There are two hospitals that currently operate autonomously but are in reasonably close proximity to each other in a mid-sized metropolitan area of about 300,000 persons. The hospitals are 285 bed St. Anywhere Medical Center and nearby 53 bed Community Hospital. You will see from review of the attached financial statements that Community Hospital is in some difficulty. You may assume that the current financials have been the same for the past three (3) years. Also assume that St. Anywhere is part of a large, nonprofit multi-hospital organization and would like to acquire Community in a purchase transaction. The governing board at Community is willing to entertain such negotiations at the right price. So from a finance perspective, discuss the following issues:

• Again assuming that St. Anywhere does acquire Community, how would you propose structuring the merger/acquisition? What would be the valuation of the transaction? PLEASE GIVE A PRICE AND EXPLANATION ON HOW YOU REACHED THAT PRICE
• Are there any other key deal points you would propose?

D E F G H Inpatient Days Discharges 3,354 2,114 1,256 642 400 783 367 6,435 2,481 F11 4 x fx A B 1 Operating Statistics for Both Hospitals 2 3 Community Hospital 4 Service Beds Bed Days Available 5 Adults & Peds 33 8,085 6 ICU 12 2,940 7 Nursery 8 Observation Days 9 Labor & Delivery Days 8 1,960 10 Grand Total 53 12,985 11 12 St Anywhere Medical Center 13 Service Beds Bed Days Available 14 Adults & Peds 202 73,932 15 ICU 32 11,712 16 CCU 27 9,882 17 Inpatient Rehab 24 8,784 18 Observation Days 19 Grand Total 285 104,310 20 21 22 23 24 25 26 27 Inpatient Days Discharges 45,168 12,554 8,241 4,201 5,113 414 3,441 66,164 12,968 D E F G H Inpatient Days Discharges 3,354 2,114 1,256 642 400 783 367 6,435 2,481 F11 4 x fx A B 1 Operating Statistics for Both Hospitals 2 3 Community Hospital 4 Service Beds Bed Days Available 5 Adults & Peds 33 8,085 6 ICU 12 2,940 7 Nursery 8 Observation Days 9 Labor & Delivery Days 8 1,960 10 Grand Total 53 12,985 11 12 St Anywhere Medical Center 13 Service Beds Bed Days Available 14 Adults & Peds 202 73,932 15 ICU 32 11,712 16 CCU 27 9,882 17 Inpatient Rehab 24 8,784 18 Observation Days 19 Grand Total 285 104,310 20 21 22 23 24 25 26 27 Inpatient Days Discharges 45,168 12,554 8,241 4,201 5,113 414 3,441 66,164 12,968