SOURCE: Longfellow Benefits

February 20, 2008 11:08 ET

Hospital M&A Transactions Demand Vetting Employee Benefits, Longfellow Benefits Writes

Hidden Liabilities Lurk, Haraden Writes in Hospitals and Health Networks

BOSTON, MA--(Marketwire - February 20, 2008) - Employee benefits are often one of the last areas evaluated in hospital merger and acquisitions -- if they're considered at all -- despite the potential landmines, Patrick J. Haraden of Longfellow Benefits writes in Hospitals and Health Networks.

"After a merger, a healthcare organization may find itself saddled with hidden costs or liabilities," Haraden points out. "Its employees may become unhappy with their new benefits and leave. But with proper planning, a merger or acquisition can improve benefits and reduce costs."

Haraden, director of employee benefit services at the Boston-based employee benefits broker, says healthcare executives involved in M&A transactions need to consider these key points:

--  Uncover hidden liabilities -- medical and dental benefits usually have
    the greatest impact on costs, opportunities and employee relations.  But
    all benefit programs, including disability, time off, retirement and
    voluntary benefits, should be vetted.
    
--  Continuing COBRA coverage -- if the seller maintains health insurance
    coverage after the sale, it also must continue COBRA coverage to affected
    employees under the federal law that requires employers to extend coverage
    to former employees up to 36 months.  "Employers should create contract
    provisions for all parties to access each other's COBRA-eligible plan
    documents and records -- including notifications, eligibility, elections,
    waivers and payments -- for at least 36 months after the sale date," he
    writes.
    
--  Unique hospital opportunities -- Hospitals and healthcare systems are
    unique when it comes to benefits evaluations in mergers and acquisitions
    because of their dual roles as employer and provider of healthcare services
    for employees.  "Some healthcare organizations have taken advantage of
    their dual role. In a merger, these advantages can be magnified or modified
    to achieve the goals of both human resource departments and the CFO," he
    writes.
    

"If M&A due diligence regarding the employee benefit programs is thorough and considers all of the post-combination effects on all stakeholders, the transaction should close and appear seamless. Leaders may even get a pleasant surprise. The resulting employee program may produce economies and advantages that weren't anticipated. Your strategy and actions will determine whether you get an unexpected bonus or a rude shock," he writes.

The full article can be read online at http://www.hhnmag.com/hhnmag_app/jsp/articledisplay.jsp?dcrpath=HHNMAG/Article/data/02FEB2008/080219HHN_Online_Haraden&domain=HHNMAG.

Serving organizations in New England and nationally, Longfellow Benefits provides employee benefits, retirement plans and executive benefits. Its staff includes experts carrying top professional designations: Registered Employee Benefit Consultant (REBC), Chartered Life Underwriter (CLU), Registered Health Underwriter (RHU), Licensed Insurance Advisor (LIA), Master of Business Administration, Taxation (MBA), Certified Employee Benefits Specialist (CEBS), Certified Financial Planner (CFP®), Chartered Financial Consultant (ChFC) and Accredited Investment Fiduciary (AIF®).

For more information, visit www.longfellowbenefits.com or call 617-351-6000.

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