Columbus Regional Healthcare System engaged Stroudwater in 2017 to provide valuation services and a community benefit analysis related to its proposed affiliation with Piedmont Healthcare. Columbus Regional Healthcare included two acute-care hospitals in Columbus, Georgia with nearly 700 combined beds, as well as a cancer center, medical group, and retirement community. The intent of the strategic affiliation was to create a Columbus-area regional hub supported by a larger system, providing the community with more resources and strengthening access to care. The transaction was subject to review by the Georgia attorney general under the Georgia Hospital Acquisition Act, which stipulates that transactions involving a not-for-profit hospital must provide adequate community benefits that reflect the fair market value of the entity being transferred.
While many of the deal terms had been negotiated with the assistance of transaction advisors, the specific language in the agreements did not reflect the full intent of the parties regarding debt and capital commitment treatment. The open legal interpretation of the language put financial commitments at risk without proper recourse for Columbus Regional Health System.