Hospital Merger and Acquisition Activity Rising Among Larger Organizations, According to Kaufman Hall Analysis
Six Large-scale Mergers Announced in First Half of 2017
Skokie, Ill., July 19, 2017 — Partnership transactions among hospitals and health systems rose 15 percent in the second quarter of 2017, from 27 to 31 transactions compared to the second quarter of 2016. Fifty-eight transactions have been announced so far this year, up from 52 this time last year, according to the latest analysis by Kaufman, Hall & Associates, LLC, a leading provider of strategic, capital, financial, and transaction advisory services and software tools.
Transactions among large organizations with nearly $1 billion or more in revenues are on the rise, with a total of six such transactions announced in the first half of 2017. Only four such deals were announced in all of 2016. The three announced in the second quarter include the merger of Steward Health Care and IASIS Healthcare, a deal that would make Steward the country’s largest private for-profit hospital operator with 36 hospitals in 10 states. Also announced were the acquisition of Providence, Rhode Island-based Care New England Health System by Boston-based Partners HealthCare, and a partnership between Greenville Health System and Palmetto Health in South Carolina.
The uptick in transactions among larger and like-sized organizations is likely to continue in the months ahead, says Patrick Allen, Managing Director at Kaufman Hall. “As the field of potential partners evolves, leaders of many larger health systems are thinking strategically about how best to build the scale and capabilities needed to remain competitive in a rapidly changing healthcare environment,” he said. “Traditional providers face an array of uncertainties, from changing federal healthcare policies to shifting payment and care delivery models. Health systems across the country are looking to grow and transform their operations to ensure stability in the face of turbulent times.”
Of the transactions announced in the second quarter of 2017, eight involved for-profit acquirers, 22 involved not-for-profit acquirers, and one was a for-profit/not-for-profit combination. Pennsylvania and Texas saw the most activity, with four announced transactions each in the second quarter. Tennessee-based Community Health Systems was involved in four transactions, and HCA was involved in three. In Massachusetts, five hospitals have announced plans to merge as one large, regional system. The hospitals involved are Anna Jaques Hospital, Beth Israel Deaconess Medical Center, Lahey Health, New England Baptist Hospital, and Mount Auburn Hospital.
About Kaufman Hall
Kaufman Hall provides management consulting and software to help organizations realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods into their strategic planning and financial management processes, and quantify the financial impact of their plans and strategic decisions to consistently achieve their goals.
Kaufman Hall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of Kaufman Hall advisory services are unparalleled, encompassing strategy; financial and capital planning; cost transformation; treasury and capital markets management; and mergers, acquisitions, partnerships, and joint ventures.
Kaufman Hall software includes the Axiom Healthcare Suite, providing sophisticated, flexible performance management solutions that empower finance professionals to analyze results, model the future, and optimize organizational decision making. Solutions for long-range planning, budgeting and forecasting, performance reporting, capital planning, and cost accounting deliver decision support, reporting, and analytics within an integrated software platform. Kaufman Hall’s Peak Software empowers healthcare organizations with clinical benchmarks, data, and analytics to provide a higher quality of care for optimized performance and improved patient outcomes.