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Healthcare mergers and acquisitions no longer just about scale

Some of the larger merger and acquisition transactions and proposals in the healthcare sector are no longer just about economies of scale but have other goals in mind, such as improving health equity, according to a Jan. 12 report from KaufmanHall.

Charlotte, N.C.-based Advocate Health, newly formed through the merger of Advocate Aurora Health and Atrium Health, for example, cites such improved equity and a number of other issues on top of its fundamental goal of delivering the best possible health outcomes and making healthcare more affordable and accessible.

"The organization aims to bring medical innovations to patients more quickly, address the root causes of health inequities, advance population health, enable career advancement and achieve carbon neutrality by 2030," Advocate Health said Dec. 2 at the time of the merger's completion.

The deal between Duluth, Minn.-based Essentia Health and Marshfield (Wis.) Clinic Health Systems will enable the organizations to use their combined resources to ensure "sustainable and thriving" rural healthcare, KaufmanHall said. The proposed Sioux Falls, S.D.-based Sanford Health and Minneapolis-based Fairview Health merger will also target improved healthcare for rural and indigenous communities as well as urban ones in the Midwest.

Technological innovation is also driving such transactions, the report said. Ann Arbor-based University of Michigan Health, for example, has committed $800 million to accelerate expansion of services and integrate leading edge technology as a core driver of its merger with Lansing, Mich.-based Sparrow Health.

"These transactions transcend the simplicity of raw scale, and instead more often exhibit a desire to transform healthcare for the communities that will be served by the combined system as an explicit goal of the transaction," KaufmanHall said.

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