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The Dose - JK Wall

Welcome to The Dose, which tackles the finances behind local health care and life sciences and points to the most interesting national analysis. Your host is J.K. Wall.

Health Care & Life Sciences / Life Science & Biotech

Merger mania spurs Hall Render to add two more offices

October 19, 2015

Health care providers are getting bigger, and Hall Render Killian Heath & Lyman is trying to grow with them.

The Indianapolis-based law firm, which is the country’s largest firm focused solely on health care, opened two new offices this fall—in Dallas and Seattle—and has now added five new offices in the past 24 months.

The firm now employs 364 people nationwide at nine locations, with 225 of those workers at its headquarters in Indianapolis. The firm has hired 53 people just this year.

And Hall Render isn’t done growing. Managing Partner John Ryan said the firm would likely add “a handful” more offices in the next few years to fully serve the entire country.

“About five years ago, we had been courted by a number of national law firms that want to beef up their health care practice group. We could have gone that road, joined a large national firm that already had the national scaling,” Ryan said. “But the firm leadership set the vision then to become the preeminent health care law firm in the country. We knew that part of that required us to geographically scale ourselves across the country.”

That need for scale is growing each year, as Hall Render’s main type of clients—hospitals, physician practices and long-term care providers—combine at a rapid clip.

In 2014, there were 752 mergers and acquisitions valued at $62 billion in the health care services sector, according to a March report by Connecticut-based research firm Irving Levin Associates Inc. That was up about 18 percent from the previous year.

Among just hospitals, there were 95 mergers last year and 98 in 2013—both totals running about 50 percent higher than was the case in 2010, according to data collected by Chicago-based consulting firm Kaufman Hall & Associates.

“Some of the deal-making activity in 2014 was a direct result of the mega-mergers of 2013,” when two of the industry’s biggest chains—Tenet Healthcare and Community Health Systems— made major acquisitions, said Lisa E. Phillips, editor of Irving Levin’s 2015 Health Care Services Acquisition Report. “Smaller hospitals were ready to merge with larger systems in order to stay afloat.”

Hall Render’s Ryan said he expects the consolidation trend to continue for many years.

“We’ve probably scratched the surface on the amount of consolidation that we’re going to see in the next 10 to 15 years,” he said. He noted that the Affordable Care Act, better jknown as Obamacare, is pushing hospitals and doctors to get larger. And the pending mergers of the nation’s largest health insurers—Anthem Inc.’s purchase of Cigna Corp. and Aetna Inc.’s purchase of Humana Inc.—could have the same effect.

Mergers mean the more than 1,500 health care entities operated by Hall Render's clients are strewn around the country. For example, one of the Hall Render’s largest clients, St. Louis-based Ascension Health, owns 131 hospitals and more 1,900 sites of care, which are located in 24 states and Washington, D.C. Ascension is the parent organization of Indianapolis-based St. Vincent Health.

“You typically see clients that have operations in multiple states, and sometimes across the entire nation,” Ryan said. “In order for us to stay relevant to that ever-consolidating health care industry, we need to remain scaled.”

Ryan said Hall Render is looking to add offices in the southwest and southeast regions of the country, because it has clients operating there, but no physical presence.

Being larger helps Hall Render have experts in specialized areas of health care law, wherever they happen to live.

Other firms that are much larger than Hall Render have placed health lawyers in all their offices around the country, and Hall Render needs compete with that, Ryan said.

For example, Morgan Lewis, a law firm based in Washington, D.C., has 265 health lawyers spread among its 28 office locations worldwide—with 17 of those in the United States, according to a 2014 ranking by Modern Healthcare magazine.

Also , Boston-based Ropes & Gray had 202 health lawyers in its 11 office locations, six of which are in the United States, according to the Modern Healthcare ranking.

And major firms—such as New York-based Epstein Becker & Green and Atlanta-based King Spalding—have significant health care practices, with 127 and 139 health lawyers, respectively, according to Modern Healthcare.

Hall Render, with 166 health lawyers, ranked third in Modern Healthcare’s list, which was based on 2013 data. Now, after adding offices in Denver, Dallas, Philadelphia, Seattle and Washington, D.C., Hall Render has 199 health lawyers.

More than half of those—105—are in Indianapolis. The new office in Seattle, which joined Hall Render on Sept. 1, added five attorneys, and the Dallas office, which joined Hall Render Oct. 1, added another six.

Before its recent expansion, Hall Render’s offices were exclusively in the Midwest—Detroit, Indianapolis, Louisville and Milwaukee.

“With a few more offices, we should feel comfortable that we’ve got a physical presence in every region in the country,” Ryan said. “And then from there, we will contemplate additional offices in those regions in order to provide comprehensive health care services. Just like we did in the Midwest.”

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