The American Hospital Association considered buying at least two companies before Jan. 1 as part of its effort to expand into for-profit business lines, but the AHA rejected the companies as possible acquisitions because they didn't meet acquisition criteria, MODERN HEALTHCARE has learned.
Last week, Eric Alan Rapp, an acquisitions consultant with Ernst & Young in Chicago, told MODERN HEALTHCARE that the AHA reviewed two companies shortly after the association made it known that it was interested in buying as many as four companies. Ernst & Young is helping the AHA find and review possible acquisitions.
Rapp said the AHA turned down the deals, but he declined to identify the firms or industries they represented.
In mid-December, the AHA sent letters to about 200 investment banking companies, notifying them that the association is interested in buying as many as four companies and is willing to spend as much as $40 million in cash for the properties (Jan. 1, p. 2). The AHA said it intends to operate the new businesses through its for-profit subsidiary and market the products and services of the new businesses directly to AHA member hospitals.
News of the rejected deals suggests that the AHA is moving faster on acquisitions than originally indicated. Richard Wade, the AHA's senior vice president of communications, said last month that acquisitions were not imminent, calling the letter a "real basic first step." He also dismissed a description of the effort as a formal "acquisition strategy," indicating that that overstated what the AHA was doing.
In an interview last week, Wade said the two companies approached the AHA voluntarily but weren't seriously considered because they "didn't fit" the association's objectives.
"We don't anticipate any serious consideration of a possible acquisition until after the first quarter of the year," Wade said.