| As part of Shattuck Hammond's ongoing effort to bring innovative ideas to our clients and educate them about important trends and strategies in corporate and public finance, we periodically publish industry reports and white papers on a variety of topics. These papers, summarized below, are available from this site as PDF files. Alternatively, we would be pleased to mail you hard copies of any report - send your request to Info@shattuckhammond.com. Please also contact us if you would like to be added to our mailing list for future industry reports and white papers.
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Mergers & Acquisitions in
the Hospital Sector
Is Past Performance Indicative
of Future Results?
(Fall 2008)
Amid the current economic slowdown, Presidential transition and potential for significant healthcare reform, many of our clients and other industry participants are questioning the outlook for hospital merger and acquisition (M&A) activity. This is understandable, as it has become increasingly important for hospital leadership teams to monitor the external environment just as closely as the internal matters over which they exert more direct control.
Having peaked in the mid 1990s and bottomed out in 2003, the volume of M&A transactions among hospitals has since increased slowly, but steadily. And although it is difficult to make reliable predictions in an industry as dynamic, complex and highly regulated as healthcare, Shattuck Hammond predicts this upward trend will continue. In this monograph, we review historical M&A volume and purchase prices, and address the trends that are likely to drive the increase in future activity. In addition, we provide guidance regarding the assessment of strategic options and the M&A process for readers who may be anticipating a potential transaction. It is our hope that, with this information, hospital leaders will be in a better position to take advantage of market opportunities and to base strategic planning upon an informed evaluation of potential options.
For more information relating to this report, please contact Victoria Poindexter via email or by calling 312.541.6400.
Guide to Acronyms
Mastering the Alphabet Soup of the
Healthcare Services Industry
(October 2008)
As a leading investment bank dedicated to healthcare services, Shattuck Hammond Partners understands the challenge of sifting through acronyms for healthcare terms. It remains a challenge even for some of our most seasoned professionals! In preparing this guide, we found that definitions of many of the acronyms and associated terms we researched on the internet or in association guides were often out-of-date, out-of-practice or simply unavailable. Our guide provides a comprehensive reference source for over 1,700 of the most commonly used acronyms in the healthcare services industry. The sectors covered under our umbrella of healthcare services include acute care services, post acute care and alternate site services, managed care organizations and benefits management, healthcare information technology, physician services, pharma outsourcing and medical technology and devices.
We hope you find this guide useful and an easy source to turn to when trying to find the elusive term behind that puzzling acronym. Shattuck Hammond Partners plans to update this guide on an annual basis. If you have any suggestions or additions, we welcome your input.
For more information relating to this report, please contact Richard Lorenti via email or by calling 212.314.0400.
 The Impact of the Capital Markets Crisis and Economic Slowdown on Hospitals and Health Systems
(Fall 2008)
In light of the severe contraction of credit in the capital markets, the economic factors that are currently affecting the hospital industry, and the prospects for continued economic instability, the next several years will likely present an unparalleled mix of challenges and opportunities for hospitals and health systems. This paper reviews the current capital markets crisis and the impact that a projected economic slowdown will have on the operations, financing options and strategic plans for not-for-profit health systems. It then offers a series of strategic responses that hospital leaders should consider.
For more information relating to this report, please contact Keith Dickey via email or by calling 212.314.0400.
 Self-Diagnosis for Board Members and Senior Managements: 10 Warning Signs that "Boiled Frog" Syndrome Threatens Your Health System
Today’s financial market and credit/liquidity crisis and recession requires that Boards and Senior Managements of Hospitals and Health Systems undertake a comprehensive Self-Diagnosis as outlined in this Shattuck Hammond publication.
Today’s multiple set of crises are “Unprecedented”; “Unexpected”; “Equivalent to a 100 year Flood”. As such, in this publication Shattuck Hammond provides a Self-Diagnosis framework for Boards and Senior Management of Hospitals and Health Systems to assess core issues that need to be identified, planned for and addressed in today's Brave New World.
For more information relating to this report, please contact Vinton Rollins or Mitch Kornblit via email or by calling 212.314.0400.
 The Diagnostic Imaging Services Industry - Headed for a Shakeout
(Fall 2006)
Frustrated by the inability to contain the explosion of imaging costs over the past decade, Congress abandoned its incremental approach to containing costs and enacted sweeping reimbursement changes through the Deficit Reduction Act of 2005, which will permanently change the landscape of the diagnostic imaging industry. On
January 1, 2007
, Medicare payments for the technical component of many diagnostic imaging procedures will be reduced by 30-40%. This special report provides an overview of this legislation, its impact on varying sectors of providers and discusses who will be the winners and losers when the dust settles.
