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Hospital M&A Activity Grew Slightly in 2013

In 2013, there were 98 total hospital and health system transactions, an increase of 3 percent from 2012 and a 51 percent spike from 2010, according to a Kaufman Hall report.

The analysis puts hard numbers to observations that have been seen extensively during the past year. A vast majority (87) of the hospital mergers and acquisitions involved the acquisition of a nonprofit organization. Of that total, 70 transactions were nonprofits buying nonprofits, while the other 17 were for-profits acquiring nonprofits.

Further, Kaufman Hall researchers found the total operating revenue of the acquired hospitals equaled $32.3 billion — $18.5 billion from the 87 nonprofit transactions, and $13.8 billion from the 11 for-profit transactions. However, almost all of the operating revenue involved in the for-profit deals came from the two primary mega-mergers: Community Health Systems in Franklin, Tenn., and Health Management Associates in Naples, Fla., and Tenet Healthcare Corp. in Dallas and Vanguard Health Systems in Nashville, Tenn.

"Our analysis confirms that hospitals and health systems are continuing to pursue partnership arrangements as one approach to accessing the enhanced infrastructure necessary to provide care successfully in the changing environment," Kaufman Hall Managing Director Michael Finnerty said in a news release.

Kaufman Hall's analysis reiterates the findings of other healthcare M&A firms. A recent report from Ponder & Co. found hospital deals have increased, and they are not likely to stop this year, especially among large nonprofits and regional systems. PwC analysts expect to see a "heightened level of hospital deal activity" this year due to uncertainties surrounding healthcare reform, convergence in the provider and payer arenas and expanding physician alignment.

More Articles on Hospital M&A Reports:
Troubled Transactions: Why There's Still Hope for Financially Struggling Hospitals
5 Common Healthcare Transaction Deal Killers
Healthcare M&A Volume Down 9% in 4Q of 2013

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