In the first quarter of 2019, the quarterly volume of announced acute care hospital merger and acquisition activity reached its lowest point since the fourth quarter of 2009, according to an analysis by Ponder & Co.
The quarterly volume of announced transactions was also less than 20 for the first time since the third quarter of 2016.
There were 14 hospital change-of-control transactions announced in the first quarter of 2019, a decrease from 23 in the previous quarter and 40 in the first quarter of 2018, according to the analysis.
Ponder, a healthcare financial advisory firm, partially attributed the slowdown to the reduced pace of for-profit divestitures.
The analysis notes that Franklin, Tenn.-based Community Health Systems announced 24 separate transactions in 2018 and the year prior, while Dallas-based Tenet Healthcare and Brentwood, Tenn.-based LifePoint Health combined to announce 12 additional divestitures over the same period.
Brentwood-based Quorum Health also announced more than nine transactions in 2017 and 2018.
“Over the last several quarters the for-profit divestiture pace has slowed as they have sold their most isolated and disparate assets. We foresee continued for-profit divestitures as these systems further evaluate and reposition their portfolios, but at a slower pace with less urgency,” Ponder wrote.
The firm also said the “natural pause” that occurs as consolidators digest and integrate their new acquisitions, as well as the shrinking pool of potential partners for struggling hospitals to join, have also contributed to the slowdown in M&A activity.
Read the full analysis here.
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