. Finance transactions handled by Benesch lawyers in the health care industry include acquisition and consolidation of the largest preferred provider network in the country. The acquisition occurred in multiple stages as the purchaser’s equity investment was used to expand the target network through the acquisition of other large networks.

In connection with this and similar projects, Benesch advises on transaction structuring, transactional due diligence, and coordinating transaction arrangements with a variety of investors, sellers, lenders, and regulatory agencies. Benesch’s participation with a client goes beyond transactional guidance. In addition to forming entities and negotiating transaction documents, Benesch assists its clients in navigating regulatory requirements and in strategic planning which allows its clients to identify and take advantage of opportunities for growth.

Getting the Deal Done Right. The breadth of coverage of preferred provider organizations often requires that counsel be able to act quickly in dealing with agencies and governmental representatives in multiple states. This is where Benesch excels. Utilizing knowledge of insurance regulations, prompt pay laws, and the tendencies of governmental agencies, Benesch has a long track record of meeting client expectations when it comes to negotiating obstacles to transactions in this heavily regulated industry. As a result, Benesch has developed a reputation among preferred provider organizations as the firm that gets the deal done and gets it done right.

Examples of recent M&A engagements include:

  • Represented numerous long term care chains in long term care facility acquisitions.
  • Represented a publicly held long term care company in the acquisition of other long term care providers and ancillary care providers.
  • Represented a real estate investment trust in the acquisition of a chain of 24 nursing homes for a purchase price of over $90 million.
  • Represented the owner and operator in the sale and lease-back of a large regional nursing home chain for a purchase price exceeding $100 million.
  • Represented a major shareholder in the divestiture of eight distressed nursing homes.
  • Represented The CommuniCare Family of Companies in the purchase of 14 long term care facilities from THI for $140 million.
  • Represented The CommuniCare Family of Companies in the purchase of 12 long term care facilities from Cleveland Senior Care for $120 million.
  • Represented Carespring in the sale of eight long term care facilities to Nationwide Health Properties.
  • Represented three privately held chains in the sale of 11 long term care facilities to Complete Care for $130 million.
  • Represented Sun Healthcare Group in the acquisition of Harborside Health Care.
  • Represented The CommuniCare Family of Companies in the purchase of seven facilities from Emery Medical for $60 million.
  • Represented numerous privately held nursing facility and assisted living chains in the sale and disposition of nursing facilities, assisted living centers, institutional pharmacies, hospices and therapy providers. These include:
    • The acquisition of 46 long term care facilities in three states.
    • The acquisition of 11 long term care facilities in five states.
    • The proposed acquisition of 60+ long term care facilities in eight states.
    • The proposed acquisition of 200+ long term care facilities in three states.
    • The proposed acquisition of 11 long term care facilities in three states.
    • The proposed acquisition of 27 long term care facilities in five states.
  • Performed health care regulatory diligence in a proposed acquisition involving 50+ long term care facilities in three states by a private equity firm.
  • Performed health care regulatory diligence and change of control/licensure process in an acquisition involving Medicare certified hospices in ten states by a private equity firm.
  • Performed health care regulatory diligence and change of control/licensure process in an acquisition involving Medicare Managed Care Plans in five states by a private equity firm.
  • Represented arbitrage funds in connection with the acquisitions of Manor Care, Inc. by Carlyle Group and of Genesis HealthCare Corporation by Formation Capital.
  • Represented private equity funds in proposed acquisitions of Sunrise Senior Living, Inc. and Erickson Senior Living.
  • Represented a medical billing services company in its issuance of $8 million of senior unsecured promissory notes and Class D Common Stock to a private equity fund and insurance company.
  • Raised a combined $30 million of debt and equity to fund the opening of 15-20 new pharmacies by year-end for a privately owned institutional pharmacy.
  • Representation of a dental care provider following its $43 million acquisition by three private equity firms we represented as outside general counsel on matters including finance, acquisition of offices, employment, real estate, and four additional rounds of financing and regulatory matters in 17 states.
  • Representation of an after-market medical equipment replacement parts supplier as financing counsel on a $60 million dollar recapitalization of the $150 million business with two institutional investors buying approximately one third of the ownership. We also acted as the investment banker on the transaction and succeeded in getting a valuation for the business that was approximately 20 times projected EBITDA. We continue to serve as outside general counsel on all company matters.
  • Representation of a contract research organization that serves the preclinical needs for several businesses including pharmaceutical companies in a $75 million financial restructuring with three private equity firms providing the capital. We also represented the client as it expanded its operations by acquiring businesses in France, Taiwan and the state of Washington.
  • Ongoing corporate, lending and regulatory counsel of a fee for services fibromyalgia series of clinics throughout the southwest and southeast in a follow on institutional financing of $25 million and the original equity round from two institutional investors of $18 million.
  • Representation of a medical billing business in a number of rounds of growth equity totaling $65 million of equity capital, as well as in an ongoing regulatory and general counsel capacity and a going private transaction. Recently, we represented this client in a number of rounds of institutional mezzanine debt and equity financings including a $4.5 million preferred stock, an additional $14 million in mezzanine debt and the sale of $22.3 million of senior notes.
  • Representation of a medical transcription company in its angel rounds of investment, and as counsel in its first institutional round of capital - a minority investment of 20% of the business, which amounted to approximately $15 million dollars. We are now assisting the client in its selection of an investment banking firm to raise another $20-$30 million of capital.