Health Central Hospital in Ocoee, Fla., which recently began looking for a network to join, was the last independent hospital in the Orlando, Fla., area. "We think that the time of the independent, physician practitioner and the time of the independent hospital have come to a close," Health Central CEO Richard Irwin told the Orlando Sentinel. "I think that healthcare is better suited to be delivered in a system approach in the future."
Merger activity is picking up across the country. So far this year, there have been 34 deals involving 69 hospitals and 12,960 beds, compared with 52 deals involving 80 hospitals and 10,600 beds in all of 2009, according to Irving Levin Associates.
Motivations for merging
Smaller hospitals are looking for protection from losses, better payor contracts, greater access to capital markets, larger economies of scale and a way to share large expenses, such as installing EMR systems, experts say. Meanwhile, the larger acquiring systems can expand their negotiating clout enrich their existing services.
Almost always, systems acquire hospitals in or near their markets, but not always. In July, Johns Hopkins Medicine announced plans to acquire All Children's Hospital & Health System of St. Petersburg, Fla., according to the Baltimore Sun.
"We see this as a way to expand our research capability in new areas and new spaces," said Edward Miller, dean and CEO of Johns Hopkins Medicine.
Seeking a stronger partner
In Connecticut, 85-bed New Milford Hospital, which had a total margin of -5.52 percent in 2009, found respite merging with Danbury Hospital, whose 2009 total margin was 8.01 percent, according to Hartford Business. Richard Henley, the interim president and CEO of New Milford Hospital, said the merger would allow his hospital to better manage costs, reduce overhead and consolidate back office services.
Middlesex Hospital in Middletown, Conn., which had a 5.79 percent total margin in 2009, is remaining independent, but COO Vincent Capece acknowledged it’s expensive to keep a hospital up-to-date, improve efficiency and meet requirements in the coming years. Middlesex opened a $30 million ED a few years ago and has been spending more than $20 million a year for routine improvements.
Southwest Washington Health System, a one-hospital system in Vancouver, Wash., announced plans to affiliate with PeaceHealth, a multi-hospital system based at Bellevue, Wash., according to the Columbian. Southwest COO Rainy Atkins said the merger would provide better access to borrowing, better financial resources, discounted purchases and expanded clinical capabilities.
Read more coverage on hospital merger activity:
- Key Considerations for Hospitals Looking to Merge, Acquire or Sell
- Healthcare Reform Paving Way for More and Different Hospital Merger & Acquisition Activity
Merger activity is picking up across the country. So far this year, there have been 34 deals involving 69 hospitals and 12,960 beds, compared with 52 deals involving 80 hospitals and 10,600 beds in all of 2009, according to Irving Levin Associates.
Motivations for merging
Smaller hospitals are looking for protection from losses, better payor contracts, greater access to capital markets, larger economies of scale and a way to share large expenses, such as installing EMR systems, experts say. Meanwhile, the larger acquiring systems can expand their negotiating clout enrich their existing services.
Almost always, systems acquire hospitals in or near their markets, but not always. In July, Johns Hopkins Medicine announced plans to acquire All Children's Hospital & Health System of St. Petersburg, Fla., according to the Baltimore Sun.
"We see this as a way to expand our research capability in new areas and new spaces," said Edward Miller, dean and CEO of Johns Hopkins Medicine.
Seeking a stronger partner
In Connecticut, 85-bed New Milford Hospital, which had a total margin of -5.52 percent in 2009, found respite merging with Danbury Hospital, whose 2009 total margin was 8.01 percent, according to Hartford Business. Richard Henley, the interim president and CEO of New Milford Hospital, said the merger would allow his hospital to better manage costs, reduce overhead and consolidate back office services.
Middlesex Hospital in Middletown, Conn., which had a 5.79 percent total margin in 2009, is remaining independent, but COO Vincent Capece acknowledged it’s expensive to keep a hospital up-to-date, improve efficiency and meet requirements in the coming years. Middlesex opened a $30 million ED a few years ago and has been spending more than $20 million a year for routine improvements.
Southwest Washington Health System, a one-hospital system in Vancouver, Wash., announced plans to affiliate with PeaceHealth, a multi-hospital system based at Bellevue, Wash., according to the Columbian. Southwest COO Rainy Atkins said the merger would provide better access to borrowing, better financial resources, discounted purchases and expanded clinical capabilities.
Read more coverage on hospital merger activity:
- Key Considerations for Hospitals Looking to Merge, Acquire or Sell
- Healthcare Reform Paving Way for More and Different Hospital Merger & Acquisition Activity