SC&H Capital, an investment banking and advisory firm, 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, Ken Mann and Christopher Helmrath, managing directors at SC&H Capital, 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, including the current Howard University Hospital management agreement with Adventist HealthCare, the SC&H Capital team appreciates that the healthcare industry is far more complex and layered than other industries and that it is 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,” Mann, whose distressed mergers and acquisitions team, formerly Equity Partners, recently joined SC&H Capital, said. “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. 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,” Robert Heacox, co-founder of I3 Healthcare Consulting, said. “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.”
“Organizations that were financially strained before COVID-19 need trusted advisers to proactively guide their organizations through their options,” Mann said. “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.”
Before COVID-19 spread to the U.S., Heacox said 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 from the financial impact of COVID-19 for some time to come, Heacox said. 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 an increasing preference for home care. According to Pierce, 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.
“I’m very excited that this joint venture brings the full toolbox to the job,” Pierce said. “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 advised 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,” Mann said. “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 10, this collective group will present a live webinar to discuss the current market and the challenges the industry is facing.
SC&H Capital, an affiliate of SC&H Group, is an investment banking and advisory firm providing merger and acquisition, employee stock ownership plan, special situations, and business valuation solutions to middle market and growth companies.
Healthcare Management Partners is a turnaround and consulting firm that specializes in assisting healthcare organizations experiencing current or anticipated financial challenges.
I3 Healthcare Consulting is a healthcare business consulting firm.
