Hospital mergers keep getting bigger


Hospital consolidation slowed a bit last year, but the size of the deals was a “mega-merger” type in which even the seller had $1 billion in annual revenue, according to a new analysis.

Consulting firm Kaufman Hall’s analysis of mergers, acquisitions between hospitals and health systems in 2021 shows that “the number of transactions has decreased but the size of transactions has increased”.

“Eight of the 49 deals announced in 2021 (16.3%) were ‘mega-mergers,’ in which the smallest partner or vendor has average annual revenues above $1 billion,” Kaufman Hall said. “That was almost double the percentage for 2020 (8.9%) and the highest in six years.”

Among the report’s most notable deals was one of the nation’s largest investor-owned healthcare systems, Tenet Healthcare, which sold five hospitals and affiliated medical practices in South Florida to Steward Health Care for about $1. .1 billion, doubling the size of the “Steward presence”. in the state, the consultancy said.

But Kaufman Hall said the declining transaction numbers are partly related to “fewer independent, unaffiliated community hospitals seeking partnerships.”

“Organizations are focusing on partnerships with a strong strategic rationale and have become increasingly selective in identifying potential partners,” Kaufman Hall said in his report. “They are looking for partnerships that will have a transformative impact through the addition of new capabilities, improved intellectual capital and access to new markets or services.”

Certainly, the trend of accessing new markets via merger is already expected to continue from 2021 to 2022.

Take the merger announced last month between major cancer treatment providers. City of Hope is buying Cancer Treatment Centers of America for $390 million to expand nationwide beyond its Southern California base in a deal expected to close early this year.

City of Hope said the acquisition expands “the portfolio, reach and impact of City of Hope’s cutting-edge cancer services and capabilities, including research and development, into more communities across the country”.


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