For more information relating to this report, contact one of the following:
 Guide to Physician Real Estate Ownership Options
(Fall 2006)
Over the past decade, many physicians in independent practices have seen declines in profitability caused by factors including changes in reimbursement and increases in business costs. In this environment, physicians increasingly have considered alternative sources of revenue and different options in wealth creation, including joint ventures with non-profit or for-profit healthcare providers or direct investment opportunities.
In this issue, we take a look at the increase in real estate values over the past decade. Low interest rates and historically high levels of capital seeking real estate investments, have motivated many physician practices to consider real estate ownership as a key component of their overall business strategy. Physicians all across the country are approaching hospitals and healthcare systems (collectively “hospitals”) regarding their desire to own the “bricks and sticks” of the medical office buildings, clinics, ambulatory surgery centers and other forms of real estate they occupy.
For more information relating to this report, contact PJ Camp, via email or by calling 212.314.0400 .
 The State of the Managed Care Industry
(Summer 2006)
This 61-page Report is the latest in our ongoing series of Reports on the Managed Care Industry. This Report focuses on industry trends, financing activity, financial performance, valuation, merger and acquisition activity, and industry highlights primarily among the publicly-traded managed care companies. The Report divides the universe of publicly-traded managed care companies into two distinct groups: the National Managed Care Companies, which have operations in multiple regions throughout the U.S., and the Regional/Specialty Managed Care Companies, which have operations concentrated within a specific region or focused on a specific business line (e.g., Medicaid and Medicare). Publicly-traded companies covered in this Report include: Aetna, CIGNA, Coventry, Health Net, Humana, United, WellPoint, AMERIGROUP, Centene, Molina, Sierra, WellCare and HealthSpring. In addition, the Report includes commentary and information on many not-for-profit, Blue Cross and privately-owned managed care companies.
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For more information relating to this report, contact Eric Coburn or Mitchell Kornblit via email or by calling 212.314.0400. Copies of earlier reports in our Managed Care Report Series are available upon request for the following dates: Summer 2005, Spring 2004, Fall 2003, Fall 2002, Fall 2001, Spring 2001, Fall 2000, Spring 2000, Spring 1999. Not all reports are available electronically.
 Challenges and Opportunities in Healthcare
(Winter 2005)
Success for businesses and investors in the healthcare sector requires a constant focus on many regional, national and global trends. In areas as diverse as Medicare funding, dramatic shifts in demographic trends, technological innovation, access to capital and new financial products, the ability to identify and assess the impact of multiple diverging and conversing influences has never been more essential. This special report summarizes the issues addressed at a special conference organized by Shattuck Hammond through four presentations from acknowledged healthcare industry experts addressing key trends driving change in healthcare; an assessment of the state of Medicare and Medicaid; a physician’s perspective of healthcare competition; and an analysis of the factors that influence the creation of a sustainable future for the healthcare system. The report concludes with an epilogue from the Firm addressing the implications of these forces for capital formation in healthcare
For more information relating to this report, contact one of the following:
 Real Estate Monetization and Development
(Summer 2005)
Over the last five years, there has been a dramatic increase in monetization of non-core real estate monetization, particularly the sale of medical office buildings (“MOBs”), and third party development/ownership. With over $2 billion in sales in 2004, the pioneer phase of healthcare real estate monetization has clearly ended and the results have been positive for all market participants. Today, health systems can greatly benefit from the work done and risks taken by their peers and choose from the many ownership structures that have evolved over the past ten years. Current structures allow a system to sell assets to third parties and still maintain control, as well as protect and strengthen relationships with physicians and patients. This report will address the What? Why? Who? How? and When? of non-core healthcare real estate monetization and third-party development.
For more information relating to this report, contact PJ Camp, Hunter Beebe or Ari Weinberger via email or by calling 212-314-0400 .
