While its executives continue to downplay the aggressiveness of its acquisition campaign, the American Hospital Association has issued another nationwide call to companies that may want to sell themselves to the AHA.
In fact, in a recent letter to investment banking firms, the Chicago-based hospital trade group said it came close to, but ultimately rejected, acquiring four unidentified companies, including a healthcare publishing company.
"We considered the acquisition of a provider of third-party administrator services, a couple of on-line healthcare service companies (including a physician recruitment database company) and a healthcare newsletter and publication company," said Paul Boyke, the AHA's senior vice president for finance and administration, in the April 8 letter.
The corporate finance department of Ernst & Young, a national accounting and consulting firm working with the AHA to find acquisition candidates, also issued a press release May 6 stating that the AHA "is seeking domestic investment opportunities."
The letter and the press release indicate that the acquisition search isn't the passive activity suggested in statements by AHA executives.
In a recent interview, Richard Wade, the AHA's senior vice president for communications, emphasized that the association has made no acquisitions to date and "nothing has come close."
In January, MODERN HEALTHCARE*revealed that the AHA was shopping around for as many as four companies to buy with at least $40 million in cash (Jan. 1, p. 2). The money to make the acquisitions came from the sale of the AHA's liability reinsurance company, Health Providers Insurance Co., last year to MMI Cos. of Deerfield, Ill.
The companies would be operated by the AHA's for-profit subsidiary, AHA Services, and the companies' products and services would be marketed directly to the association's 5,000 hospital members.
In its initial letter to investment bankers last December and the follow-up letter and press release, the AHA said it's interested in companies in a limited field and in those whose products and services support the AHA's mission and values. The companies also should have a minimum of $1 million in annual revenues, generate a profit margin of between 12% and 15% and require no significant cash infusion or capital investment.
"AHA prefers firmly established companies with good market presence in relatively noncyclical industries," Ernst & Young said.
The AHA's areas of interest include printing and publishing, data and information systems, third-party administrators, physician recruiting firms, market research firms, education and training services, temporary help service providers, real estate management and insurance brokers.