Distressed Health Care Restructuring

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Why the need for a group that focuses on distressed health care:

The United States health care industry is in a state of distress stemming from the challenges created by an ever-increasing regulatory compliance burden, changes in reimbursement rates, uncertainty with the Affordable Care Act, and mounting tort and employment litigation. The recent growth of urgent care centers and retail clinics, as well as technological advances and telemedicine, has changed the nature of health care services. Consequently, these changes have put greater pressure on providers to compete and have altered the economics of health care delivery. Every participant in the health care industry—hospitals (large, small, rural, profit or non-profit), physicians and dentists, behavioral health, skilled nursing, home health and senior living providers, pharmaceutical distributors, diagnostic labs, durable medical equipment suppliers—has been or will undoubtedly be affected by these changes.

In response, Dickinson Wright has created a Distressed Health Care Restructuring Group (“DHR”), which combines the experience of its health care and restructuring/bankruptcy attorneys to advise clients on how to address challenges resulting from this changing health care environment and the most efficient ways to achieve and maintain ongoing financial viability.

Whether counseling health care providers, practice groups, investors or lenders, our attorneys focus on business solutions and strategies because we recognize and understand the spectrum of regulations and patient concerns that apply and impact the health care industry. The question is, how can you obtain the best outcome for your business in this challenging time? We believe the answer lies in having seasoned professionals with specific knowledge of health care issues and turnaround opportunities. Dickinson Wright’s DHR Group has the depth and breadth of knowledge and experience to help you in every aspect of health care and its troubling issues.

What sets us apart:

Experience and more. Our DHR Group includes experienced professionals in the areas of health care, restructuring, insolvency and bankruptcy, finance, real estate, regulatory, litigation and tax. These lawyers, who work in conjunction with our colleagues in Dickinson Wright offices across the country, have extensive experience in health care turnarounds and restructurings, bankruptcy sales, mergers and acquisitions, health care related lending, issues related to leases, real estate, and all related regulatory and compliance matters including government relations.

One of Dickinson Wright’s major strengths is in the compliance arena. We have found that half of the troubled companies we encounter got there because of a failure to comply with the massive number of regulations that affect virtually all health care participants. Our DHR Group recognizes that addressing compliance issues is a principal component to revitalizing operations.

In addition, Dickinson Wright also has something most firms don’t have—our own health care business and financial advisor. We partner with Crux Strategies™ to bring clients immediate and comprehensive business and financial data analysis that is the heart of decision making for every health care-related business.

The ability of our clients to analyze and act on current data is key. Crux Strategies™ recognizes that a “strategy” without actionable supporting data is just an opinion – not a solution. This is why Crux Strategies™ built the Aurum™ database. The Aurum™ database, built on over 30 million claims, contains the financial metrics for every US hospital, ambulatory surgery center, specialty physician practice, and post-acute care facility. By using weekly updated metrics in the Aurum™ database as a foundation for data driven support of the financial and operational analysis of health care companies facing financial challenges and the management, political and legal experience of Crux's staff, our clients can chart a course back to financial viability.

Carefully designed solutions equal customized results:

Our DHR Group thinks like a business person — through both financial and legal analysis, we help clients identify the real issues and implement the right solutions.

Each health care client has its own unique mission –

  • Some hospitals want to grow – others are happy to merge
  • Some physicians want to become employees – others do not
  • In some cases, entities are challenged with reimbursement uncertainty and need specific legal and financial tools to revamp their revenue cycles and contain costs
  • In other cases, management may face compliance or cybersecurity problems or simply may be saddled with an outdated legacy operating model

These are just a few of the very real issues that currently confront health care entities. Dickinson Wright’s DHR Group offers the right experience and supporting information to address these issues and any others you may encounter.

What we have done in the past equips us for the future:

The following descriptions are just a sampling of the previous representations that demonstrate the breadth of experience within the Dickinson Wright DHR Group:

Hospitals, Physician Groups, Clinics

  • Representation of 33-bed surgical hospital in Chapter 11; successfully negotiated a sale of the business to a large operating subsidiary of a publicly traded health care company with full payment to creditors and substantial return to equity.
  • Counsel to regional specialty clinic in connection with closure, liquidation and dissolution proceedings under state law.
  • Counsel to Michigan regional hospital in restructuring and workout negotiations, including negotiations for possible Chapter 11 proceeding and possible 363 sale transaction.

Creditors and Committees

  • Counsel to Creditor’s Committee in successful merger of two hospitals in Chapter 11 bankruptcy; creditors received 96 percent payout. For this achievement, Dickinson Wright was recognized by the Turnaround Management Association as Mid-Sized Company Turnaround of the Year and awarded the Healthcare/Life Sciences Deal of the Year by M&A Advisor.
  • Counsel to Creditor’s Committee in a case filed by a 200-bed non-profit community hospital; negotiated a successful sale of assets.
  • Counsel to Creditor’s Committee in a business owning multiple radiology facilities; successfully negotiated a plan of reorganization providing for the partial sale of certain properties and the revitalization of business operations.
  • Counsel to Creditor’s Committee in a case involving multiple sleep diagnostic centers; successfully negotiated sale of all assets.
  • Counsel to international provider of electronic health record and related cloud-based services to skilled nursing facilities.

Lenders and Lessors

  • Counsel to senior note holders in Chapter 11 of multi-million dollar health care company with 33 affiliates.
  • Counsel to secured lender in large Texas hospital bankruptcy; obtained stay relief allowing client to collect more than $1 million in health care receivables securing its loan; defeated debtor’s attempt to impair client’s first lien position on more than $1.5 million worth of hospital equipment and secured stay relief to allow sale of equipment to large health care operator.
  • Counsel to large equipment lessor in regional hospital bankruptcy

Business, Financial and Turnaround

  • Counsel to national health and wellness company; restructured financial systems that enabled management to assess and control company profitability and growth; restructured the service delivery and operations of the company resulting in an overall improvement in efficiency of 800%; measures improved financial performance from an annual loss of $12.5 million to an annual profit of $1.5 million in 18 months.
  • Counsel to national electronic health records company; restructured product delivery and product offerings; restructured the product IT platform; renegotiated all major contracts including those with several state Medicaid Agencies; and positioned the company for sale to new national owner with improvement in valuations for sale of the company from $12.5 million to $70 million in 18 months.
  • Counsel to rural hospital; led the legal and business teams in the acquisition and refinancing of a rural hospital where the previous owner was convicted of Medicare fraud; structured purchase of the facility itself without acquisition of CMS Medicare number; restructured delivery costs, billing systems and payor agreements; recruited new management team and negotiated a joint operating agreement with larger hospital systems, allowing the facility to remain open and continue providing services to local community.
  • Chief restructuring officer of skilled nursing facility: restructured and revised all payor agreements, billing and collections processes for facilities in five states and the District of Columbia, making it possible for the entity to avoid insolvency proceedings.
  • Counsel to managed care organization on the distribution of supplemental Medicaid funding involving approximately 100 hospitals and $450 million in payments.
  • Counsel on multiple health care provider defense actions involving allegations of violations of the False Claims Act and Stark Act violations with the United States Department of Justice, State Attorney General and large health insurance companies.

Acquirers

  • Counsel to buyers of assets of distressed health care providers in numerous transactions.
  • Counsel to acquirer of skilled nursing facility.
  • Counsel to distressed surgery center acquired during litigation with lenders.

Regulatory

  • Counsel to health care related parties in litigation arising under the Bankruptcy Code and in connection with health care related investigations arising in insolvency contexts.
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