Change of Ownership (CHOW)

We counsel healthcare providers and investors on the regulatory aspects involved in structuring and implementing transactions and work to ensure there are no barriers to achieving our clients’ growth goals and objectives.

Overview

The Arnall Golden Gregory Change of Ownership (CHOW) team leads all regulatory aspects of healthcare transactions for investors, operators, managers, capital partners, and developers of all sizes and in all 50 states. To date, the CHOW team has served as primary regulatory counsel in transactions valued at more than $35 billion.

Our healthcare lawyers represent clients in CHOW matters, including asset and stock transactions, mergers, restructurings, and other organizational changes, and serve as lead regulatory counsel on many of the largest and most complicated healthcare transactions in the country. These transactions involve providers across the continuum of care and include nursing homes, skilled nursing facilities (SNF), assisted living facilities (ALF), continuing care retirement communities (CCRC), hospitals, home health agencies, hospices, behavioral health and developmental disabilities providers, pharmacies, laboratories, ambulatory surgery centers, physician groups, and more.

We coordinate all regulatory aspects of healthcare transactions and interact with regulators to help our clients accomplish their goals. We counsel privately-owned and publicly-traded companies of all sizes, private equity investors, REITs, developers of healthcare facilities, and management companies to resolve regulatory issues and find creative solutions to potential issues that arise during due diligence. Whether structuring transactions to expedite closings, planning ahead to minimize cash flow disruption, simplifying disclosures related to complex ownership structures, facilitating change of ownership processes, or advising on change of ownership guidelines, we streamline the regulatory process.

The CHOW team helps our clients obtain certificates of need, licensure, Medicare and Medicaid certification, MCO enrollment, and managed care credentialing. We also perform all regulatory due diligence, counsel on CARES Act Provider Relief Funding, review, revise, and negotiate operations transfer agreements (OTAs) and all other transaction documents, and prepare and submit post-closing regulatory filings to ensure compliance with federal and state law and minimize regulatory risk for our clients. Our experience in the industry ranges from single-facility purchases and sales to many of the largest multi-state, multiple service-line transactions.

