While hospital merger and acquisition activity fell during 2016 compared to the year prior, announced transaction activity in Q4 increased from the previous quarter, according to an analysis by Ponder & Co.
In the Announced Hospital M&A Activity Report 2016 Q4, analysts at Ponder & Co. reflected on the state of merger and acquisition activity in 2016 and predicted certain trends that may manifest in 2017.
Here are nine findings on hospital M&A from the report.
1. During the course of the year, 83 hospital change-of-control transactions were announced, a decrease of more than 25 percent from 2015.
2. Nineteen hospital change-of-control transactions were announced in Q4 2016, a slight increase from the previous quarter.
3. The median target revenue per transaction in Q4 was $77 million.
4. Divesture activity represented more than 40 percent of all transactions announced in Q4, up 29 percent from Q4 2015.
5. For-profit hospitals acted as the acquiring party in 23 percent of transactions in 2016, down 32 percent from 2015.
6. Analysts speculate pressure on payment reform and traditional volume-based healthcare will continue in 2017.
7. Both nonprofit hospitals and for-profit hospitals will increasingly turn to alternative forms of alignment, including minority equity interests in hospitals and ancillary businesses.
8. System rationalization, or restructuring, will continue to be a major trend in 2017 for financially struggling hospitals.
9. Analysts speculate change-of-control transaction volume will continue at 2016 levels into 2017 and will lead to a new wave of merger and acquisition activity.