 The State of the Managed Care Industry
(Summer 2005)
This 44-page report is the latest in our ongoing series of reports on the Managed Care Industry. This report focuses on financial performance, valuation, merger and acquisition activity, and industry highlights primarily among the publicly traded managed care companies. The Report divides the universe of publicly traded managed care companies into two distinct groups: the National Managed Care Companies, which have operations in multiple regions throughout the U.S., and the Regional/Specialty Managed Care Companies, which have operations concentrated within a specific region or focused on a specific business line (e.g., Medicaid). Companies covered in this Report include: Aetna, CIGNA, Coventry, Health Net, Humana, Pacificare Health Systems, UnitedHealth Group, Wellpoint Health Networks, AMERIGROUP Corporation, Centene Corporation, Molina Healthcare, Sierra Health Services, WellCare Health Plans and WellChoice.
For more information relating to this report, contact Eric Coburn (212-314-0400 or ecoburn@shattuckhammond.com) or Mitchell Kornblit (212-314-0400 or mkornblit@shattuckhammond.com).
Copies of earlier reports in our Managed Care Report Series are available upon request for the following dates: Spring 2004, Fall 2003, Fall 2002, Fall 2001, Spring 2001, Fall 2000, Spring 2000, Spring 1999. Not all reports are available electronically.
 Total Return Swaps: Refinancing Opportunities Using Derivatives (Winter 2005)
This report provides a brief overview of a relatively new and creative way for tax-exempt entities to refinance existing fixed rate bonds through a secondary market transaction known as a Total Return Swap (“TRS”). The report highlights the benefits of TRSs, what situations are appropriate for a TRS, the mechanics behind a TRS, and the associated risks. In addition, the report has a case study on a recent TRS to provide insight into how a Hospital realized significant interest cost savings as a result of executing a TRS.
For more information relating to this presentation, please contact one of the following:
Bill Hanlon, (404-846-5801 or bhanlon@shattuckhammond.com)
Michael Guernier, (212-314-0400 or mguernier@shattuckhammond.com)
Richard Bayman, (404-846-5801 or rbayman@shattuckhammond.com)
 Focus on the Hospice and Palliative Care Industry (Summer 2004)
This report provides a brief overview on the Hospice and Palliative Care Industry. The report addresses the growing revenue opportunity in hospice, the risks of high Medicare exposure and the beginning industry consolidation trend. In addition, the report identifies the largest hospice providers and addresses current industry valuations.
For more information relating to this presentation, contact Richard Bayman, Vice President (404-848-9190 or rbayman@shattuckhammond.com).
 The State of the Managed Care Industry
(Spring 2004)
This 34-page report is the latest in our ongoing series of reports on the Managed Care Industry. This report focuses on financial performance, valuation, merger and acquisition activity, and industry highlights primarily among the publicly traded managed care companies. The Report divides the universe of publicly traded managed care companies into two distinct groups: the National HMOs, which have operations in multiple regions throughout the U.S., and the Regional HMOs, which have operations concentrated within a specific region or state. Companies covered in this Report include: Aetna, Anthem, CIGNA, Coventry, Health Net, Humana, Pacificare Health Systems, UnitedHealth Group, Wellpoint Health Networks, Oxford Health Plans, Sierra Health Services, WellChoice, AMERIGROUP Corporation, Centene Corporation and Molina Healthcare.
For more information relating to this report, contact Eric Coburn (212-314-0400 or ecoburn@shattuckhammond.com) or Mitchell Kornblit (212-314-0400 or mkornblit@shattuckhammond.com).
Copies of earlier reports in our HMO Report Series are available upon request for the following dates: Fall 2003, Fall 2002, Fall 2001, Spring 2001, Fall 2000, Spring 2000, Spring 1999. Not all reports are available electronically.
 Healthcare Real Estate Monetization (March 2004)
This paper was presented at the Healthcare CFO Roundtable in March 2004. The presentation discusses numerous aspects of the increasing trend by hospitals and health systems to monetize non-core real estate assets. It includes an overview of the national medical office building market, examines why hospitals are monetizing these assets, describes several different possible transaction structures, and provides a series of case studies.
For more information relating to this presentation, contact PJ Camp, Managing Director (212-314-0400 or pcamp@shattuckhammond.com).
Healthcare Information Systems - If We Build It, They Will Come - Eventually (December 2003)
Healthcare information technology, while having tremendous potential to impact positively both the cost and quality of medical care has, overall, been disappointing to both users and investors. However, a number of key drivers such as improved technology, awareness of medical errors, legislation and physician adoption suggest to Shattuck Hammond that the technology and the industry have now matured to the point where they can finally begin delivering on their promises with a degree of consistency. In light of these developments, Shattuck Hammond believes the HCIT industry is entering a phase of accelerating consolidation, as the public capital markets remain largely closed to private companies in the sector.