Experience

Handled all regulatory aspects of a $4.2 billion merger of two non-traded healthcare REITs, which created a new REIT with properties across 36 states, as well as in the United Kingdom and Isle of Man. The REIT is comprised of senior housing, skilled nursing, medical office buildings, and hospitals. The merger was completed in preparation for a potential public offering. If the public offering occurs, it is predicted to be the largest ever for a healthcare REIT.
Advised a national REIT in its tax restructuring, which involved more than 140 facility operators in 33 states and five separate third-party management companies, with changes of ownership triggered in most states. In addition to providing structure advice, AGG prepared all filings and obtained all regulatory approvals required for the restructure, including all pre- and post-closing filings.
Represented a publicly traded REIT in all regulatory aspects of its transfer of management of 90 senior living communities in 20 states. The communities had been adversely impacted by the COVID-19 pandemic and were transferred to eight different third-party managers.
Advised client in its merger with a national skilled nursing provider, with operations in Alabama, Kansas, Mississippi, Missouri, Ohio, Indiana, Tennessee, and Texas, totaling sixty-one separate facilities with 7,250 skilled nursing beds. AGG handled all pre- and post-closing regulatory submissions, including obtaining pre-closing regulatory approvals on an expedited basis.
Advised a private equity client in its stock acquisition of a Florida independent clinical laboratory company. AGG performed regulatory diligence on the seller, including reviewing its licensure, CLIA certifications, and Medicare and Medicaid enrollment, HIPAA compliance, anti-kickback compliance. AGG also provided regulatory comments to the transaction agreement and completed required filings, which were complicated by Florida requirements deeming certain clinical laboratory stock transactions a full change of ownership.
Represented a national home health provider in its membership interest acquisition and entity conversion of an existing Florida home health agency with five locations. Because Florida deems a direct ownership change a full change of ownership, the membership interest purchase triggered extensive licensure and Medicaid filings, as well as notifications and filings for nine third-party payors, which included managed care organizations and school boards. Due to COVID-19, there were also certain survey issues which also required post-closing navigation of virtual “on-site” compliance reviews for Medicaid purposes. AGG also assisted with the drafting of transaction documents and an in-depth regulatory diligence review.
Advised on all regulatory aspects of the development and operations of a new Georgia Continuing Care Retirement Community (CCRC). AGG prepared and shepherded the CCRC in its application, survey, and receipt of state nursing home and assisted living community licenses, CLIA waiver certificates, and Medicare Part A and Part B enrollments on a short timeline.
Represented a new RIDEA entrant to the long-term care space in its acquisition by asset purchase of a SHOP portfolio (including assisted living facilities and independent living facilities) in Florida, Georgia, Texas, Michigan, and Ohio. AGG negotiated the regulatory aspects of all transaction documents, including interim bridge structures, which included interim management agreements and subleases. AGG performed due diligence on matters related to licensing, survey history, compliance, Provider Relief Funds, and anti-kickback issues and handled all state licensure change of ownership filings.
Counseled clients on the ability of parties to a CHOW to retain Department of Health & Human Services’ (HHS) COVID-19 Provider Relief Funding. This included advising clients on the return of Funds issued to outgoing operators, application for new operator Funds, the negotiation of transaction agreement provisions related to Provider Relief Fund retention and liability, and interfacing with HHS and the Health Resources & Services Administration to resolve Fund issues.
Represented a hospital authority in its plan development and execution of changes involving two nursing homes. The client’s goals were to receive the approvals necessary for a newly built nursing home, which would replace an existing nursing home, while simultaneously decreasing its licensed and certified capacity and moving the nursing home beds to another home operated by the hospital authority. To accomplish the client’s goals, AGG coordinated the certificate of need, licensure, and Medicare filing process, as well as the state survey process.
Represented a national intellectual and developmental disabilities (IDD) provider in its introduction to the State of Georgia, which involved the acquisition via asset purchase of an existing IDD provider with 35 locations and Medicaid enrollments through Georgia’s COMP and NOW waivers. AGG coordinated the licensure and Medicaid filing process, including all filings with the Department of Behavioral Health and Developmental Disabilities. AGG also assisted with the negotiation of transaction agreements and performed a detailed diligence review.
Represented a publicly traded REIT in a $1.125 billion acquisition and restructuring of a senior housing provider that operates 96 senior-living communities and pharmacies.
Represented a national hospice provider in a $1 billion acquisition by a private equity firm and health system, which involved the consolidation of another large hospice and home health provider in eight states. AGG also handled the regulatory aspects of the subsequent internal restructuring and rebranding as part of the full integration of the two companies.
Advised a leading owner-operator of integrated senior healthcare campuses in multiple facility refinancings, including with HUD, in several states, including Indiana, Kentucky, Michigan, and Ohio. AGG assisted with determining any filing requirements for the refinancings, the compilation of filings, and the opinion-writing process for the facilities, including nursing facilities, assisted living facilities, residential care facilities, and homes for the aged.
Advised a large pharmacy operator in its acquisition of more than 20 Missouri pharmacies out of bankruptcy. In order to effect the acquisition, AGG handled the preparation of transaction documents, filings, and interactions with the U.S. Drug Enforcement Administration, Centers for Medicare and Medicaid Services, State Board of Pharmacy, and the State Medicaid Agency. AGG also reviewed the purchase agreement from both a healthcare regulatory and FDA perspective.
