Minimizing antitrust exposure in a virtual merger.

As an alternative to complete mergers or joint ventures, hospitals recently have begun to explore virtual mergers, in which the parties are able to retain some managerial and financial independence while coordinating their mutual operations to financial advantage. Because virtual mergers are a recent phenomenon and can be structured in various ways, the antitrust risks associated with such transactions are unclear. A state antitrust challenge brought against an East Coast virtual merger and informal guidance by Federal antitrust attorneys suggest that the antitrust agencies will be inclined to challenge a virtual merger if the parties to the transaction retain too much independent decision-making authority. Hospitals that are considering a virtual merger therefore would do well to structure the transaction to combine governance and administration, financial assets, operations, and medical staffs as much as possible, while still allowing each party to the transaction to retain the independent decision-making authority each feels is necessary.