For more information relating to this report, contact Grant Chamberlain (312-541-6400 or gchamberlain@shattuckhammond.com)
 The State of The HMO Industry (Fall 2003)
This 40-page report was released in November 2003 as part of our ongoing series of reports on the HMO Industry. The Report focuses on financial performance, valuation, merger and acquisition activity, and industry highlights primarily among the publicly traded managed care companies. The Report divides the universe of publicly traded managed care companies into two distinct groups: the National HMOs, which have operations in multiple regions throughout the U.S., and the Regional HMOs, which have operations concentrated within a specific region or state. Companies covered in this Report include: Aetna, CIGNA, Health Net, Humana, Pacificare Health Systems, UnitedHealth Group, Wellpoint Health Networks, Anthem, Coventry, Mid Atlantic Medical Services, Oxford Health Plans, Sierra Health Services, Wellchoice, AMERIGROUP, Centene, and Molina Healthcare.
For more information relating to this report, contact Eric Coburn (212-314-0400 or ecoburn@shattuckhammond.com) or Mitchell Kornblit (212-314-0400 or mkornblit@shattuckhammond.com). Copies of earlier reports in our HMO Report Series are available upon request for the following dates: Fall 2002, Fall 2001, Spring 2001, Fall 2000, Spring 2000, Spring 1999. Not all reports are available electronically.
 Self-Diagnosis: Are You Deploying and Managing Your Corporate Assets Wisely? (Fall 2003)
How well is your organization allocating its capital assets to meet the Board's long-term objectives and build value for its shareholders and stakeholders? In our work as investment bankers and as "Architects of Capital" for our healthcare, educational, specialty non-profit and middle market corporate clients, Shattuck Hammond has found that a frank assessment of this question by Boards and top management, followed by a strategic re-deployment of corporate assets to their highest and best use, is essential to a company's long term financial success. This paper provides specific financial techniques for self-diagnosing your company's status quo situation, which is the first step toward initiating corrective measures for improving the organization's asset allocation, financial returns and for consistently increasing shareholder value.
For more information relating to this report, contact Vinton Rollins, Principal (212-314-0400 or vrollins@shattuckhammond.com).
 What About Going Private? (Winter 2003)
The past few years have witnessed tremendous turmoil in the equity markets. As a result, access to public equity has tightened while the costs and requirements of operating as public company have increased significantly. For many public companies, particularly smaller cap companies with low trading volume, the time may be right to consider taking the company private. This Report discusses the potential benefits of a going private transaction, the different forms these transactions can take, special issues involved, and the role of the Special Committee and Financial Advisor. Case studies are included.
For more information relating to this Report, contact Richard Lorenti (212-341-0400 or rlorenti@shattuckhammond.com).
 The Financial Health of the California Nursing Home Industry (June 2003)
In 2002 The California Healthcare Foundation engaged Shattuck Hammond to conduct an intensive study of the Financial Health of the California Nursing The Final Report provides an objective assessment of the financial performance of the skilled nursing industry in California. Highlighted are critical public policy issues and financial context for the decisions that industry leaders, policymakers, and patient advocates must address. Findings from the study cover the following topics:
- Industry capacity, facility ownerships, and demographics;
- Revenue and reimbursement trends;
- Operating expense trends;
- Net income and operating margin trends; and
- Industry outlook and policy considerations.
An accompanying issue brief summarizes the key findings from the study.
For more information relating to this Study, contact Herb Horowitz (212-314-0400 or hhorowitz@shattuckhammond.com) or Keith Dickey (212-314-0400 or kdickey@shattuckhammond.com).
 The Ultimate Healthcare Issue: Capital - How Do You Ensure You Have Enough? (Spring 2002)
Capital strength has been and continues to be a defining issue in a competitive and volatile healthcare services industry. The sustaining lifeblood of any organization is capital - particularly during times of significant change. It is little surprise then, that capital is one of the top concerns of healthcare executives and directors/trustees. What is surprising is that large sectors of the healthcare industry engage in little conscious capital planning. Many organizations continue to rely on principles of annual "budgeting to cashflow" or on management or board intuitive conservatism to control capital usage and allocation. This publication presents Shattuck Hammond's conceptual and analytical multi-year approach to understanding and controlling capital at the organizational level. In presenting this approach, we address the following questions:
- How can an organization define and estimate its future available capital or "capital capacity"?
