Healthcare is shifting to a multi-region model and the number of health systems operating in multiple states is rapidly increasing.
The trend is becoming more prominent as health systems diversify portfolios, increase their bargaining power with payers and vendors and pursue further economies of scale amid challenging financial headwinds.
The Federal Trade Commission also has challenged several recent in-market hospital deals, which is driving health systems to increasingly look outside their traditional service areas to expand.
Here are three health systems that recently acquired or plan to acquire their first hospital in an adjacent state:
1. Kansas City-based University of Kansas Health System on July 1 acquired Missouri. Liberty (Mo.) Hospital. The transaction sees KU Health grow into a nine-hospital system, including seven acute-care hospitals and two behavioral health facilities. Liberty Hospital is its first hospital in Missouri.
Notably, 35% of KU Health's patients come from Missouri, making it "a perfect opportunity to partner with another independent hospital in a prime area for our health system," Bob Page, president and CEO of the health system, told Becker's. "We also have that cultural compatibility, so it was pretty much a no-brainer for us to pursue."
2. Greenville, S.C.-based Prisma Health plans to enter Tennessee by acquiring Blount Memorial Hospital, a 304-bed community hospital in Maryville, Tenn. The 18-hospital system has committed to investing $364 million into Blount Memorial should the deal close. Several health systems were interested in acquiring Blount Memorial, according to hospital leaders.
"Expanding to desirable nearby markets with respected regional hospitals like Blount Memorial strengthens our scale, capabilities, relevance, resources, and attractiveness to top talent and industry partners — all attributes of leading health care organizations," Prisma President and CEO Mark O'Halla said.
3. Dalton, Ga.-based Hamilton Health Care System plans to acquire Tennova Healthcare-Cleveland (Tenn.), a 351-bed hospital from CHS. The $160 million deal, expected to close in the third quarter, would mark Hamilton's entry into the Tennessee hospital market. The nonprofit, independent health system also plans to rebrand to Vitruvian Health as part of its regional expansion plans.
"As a not-for-profit and one of the few remaining independent health systems in the region, above all, we are committed to the well-being of our region and keeping care local to the communities we serve," Hamilton President and CEO Jeff Myers said. "Hamilton Medical Center and Tennova Healthcare-Cleveland share a proud history of serving the members of our respective communities … and we will invest in furthering that legacy to ensure long-term stability, the availability of advanced, comprehensive expert care, and a best-in-class patient experience."