Behavioral Health Managed Care Company
Company Advisor for the Strategic Assessment and Successful Sale of the Company
In the notoriously difficult field of behavioral health managed care (BHMCO), one not-for-profit provider-owned organization grew into a major player in the Northeast by developing and executing an innovative care management model for behavioral health and developmental disabilities in partnership with government and commercial payers.
Eager to reach more patients by expanding nationally, the BHMCO brought in Healthcare Management Partners as its financial and strategic advisor to examine its market position and capital structure and develop a plan to expand nationally.
Issues
- The organization was corporately organized as a charitable not-for-profit cooperative which could not be sold or merged into another entity.
- Changing the corporate form would require the unanimous consent of the 48 existing members of the cooperative and the state attorney general.
Approach
- Analyzed critical trends in behavioral health, especially behavioral health managed care and the applicable Medicaid and Medicare rules and regulations.
- Converted the company from a not-for-profit provider owned Pennsylvania Cooperative Corporation to a for-profit stock corporation.
- Conducted a sales process to find a national strategic partner with a proven record for working with state Medicaid programs and delivering quality patient care to the developmentally disabled and ready access to the capital and appropriate insurance licenses necessary to facilitate rapid expansion across state lines.
Results
- The company was successfully converted to a for-profit stock company.
- The company was sold to the largest provider of Medicaid managed care in the nation for an above market price.
- The small group of community based provider organizations which were the original owners of the company received $40 million in exchange for their stock which they in turn could invest in their continuing charitable missions.