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Prism Healthcare Partners, Principle Valuation to merge: 10 things to know

Chicago-based Prism Healthcare Partners and Principle Valuation are merging to combine their expertise in healthcare performance improvement and valuation and advisory services.

Here are 10 things to know about the transaction.

1. With the addition of Principle Valuation, Prism Healthcare Partners will offer hospitals, health systems, academic medical centers and other providers a full range of performance improvement services. In addition to expertise specific to labor costs, revenue cycle management, supply chain, physician practice management, and clinical operations and efficiencies, the firm will provide business valuation services for mergers and acquisitions, financial reporting, and real estate and tangible asset services. Their reports are also utilized by clients to comply with various state and federal laws as well as Stark and other regulatory requirements unique to the healthcare industry.  

2. "The merging of our two firms provides clients a trusted partner to help tackle a wider range of challenges and improve their bottom line," said David Shade, president and CEO of Prism Healthcare Partners. "Joining forces presents opportunities to expand our firms' market presence, extend and enrich client relationships, and increase the scale of operations and support for our teams. The end result will be a distinct and high-impact offering aligned with the evolving needs of the healthcare community."

3. Prism Healthcare Partners and Principle Valuation began negotiations in late August. The merger is expected to close in January 2016.

4. The combined firm will include approximately 150 associates, including both full-time employees and contractors.

5. Both firms are privately-owned and led by senior-level experts who have devoted their careers to healthcare. Together, Mr. Shade and Principle Valuation President Tim Baker have 70 years of experience in the industry. The two previously worked together at Wellspring Partners, which Mr. Shade founded in 2000 then sold to Chicago-based Huron Consulting Group in 2007. Mr. Shade served as CEO of Wellspring Partners, and Mr. Baker helped build and served as senior vice president of its advisory unit, Wellspring Valuation.

6. Both Mr. Baker and Mr. Shade emphasized the cultural commonalities between their respective firms, including collaborative working styles and active involvement of senior leaders in client engagements. Mr. Baker also said the firms have complemented each other well in their past engagements.

7. "The fit between Prism Healthcare Partners and Principle Valuation is natural," said Mr. Baker. "Both firms are established and well-respected healthcare provider-focused organizations with complementary cultures and approaches to client service. Merging will enhance our collaborative relationship to the benefit of clients and staff."

8. Along with valuation services covering real estate, equipment and business enterprise, one of Principle Valuation's consultancy specialties is relifing of depreciable assets, an accounting function that determines the realistic life span of hospital equipment and capital asset investments. Relifing allows organizations to more accurately reflect asset values for financial statements, insurance, bond rating and capital expenditure purposes.  

9. Mr. Shade said relifing is of great importance to hospital and health system CFOs across the country, and Mr. Baker and the Principle Valuation team are industry leaders for this capability. "Most hospitals have their fixed asset records and asset lives tied to the cost reimbursement era," he said. "The incentive was accelerated depreciation. Now hospitals are in need of a more accurate reflection of an asset's life that serves as a better economic indicator."

10. Scott Becker, publisher of Becker's Healthcare, said he expects the merger to be "a terrific combination."

"Both firms are led by high integrity, smart and seasoned professionals who have had great success to date," he said. "Further, leadership has worked with each other before.    We expect this to be an accretive combination."

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