Is a Statutory Hospital Merger a Bona Fide Sale?

On September 13, 2010, Becker’s Hospital Review published an article written by Hedy S. Rubinger and Diana Rusk Cohen titled “Is a Statutory Hospital Merger a Bona Fide Sale?” The regulatory status of a statutory merger between hospitals can have significant financial ramifications. Regulations allow realization of gains or losses from the disposition of depreciable assets on a merged entity only if the merger qualifies as a bona fide sale. As case law demonstrates, hospital mergers do not always meet this important criterion. Ms. Rubinger and Ms. Cohen point out that hospitals and other health entities need to consider the regulatory ramifications of mergers, consolidation and other forms of ownership transfer. They detail two specific cases in which the mergers’ underlying financial structures played a significant role in the Centers for Medicare and Medicaid Services determinations and court holdings. Healthcare entities should consider such cases when structuring a merger. To read the full article, please click here.

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