The Imperial Valley Healthcare District (IVHD) has sprung into action and is now considering how to merge Pioneers Memorial Healthcare District (PMHD) and Heffernan Memorial Healthcare District (HMHD). IVHD eventually will have to decide to acquire El Centro Regional Medical Center (ECRMC).
One of the first issues, and likely the most critical, should be to hire consultants who are experts in the field of mergers and acquisitions (commonly referred to a M&A) unless these seven appointed trustees are all experts in the M&A field. Based on their resumes, we can be pretty sure they are not.
We waded through the financial data that was provided by BAE Urban Economics. The expert online stumbled over the data and said most of the data was provided by summary documents and not the actual numbers. There were many other holes in his presentation and lots of speculation. For those depending on accurate information to make a decision, this BAE report is unacceptable.
The IVHD board is really waiting for the Kaufman Hall report which should be more comprehensive but that too is suspect because it was prepared for the bond holders of ECRMC and not the IVHD board. The data was supposedly supplied by ECRMC and is dubious. It may only be an “executive summary.” Basically you can trust these reports as much as gas station sushi.
The bottom line here is that merger and acquisition people are trained to look over the nuances of these reports and report back to the people who pay them. They will work for you and not a third party. M&A people are experts in marrying two or three corporate cultures and ferreting out all the sticky deal points.
Hospital mergers are likely the stickiest of all mergers and there are literally hundreds of items that need to be sorted out, some in sequential order. A proper hospital merger could take several years and those are cases where the parties want to merge, not a shotgun wedding that has been arranged by Assemblyman Garcia with co-author Senator Steve Padilla.
I, for one, urge the newly appointed IVHD board to engage with M&A experts immediately. Because of the difficult timeline, you should try to amend AB 918 to allow sufficient time to do your work properly.
Also, the IVHD board will have to have the assets of all three districts appraised and that could take many months. You cannot depend on ECRMC’s own assessment of its value. Since the assets of PMHD and HMHD are already under your authority, those appraisals will be less critical, but still needed. Remember ECRMC and the City of El Centro need to dump their debt as soon as they can. You are only the first in line.
One last point for all to consider, why are the assets of PMHD and HMHD being confiscated with no compensation, but the IVHD Board has to negotiate to acquire the assets of ECRMC? Asking for the approximately 70,000 residents within the PMHD and HMHD districts. Do we get a credit for the money we have paid into our districts for decades?