After a 2-year hiatus, healthcare transaction lawyers and related industry professionals traveled to Nashville, TN, April 25-27, for the 2022 Healthcare Transaction Conference of the American Health Law Association (“AHLA”). Besides hot chicken and honky tonks, this conference was largely a celebration of the strength and resilience of the healthcare industry over the past two years impacted by COVID19. Here are some of our top takeaways from the conference:
- Strong transactional activity: The value and volume of healthcare-related transactions have reached an all-time high, with evidence of continued growth. COVID19 has increased federal and private healthcare funding and has also exposed various market inefficiencies. These factors have contributed to record transactional activity that is leveraging increased value and the opportunity to improve healthcare delivery in a post-COVID world. Industry experts don’t expect this trend to slow down anytime soon, especially with increasing private capital and corporate investment in the space.
- Private equity leads the charge: While not necessarily new to the world of healthcare transactions, private equity (“PE”) groups have shown strong interest in increasing investment. Physical education groups view healthcare space as a potentially untapped resource for high short-term rates of return. Over the past 20 years, the return on investment in healthcare transactions has far exceeded returns in all other industries. PE groups aren’t the only non-traditional players increasingly navigating healthcare transactions. Investments from companies like Walmart and Amazon continue to shift care delivery from independent practice to a more corporate-supported model. Additionally, the growth of telehealth as a more accepted form of care delivery also makes the healthcare industry particularly attractive, as what would traditionally be limited to local practice can now be scaled up. national with relative ease. Of course, with increased corporate involvement comes increased oversight.
- Antitrust Review: Federal and state antitrust enforcement is on the rise. On July 9, 2021, President Biden issued an executive order urging the Federal Trade Commission (“FTC”) to strengthen its antitrust review of healthcare transactions. The FTC is currently actively reviewing its guidelines on horizontal and vertical mergers to determine whether those guidelines are too permissive. One of the things the FTC is considering is requiring more information to be provided about a pending transaction within a shorter timeframe. Additionally, some states (e.g., Nevada, Washington, Oregon, and Massachusetts) are beginning to implement their own pre-closing transaction notification requirements that would encompass a broader range of healthcare transactions (e.g., compared to the current HSR deposit threshold of $101 million). ).
- Stark and anti-recoil: Recent changes to the Stark and Anti-Kickback Rules underscore that regulators may begin to take a more business-like approach to defining acceptable compensation arrangements. This is primarily manifested in changes/clarifications to wording relating to fair market value, commercially reasonable transactions, and volume/value standard. For additional discussion of these rules, please see our previously published blog post here.
The 2022 AHLA Healthcare Transaction Conference covered a lot of ground.