SC&H Capital, a leading investment banking and advisory firm, announced it has entered into a joint venture with two healthcare consulting firms, Healthcare Management Partners and I3 Healthcare Consulting, to better serve the strategic and financial needs of the healthcare industry.
Even before the COVID-19 outbreak hit, SC&H Capital Managing Directors Ken Mann and Christopher Helmrath, recognized the need to expand SC&H Capital’s partnerships with specialists in the healthcare industry. Having worked on several hospital investment banking projects over the past 10 years with I3 Healthcare Consulting – such as the current Howard University Hospital management agreement with Adventist HealthCare – the team appreciates that the healthcare industry is far more complex and layered than other industries, and facing significant headwinds.
“We’re fortunate to have worked previously with both of these respected organizations. They’ve worked collaboratively as a team as well. We know each other’s abilities and respect each other’s deep commitment to quality,” says Mann, whose distressed Mergers & Acquisitions (M&A) team, formerly Equity Partners, recently joined SC&H Capital. Together, “our groups have led large healthcare organizations through complex restructuring efforts, uncovered solutions to save organizations and jobs, and consolidated entities to meet the needs of the patients and communities they serve.”
Mann and the SC&H Capital team bring decades of experience in financing and mergers and acquisitions to the venture. At the same time, I3 Healthcare Consulting specializes in hospital management and consulting, and Healthcare Management Partners has cultivated experience with skilled nursing facilities.
“In the complex and highly regulated field of healthcare,” says Robert Heacox, Co-Founder of I3 Healthcare Consulting, “if you don’t understand the intricacies of the industry, you’ll fail. If you don’t understand distressed M&A, you’ll fail at helping troubled organizations. Working together, especially now, makes us an incredibly effective team.
Mann agrees. If this kind of expertise was needed before, Mann says, it’s needed now more than ever. “Organizations that were financially strained before COVID-19 need trusted advisers to proactively guide their organizations through their options. Now that the pandemic has thrown even stable organizations into turmoil, so many more healthcare organizations are going to be facing real challenges. In order to stay solvent, access to the right expertise, data, and resources is crucial,” Mann says.
Before COVID-19 spread to the U.S., Heacox says his team saw the issues hospitals and ambulatory care operators faced and knew a partnership with SC&H Capital would help clients find and implement creative solutions. In the past, Heacox and his firm worked with smaller and rural hospitals struggling with issues of scale and payment collection. But even well-positioned hospitals will suffer the financial impact of COVID-19 for some time to come, says Heacox. The pandemic has resulted in lost revenue due to postponements of minor and elective procedures, visits, and tests.
Derek Pierce, Managing Director of Healthcare Management Partners, saw firsthand the financial challenges faced by nursing homes that hadn’t adapted to Baby Boomers’ increasing preferences for home care. Now, Pierce says, with skilled nursing and assisted living facilities at the epicenter of the crisis, they may be facing “issues with litigation and substantially increased operating costs” after COVID-19.
Pierce says, “I’m very excited that this joint venture brings the full toolbox to the job. In my experience, many consultants and investment bankers only see one solution - the one they are accustomed to implementing, and that just isn’t the most effective way to deal with any situation, certainly not a distressed healthcare operation with peoples’ lives in its hands.”
Mann advises healthcare organizations to bolster their financial strategy now, not after the pandemic clears. “Healthcare organizations waiting until the post-pandemic era to act will find their list of options is going to get shorter with every passing day.”
Fortunately, says Mann, SC&H Capital’s joint venture can help healthcare organizations best position themselves to survive, recover, and grow. “We believe that we are the only service provider that brings the full spectrum of expertise to a troubled healthcare organization. This combination of deep experience in management, operations, and finance, including mergers and acquisitions, provides the client with the benefit of collaboration between the disciplines to determine and execute the best path forward.”
On June 10th, this collective group will present a live webinar to discuss the current market and the challenges the industry is facing.