- How can an organization ration and prioritize capital spending?
- How can an organization measure its cost of capital?
- How does capital capacity analysis dovetail with financing strategy issues?
- Should an organization periodically redeploy capital as the result of its assessment of the operating performance and strategic necessity of certain business assets?
 Financial Challenges for California Hospitals (September 2001)
Shattuck Hammond conducted an intensive study of the financial health of California's hospitals, analyzing financial performance for the years 1995 through 1999. The major findings of the final report are summarized in an issue brief. The findings include analysis of data for all 409 California hospitals that submitted disclosure reports in those years to federal and state agencies. The issue brief raises important questions facing health care industry leaders and policymakers, including:
- What is the current financial health of California's hospitals?
- What are the recent trends in financial performance, in terms of margins, revenues, expenses, and capital?
- Are the trends in financial performance consistent across various typologies of hospitals?
- How large is the gap between strong and weak hospitals?
- What are the public policy implications of the financial health of California's hospitals?
Shattuck Hammond Partners also polled leaders of 13 leading hospital and health system organizations in California on issues raised by the study. This research is intended to help policymakers, health care professionals, and the public better understand the issues contributing to the financial predicament looming before California's hospital industry.
 Electronic Bond Auctions - A New Standard for Accessing Capital (Summer 2001)
This Report discusses how innovative auction technology combined with the broad reach of the Internet is transforming the municipal bond market and describes the substantial benefits of an online bond auction for the issuer of tax-exempt debt. The Report examines the historical context for competitive versus negotiated bond transactions, quantifies the potential savings through a competitive auction approach, and provides a case example of one client that issued fixed rate tax-exempt using Shattuck Hammond's proprietary bond auction site (www.shattuckhammondauction.com) to realize the best possible rate in the market at the time.
 No Margin - No Mission: Developing a Target Minimum Operating Margin (Spring 2001)
Today's challenging operating environment has left many not-for-profit hospitals and hospital systems with negative operating margins. Other more fortunate organizations are left to compare operating results to those of an "underperforming" industry. With the emergence of negative operating margin trends, mission and fiduciary issues have moved to the forefront of the Board-Management-Community dialogue. In this climate, not-for-profit organizations are searching for credible financial and operating targets that guide organizational action plans ranging from the more severe "restructuring" options to the less contentious "optimization" actions. Shattuck Hammond Partners has developed the target Minimum Operating Margin or "MOM" approach to provide a much-needed tool to permit Boards and Management to harmonize mission, business and fiduciary objectives. This Report introduces MOM and its application in today's healthcare environment.
 Hospital-Assisted Living Joint Ventures: A Key Entry Point into the Integrated Health System (Fall 1997)
This 1997 Report is intended to give hospitals and integrated health systems an understanding and perspective on the assisted living industry and outlines the financial and organizational structures through which assisted living can be incorporated into a health system's continuum of care. The Report examines:
- The current state of the assisted living industry and the dynamics fueling its growth;
- The importance of assisted living to an integrated delivery system;
- Considerations in developing assisted living facilities
- Options for structuring strategic partnerships with assisted living providers; and
- Key financial aspects of assisted living partnerships.
 Provider-Sponsored Managed Care Companies: The Search for a New Paradigm (Spring 1997)
The development of provider-sponsored managed care companies has enabled healthcare providers - hospitals, health systems and physicians -- to take an important step towards addressing the changes in healthcare created by managed care. Sponsoring and owning managed care companies, principally health maintenance organizations, have allowed providers to gain control over a portion of the healthcare premium dollar and to begin asserting control over medical management. Now however, as the managed care industry has continued to evolve and mature, the rationale for owning a provider-sponsored health plan should be re-assessed. In order to gain insight and perspective on the challenges facing, and the opportunities presented to, provider-sponsored managed care companies, this paper examines:
- The current state of the managed care industry and the status of provider-sponsored companies within the industry;
- The "ingredients" for the successful development of a provider-sponsored managed care company;
- The considerations affecting the ability of provider-sponsored managed care companies to compete against national managed care companies;
- Strategies for monetizing the value of a provider-sponsored managed care company;
- The importance of the provider contract in a divestiture or strategic transaction involving a provider-sponsored managed care company; and
- Strategies for enhancing the value of a provider-sponsored managed care company.
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