Represented a large multi-state radiation oncology provider in obtaining necessary regulatory approvals to proceed with an international merger.
Represented a long-term care provider in its sale to a publicly traded company of over 50 facilities, which included skilled nursing, assisted living, and independent living facilities in 11 states, including Florida, Georgia, Louisiana, Maryland, New Jersey, New York, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. AGG prepared all filings associated with the stock transfer of the providers, including all pre- and post-closing filings, and advised on regulatory components of the deal documents. The transaction was valued at over $400 million.
Handled the filing of a full certificate-of-need application and all related licensure and enrollment filings for a skilled nursing provider to acquire real estate from a hospital authority.
Represented a healthcare private equity investor in the $2.4 billion dollar sale of the real estate assets of a national nursing home company.
Advised a longstanding private equity client on all regulatory aspects of a consensual receivership with three different operating companies in eight states. AGG oversaw the transition of the facilities to new operators during the receivership and negotiated regulatory terms, including indemnities related to successor liability. The facilities were in Wisconsin, Minnesota, Idaho, Oregon, Washington, West Virginia, Delaware, and Pennsylvania.
Assisted in the expedited sale of a Midwest-based ambulance provider.
Represented a hospice provider in the acquisition of a hospice company with more than 60 locations in 14 states.
Represented a private investment management firm in an $870 million acquisition of the real estate and transfer of operations to 4 separate operating entities for over 160 senior care facilities across 12 states, including both skilled nursing and assisted living facilities.
Represented a private investment management firm in an acquisition of a 5,000-person community-based organization that provides services and support for people with developmental and intellectual disabilities across the U.S. The transaction involved conversion from not-for-profit to for-profit entities that held licenses throughout the country.
Represented a receiver in an eight-state acquisition of a hospital chain pursuant to a court-approved comprehensive settlement agreement.
Represented one of the nation’s largest private post-acute care providers in a merger with a publicly traded post-acute care provider resulting in a combined publicly traded company with annual revenues of $5.5 billion.
Formed a new company to take over operations of 12 skilled nursing and assisted living facilities in Virginia. For tax and business reasons, the deal had to be expedited to close on a particular date. AGG formed and structured the new business, negotiated financing, advised on healthcare regulatory issues (including certificate of public need, licensure, Medicare and Medicaid), obtained all necessary regulatory and business authorizations in order to proceed with the closing, established the credit facility to fund the acquisition and working capital, negotiated transaction documents (including the operations transfer agreement, management agreement, and other transaction documents), negotiated the transfer of the operations and the lease of the real estate, and addressed environmental and employment-related issues.
Represented a healthcare operator in its acquisition of a Georgia continuing care retirement community (CCRC) and provided transaction support, including limited diligence, the filing of certificate of need, Medicare, Medicaid, and multiple licensure applications, as well as ancillary license applications, structuring advice, and negotiated regulatory components of the underlying deal documents. The CCRC had a skilled nursing facility, assisted living community, personal care home, and independent living component, and was regulated by both the Georgia Department of Community Health and the Office of Insurance and Safety Fire Commissioner. The transaction required a unique focus on the nursing facility’s certificate of need, which was initially obtained in the 1990s during changing certificate of need requirements. The client ultimately received a favorable determination from the Georgia CON agency and closed the transaction on its originally scheduled closing date.
Provided overall transaction advice for Griffin-American Healthcare REIT IV when it acquired the 1,140-unit, nine-property Central Florida Senior Housing Portfolio for approximately $110 million. AGG advised on real estate, healthcare regulatory, corporate, and tax matters. The acquisition was completed pursuant to a joint venture. AGG’s assistance included doing transaction structuring and acquisition due diligence, which included real estate, corporate, and healthcare due diligence, such as reviewing surveys, licenses, permits, payor agreements, compliance program status, and HIPAA. AGG also performed the regulatory change of ownership (CHOW) work and negotiated the transaction documents. One unusual aspect of the deal was that Medicaid payments made to the facilities came through managed care organizations, so AGG interacted with both the Medicaid agency and six managed care organizations. Managed care organizations contract with the state to enroll providers to receive Medicaid funds for programs that typically do not fall under Medicaid.
Assisted a national REIT in its minority investment in a portfolio of a variety of healthcare providers, including assisted living, memory care, hospice, and private-pay in-home care. The providers were in multiple states, including Arizona, California, Illinois, Texas, Utah, Washington, and Wisconsin. AGG’s involvement included in-depth diligence, including a review of the providers’ licenses, permits, certifications, and accreditations, PEPPER reports, government investigations and surveys, hospice cap calculations, compliance program, background screening, HIPAA, medical directorships, admission agreements, commercial payor audits, and corporate practice of medicine. AGG also assisted with preparing the underlying investment agreement and related disclosure schedules.
Advised on an asset transaction for a skilled nursing facility operator which operates senior-care facilities in several small Georgia communities. Because the transaction involved a hospital authority owner of the real estate, AGG handled the filing of a full certificate-of-need application. This 60-day process requires gathering a significant amount of information and data.