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Hospital M&A continues to accelerate in first half of 2016: 7 findings

Hospital merger and acquisition activity remained strong in the first half of 2016, according to the latest analysis by Kaufman, Hall & Associates.

Kaufman Hall identified 52 hospital and health system transactions in the first two quarters of 2016, up 6.1 percent from the 49 transaction recorded in the first half of 2015. There were 27 transactions in the second quarter of 2016 alone, up 3.8 percent from 26 transactions recorded in the second quarter of 2015.

Here are seven more observations on transactions in the first half of 2016, according to Kaufman Hall.

1. Transactions occurred across a broad range of acute-care segments, including nonprofit, for-profit, rural urban and academic healthcare organizations.

2. Of the 52 transactions that took place in the first half of the year, 39 involved acquisitions by nonprofit organizations and 12 involved acquisitions by for-profit organizations. One transaction involved a nonprofit/for-profit combination.

3. Twelve transactions involved partnerships with faith-based organizations.

4. A total of 11 publicly owned, nonprofit hospitals were acquired.

5. Texas had the most transactions of any state, with 11 deals.

6. The two organizations involved in the most transactions were Buffalo, N.Y.-based Kaleida Health and Nashville, Tenn.-based HCA Healthcare, which were involved in four and three deals, respectively.

7. The largest deal announced in the second quarter of 2016 was King of Prussia, Penn.-based Universal Health Services' $445 million acquisition of the remaining interest in Las Vegas-based Valley Health System.

"The continuing uptick in mergers and acquisitions is not surprising," said Anu Singh, Managing Director at Kaufman, Hall & Associates. "The industry is rapidly changing and many organizations are not optimally positioned to navigate the transition to value-based care on their own. Healthcare leaders should thoroughly evaluate the partnership options to help ensure strong, competitive positioning for their organizations into the future."

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