Number of Hospital Transactions Remains High in 2014 According to Kaufman Hall Analysis

Ninety-five hospital transactions were announced in 2014, representing another year of strong merger and acquisition activity, according to a new analysis by Kaufman, Hall & Associates, LLC. Although the number of deals in 2014 declined slightly compared with 2013, this is the third consecutive year in which at least 95 hospital transactions were announced, as hospitals continue to position themselves for value-based payment and population health management.

The number of transactions in 2014 is a 44 percent increase compared with the 66 transactions in 2010. Transactions rose in the fourth quarter of 2014, with 29 transactions announced, compared with 25 in the fourth quarter of 2013. Of the 95 transactions in 2014, 80 involved acquisition of not-for-profit organizations and 15 acquisition of for-profit organizations.

Hospital transactions in 2014 represent an acceleration in larger, more flexible, and less traditional combinations, as organizations seek creative approaches to attaining the scale and scope needed to manage health under value-based payment.

“We are seeing more transactions designed to form large, fully integrated health systems, as well as more partnerships being explored between strong community hospitals and small health systems,” said Patrick Allen, Managing Director, Kaufman Hall. “We are also seeing more innovative types of partnership arrangements and more cases in which traditional lines of organizational types—hospitals, insurers, and physician organizations—are being blurred.”

Using Kaufman Hall’s database, the analysis includes reported combinations of acute-care hospitals in the U.S., including mergers, acquisitions, joint ventures, and member substitutions. The total number does not include specialty hospital, long-term acute-care hospital, or surgical center transactions; minor asset sales from closed hospitals; affiliations or management service agreements; or international transactions.