Longstanding provider organizations are increasingly seeking to streamline their corporate structure and update their corporate image to project a modern look to their delivery of housing and care services. A corporate restructuring or rebranding raises numerous issues, and we have extensive experience in guiding nonprofit providers through such restructurings. We counsel providers considering such restructurings on issues including (1) corporate and organizational matters including tax exemption concerns, amending governing documents such as bylaws, creating a tax-exempt parent entity, and governance issues such as the composition of overlapping Boards; (2) tax and financial matters including PA Department of Revenue Sales and Use Tax exemption, and compliance review of existing bond and/or financial covenants; (3) regulatory matters at the state (Department of Health, Department of Human Services, and the Insurance Department) and federal level (Centers for Medicaid and Medicare Services) including the appropriate notice to such agencies as well as potential change of ownership issues; (4) operational concerns including the utilization of a management agreement and the transfer of assets between entities; (5) contractual matters including existing agreements with third parties and affiliated organizations; (6) real estate matters including possible lease arrangements with new entities and the ramifications for real estate tax exemption; (7i) intellectual property matters including fictitious names, servicemarks, and licensing agreements; (8) common pitfalls related to rebranding and restructuring; and (9) practical concerns such as selecting the right team of professionals from various disciplines to assist in the many components of restructuring and rebranding, creating a “rollout” action plan and/or timeline, and organizational dynamics which may be encountered along the way. A Corporate Reorganization is an exciting step for an organization, but is also one, especially for health care providers, that requires careful planning, and we have successfully guided clients through this process.
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