Syracuse — SUNY Upstate University Hospital paid nearly $10 million to outside experts for advice on its aborted acquisition of Crouse Hospital.
The money went to eight consulting firms between 2020 and 2023 for help preparing documents submitted to state regulators and other services related to the proposed merger and acquisition.
Upstate disclosed details about the consulting fees to syracuse.com | The Post-Standard in response to a Freedom of Information Law request.
The hospitals announced last month they were dropping the merger plan because it was no longer feasible given changing financial conditions.
The proposed deal, announced nearly a year ago, would have shaken up the Syracuse health care market and left Syracuse with just two hospital systems — Upstate and St. Joseph’s. The merger would have given Upstate a 71% share of the Syracuse hospital market.
The hospitals said the merger was necessary to provide long-term financial stability for Crouse.
One of the consultants projected Crouse’s annual losses could balloon to $45 million by 2026 if it continued operating on its own and did not tie the knot with Upstate.
The Federal Trade Commission opposed the merger, saying it would increase patient costs, hurt the quality of care and reduce wages for hospital employees.
The highest-paid consultant was Hogan Lovells, one of the world’s biggest law firms, which pocketed $3.36 million.
That firm has a lot of expertise in hospital mergers and acquisitions. It successfully thwarted an effort by the FTC in 2020 to block a merger of the Albert Einstein Healthcare Network, an academic medical center in Philadelphia, with Thomas Jefferson University.
Upstate’s consultants also included firms specializing in accounting, investment banking, health care finance, engineering and economics.
Hospitals use outside consultants for advice on mergers because their own employees don’t have the necessary expertise, said Tom Dennison, a health care expert and retired Syracuse University professor.
Hiring big accounting firms to develop financial projections for mergers and acquisitions is costly. That’s because the work is detailed, time-consuming and the firms can be sued if the projections turn out to be wrong, said Dennison, who used to work for Pricewaterhouse Coopers.
While $10 million is a lot of money, it’s not that big of an expense spread out over three years for a hospital like Upstate with an annual budget of more than $1.4 billion, Dennison said.
Dr. Mantosh Dewan, Upstate’s president, said last month the hospitals may dust off the acquisition merger proposal in the future if economic circumstances change.
If that happens most of the $10 million worth of consulting work will have to be done all over again to reflect changing financial and economic data, Dennison said.
Consultant payments related to Upstate’s proposed acquisition of Crouse Hospital
Hogan Lovells: $3.36 million
Raymond James: $2.5 million
Grant Thornton: $1.64 million
Cicero Consulting: $115,899
As an Amazon Associate I earn from qualifying purchases.
Welcome to the discussion.
Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.