Hospital Merger and Acquisition Activity Expands in First Half of 2016, According to Kaufman Hall Analysis

Skokie, Ill., July 25, 2016 — Hospital merger and acquisition activity remained strong in the first half of 2016, according to the latest analysis by Kaufman, Hall & Associates, LLC, a leading provider of strategic, capital, financial, and transaction advisory services and software tools. Kaufman Hall identified 52 hospital and health system transactions in the first half of 2016, an increase of 6.1 percent from 49 transactions recorded in the first half of 2015. Looking just at the second quarter of 2016, there were 27 announced transactions, up 3.8 percent from 26 transactions recorded in the second quarter of 2015.

The sustained growth demonstrates that hospital and health system leaders across the country continue to turn to mergers, acquisitions, and other forms of partnerships as a means of reducing costs, enhancing competitive positioning, and building capabilities for a value-based business model.

More observations of note from the first half of 2016 include:

• Transactions occurred across a broad range of acute-care segments, including not-for-profit, for-profit, rural, urban, and academic health centers
• Of the 52 transactions in the first half of 2016, 39 involved acquisitions by not-for-profit organizations and 12 involved acquisitions by for-profit organizations; one transaction involved a not-for-profit/for-profit combination
• 12 transactions involved partnerships with faith-based organizations
• A total of 11 publically owned, not-for-profit hospitals were acquired
• Texas was the most active state with 11 transactions
• Kaleida Health was involved in four transactions, and HCA Healthcare was involved in three
• The largest deal announced in the second quarter of 2016 was Universal Health Services’ $445 million acquisition of the remaining interest in Valley Health System, which encompasses six acute care hospitals in Las Vegas

“The continuing uptick in mergers and acquisitions is not surprising,” said Anu Singh, Managing Director at Kaufman, Hall & Associates. “The industry is rapidly changing and many organizations are not optimally positioned to navigate the transition to value-based care on their own. Healthcare leaders should thoroughly evaluate the partnership options to help ensure strong, competitive positioning for their organizations into the future.”

Learn more about Kaufman Hall Mergers, Acquisitions, and Partnerships here.