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Financial Advisory

The complex and ever-changing nature of the healthcare market can test even the strongest organizations. Healthcare Management Partners serves as an advisor to hospitals and other healthcare providers facing strategic decisions directly impacting current or future financial performance.

HMP also frequently serves banks, bondholders, private equity firms, committees of unsecured creditors and their legal and accounting advisors with regard to complex business transactions or restructurings involving healthcare providers. We provide Creditor Advisory, Operational Due Diligence, and Financial Due Diligence Services.

Unlike many of our competitors, every financial advisory engagement is led, "on the ground," by experienced C-Level healthcare executives. Our project experience has been diverse. For example, in a project for a major investment bank, HMP analyzed the effects of proposed major, highly complex changes to the Medicare payment system for the home health agency market. HMP's analysis identified which companies would benefit and which would be hurt by the proposed changes – and by how much.

In another case, HMP worked with a very successful behavioral health managed care organization in the Northeast to set a new strategic direction and optimize the organization's enterprise value. HMP played a pivotal role in executing the plan, which included identifying and negotiating with potential merger partners. As a direct result of HMP's leadership, the organization is now the behavioral health arm of the nation's largest Medicaid managed-care organization.

Creditor Advisory

HMP provides support to creditor groups with interests in healthcare provider organizations engaged in complex restructuring, bankruptcy, and distressed situations. Our services enable lender groups, bondholders, trade creditors, investors, and others to quickly and accurately evaluate the risks and opportunities associated with a provider's business plan. Our efforts are designed to help all of the parties make informed business judgments that will maximize overall recoveries.

Our creditor advisory services include:

  • Review of short-term cash flow projections
  • Analysis of cash conservation efforts and procedures
  • Analysis of business plans, including risks and opportunities
  • Valuation of collateral packages on both an ongoing or liquidation basis
  • Assistance in negotiation of amendment and forbearance agreements
  • Review and assessment of restructuring alternatives
  • Performance monitoring following business plan implementation

Financial Due Diligence

HMP's financial due diligence services are provided by a team of experienced healthcare executives who analyze the quality of earnings and working capital requirements through financial statements, patient mix and market placement assessments, and on-site discussions with medical staff, management, and board members. Our focused, tailored approach enables us to rapidly identify and understand potential deal breakers, value drivers, and other areas of interest specific to our clients.

Our financial due diligence services include:

  • Assessment of the target provider's quality of earnings, including the identification of overly aggressive accounting policies and the assessment of the adequacy of third party contractual allowances, as well as assessment for GAAP accounting compliance
  • Analysis of the cash flows revenue cycle (e.g., working capital changes, capital expenditures)
  • Review of on- and off-balance sheet assets and liabilities, including significant operating lease obligations
  • Use of our proprietary financial modeling and data analysis tools to assess market position and payor mix, specifically identifying market opportunities and trends in profitability as well as significant concentrations of risk
  • Evaluation of management's financial projections and business plans
  • Comprehensive discussion with management and their advisors
  • Performance of both buy-side and sell-side due diligence

Operational Due Diligence

Informed lenders and investors understand that successful transactions start with a full understanding of historical and projected financial information. To maximize returns while minimizing risks, hospitals and other providers must continuously improve operational efficiency, identify and convert market opportunities, and maximize the efficiency of cash flow. HMP's staff of experienced healthcare executives assists our clients in analyzing the quality and efficiency of critical patient services and processes. From our thorough, fact-based analysis, we identify, quantify, and validate opportunities for EBITDA improvement. Our integrated operational and financial due diligence staff work closely together to quickly assemble a comprehensive picture of the investment opportunity.