The second quarter of fiscal year 2015 saw an uptick in hospital and health system merger and acquisition activity, according to the latest analysis by Kaufman, Hall & Associates.
There were 26 hospital and health system transactions in the second quarter, three deals more than the 23 transactions recorded in the first quarter, according to Kaufman Hall's analysis. In total, 49 transactions were announced in the first half of FY 2015, compared to the 43 transactions announced in the first half of 2014.
"We are not surprised by this increase in M&A activity, as hospitals and health systems work to achieve goals such as optimizing their delivery networks, enhancing efficiency, and solidifying market position," said Kit Kamholz, managing director at Kaufman Hall. "Over time, we expect that fewer transactions will involve acquisition of financially struggling entities and more will involve strategic alignments between successful organizations with complementary strengths."
The transactions announced so far this year have occurred across nonprofit, for-profit, rural, urban and academic health centers. Of the 49 transactions in the first half of FY 2015, 42 involved the acquisition of a nonprofit organization — 34 by other nonprofits and eight by for-profit hospitals or health systems, according to the report. The total operating revenue of organizations acquired in the first half of 2015 was more than $12 billion, up from $10 billion during the same time period last year.
The largest deal of the second quarter was Chicago-based Ventas' acquisition of Nashville, Tenn.-based Ardent Medical Services from New York City-based Welsh, Carson, Anderson & Stowe for $1.8 billion, according to the report.