There is rapid consolidation in the healthcare industry today as hospitals and health systems attempt to expand their market presence, seek financial sustainability and strive to become more efficient. Although mergers, acquisitions and other affiliations are commonplace in the healthcare industry, not every potential deal comes to fruition.
Listed below are 10 hospital and health system transactions that fell through so far this year, starting with those most recently covered by Becker's Hospital Review.
1. In September, Boston-based Beth Israel Deaconess Medical Center and Burlington, Mass.-based Lahey Health reached an impasse in their attempt to join forces for the third time in the past four years. How to share the leadership of a combined organization and how to manage physician groups were two of the major issues the systems couldn't agree on. Although Beth Israel and Lahey reached a dead end in their merger talks again, the two systems may reenter discussions in the future, as their leaders believe there is a strong business rationale for the organizations to join forces.
2. In August, Wyoming, Mich.-based Metro Health Hospital decided not to move forward with a planned affiliation with Franklin, Tenn.-based Community Health Systems — a deal that had been in the works since 2013. Under the proposed deal, CHS would have purchased an 80 percent equity interest in the hospital. Metro Health provided little explanation as to why the deal fell through. Regarding the transaction, Doyle Hays, chairman of Metro Health's board of directors, said, "At each step in the process, both organizations committed to finding the right fit for patients, employees, physicians and the local community. While each organization worked hard to make the transaction possible, we have not been able to agree on some important details."
3. Columbus, Ga.-based St. Francis Hospital began exclusive take over discussions with a subsidiary of Franklin, Tenn.-based Community Health Systems in April. St. Francis Hospital ended those talks July 29. The following day, the hospital announced it had signed a letter of intent to be acquired by Brentwood, Tenn.-based LifePoint Health. CHS subsequently filed a lawsuit against St. Francis Hospital over the failed deal.
4.Marietta, Ga.-based WellStar Health System and Atlanta-based Emory Healthcare began discussing the prospect of joining forces in February. In June, WellStar scrapped plans to merge with Emory after the WellStar board of trustees determined a new strategic direction.
5. In April, River Valley Health Partners in East Liverpool, Ohio, and Cincinnati-based Mercy Health withdrew the letter of intent to merge the two systems signed in late 2014. Regarding the failed deal, Pete Wick, chairman of the board of trustees for RVHP, said, "as the merger process progressed with Mercy Health the decision was made that we may need to move in a different direction." After RVHP called off the deal, Mercy Health said it would explore partnering with another system.
6. In April, Boston Medical Center, the largest safety-net hospital in Massachusetts, and Tufts Medical Center in Boston were pushing to merge by the end of 2015. Just one month later, the two organizations scrapped their merger plans and few details were offered as to why the deal was called off. Michael Wagner, MD, CEO of Tufts, and Kate Walsh, CEO of BMC, released a joint statement saying it is "best for our medical centers to remain separate."
7. Nashville, Tenn.-based Hospital Corporation of America's relationship with Tulane University in New Orleans caused the hospital operator's discussions about taking over East Jefferson General Hospital in Metairie, La., to end in April. HCA operates Tulane Medical Center in New Orleans and Tulane-Lakeside Hospital in Metairie. The operating agreement for those facilities contain non-compete clauses, and HCA would have violated those clauses if it had entered into a transaction to operate East Jefferson General Hospital. HCA attempted to restructure the partnership agreement it has with Tulane to allow for the transaction. However, the hospital operator failed in that attempt, which led to negotiations over HCA taking over East Jefferson General Hospital to end.
8. Prime Healthcare Services, a for-profit hospital operator based in Ontario, Calif., decided to pass on a deal to acquire Los Altos, Calif.-based Daughters of Charity Health System's hospitals. The sale of the DCHS facilities to Prime was conditionally approved by the California Attorney General's Office in February. After considering the conditions placed on the transaction, Prime decided to back out of the deal in March. In September, Prime filed a federal civil rights action claiming California Attorney General Kamala Harris abused her constitutional powers by imposing unprecedented conditions on the sale of the hospitals to Prime.
9. In February, Dallas-based Tenet Healthcare and Connecticut Gov. Dannel Malloy ended negotiations over Tenet purchasing five nonprofit hospitals: Waterbury (Conn.) Hospital, Bristol (Conn.) Hospital, Saint Mary's Hospital in Waterbury (Conn.) and Eastern Connecticut Health Network in Manchester, Conn., which owns Rockville General in Vernon, Conn., and Manchester (Conn.) Memorial. Tenet first called off the deal in December 2014. However, Tenet agreed to renew negotiations with Gov. Malloy in January after 40 Connecticut lawmakers urged the governor to step in and try to get Tenet to reconsider the decision. Regarding the deal officially being dead, Tenet President and CEO Trevor Fetter said, "While Tenet is disappointed with the outcome, we wish the hospitals, local community leaders and Gov. Malloy the very best in their effort to build a sustainable future for these and other hospitals in the State of Connecticut."
10. In February, Boston-based Partners HealthCare backed out of a deal to acquire South Shore Hospital in Weymouth, Mass. The news came after a Suffolk Superior Court Judge rejected a settlement deal in January that would have allowed Partners to acquire South Shore and Hallmark Health System in Melrose, Mass.