The number of hospital transactions continued to grow in 2015, increasing 18 percent over 2014 and 70 percent over 2010, according to an analysis by Kaufman, Hall & Associates.
Mergers, acquisitions and other types of partnerships are increasingly critical as hospitals focus on providing coordinated, cost-effective care, and these transactions will continue to be an integral part of hospital strategy moving forward, according to Patrick Allen, managing director at Kaufman Hall.
"Hospitals and health systems are facing extraordinary pressure to reduce costs, manage care more effectively across the continuum and improve patient engagement and experience," said Mr. Allen. "To achieve these goals, hospitals and health systems will continue to pursue strategic partnerships designed to achieve clinical alignment, network breadth and depth, operational efficiency and other critical capabilities."
Here are eight findings on hospital M&A from the Kaufman Hall analysis.
1. There were 112 hospital transactions announced in 2015, an increase over the 95 transactions that were announced in 2014 and a significant jump from the 66 that were announced in 2010.
2. The transactions announced last year took a variety of forms, including mergers, acquisitions, joint ventures and joint operating agreements.
3. Although 2015 was a busy year overall for hospital M&A, the pace of transactions was especially strong in the second half of the year.
4. In 28 of the transactions announced last year, the acquiring entity was for-profit.
5. A significant number of hospital transactions announced last year involved a for-profit hospital operator. Franklin, Tenn.-based Community Health Systems was involved in eight deals, while Brentwood, Tenn.-based LifePoint Health, or the joint venture Duke LifePoint Healthcare, was a part to six transactions. Ontario, Calif.-based Prime Healthcare Services was also extremely active last year with five transactions.
6. In 83 of the transactions announced last year, the acquiring entity was nonprofit.
7. Only one transaction announced in 2015 involved a nonprofit and for-profit entity jointly acquiring an organization.
8. The largest transaction announced last year was the merger of Renton, Wash.-based Providence Health & Services and Irvine, Calif.-based St. Joseph Health System — a deal that will create one of the largest nonprofit healthcare systems in the nation.
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