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Kaufman Hall: 2017 Hospital M&A activity to potentially outpace 2016

Eighty-seven hospital and health system transactions have occurred as of the end of the third quarter of 2017, leading some experts to suggest the total number of deals in 2017 may exceed the 102 deals completed in 2016, according to a recent analysis from Kaufman, Hall & Associates.

Kaufman Hall analysts report 29 transactions were announced during the third quarter, down slightly from the 31 deals announced during the second quarter of 2017.

Here are five findings from the analysis.

1. Eight transactions exceeding $1 billion in revenue have been announced in 2017 thus far. The figure is double the four such transactions announced in all of 2016.

2. The two largest transactions announced during the third quarter included the proposed merger between Charlotte, N.C.-based Carolinas HealthCare System and Chapel Hill, N.C.-based UNC Health Care — announced in September — and St. Louis-based Ascension's proposed acquisition of Chicago-based Presence Health, announced in August.

3. Eight transactions announced during the third quarter of 2017 involved acquisitions by for-profit organizations, while 19 involved acquisitions by nonprofit institutions.

4. Three transactions announced thus far this year involved academic medical centers partnering with for-profit entities.

5. The three states with the highest number of transactions announced during the third quarter include New York, Pennsylvania and Illinois.

"Transactions among larger and like-sized organizations are rising as health systems across the country look to build scale and new capabilities for an uncertain healthcare environment," said Anu Singh, managing director of Kaufman Hall. "These transactions are driven primarily by strategic imperatives and less so, by financial drivers … We're also seeing an uptick in creative affiliations, with partnerships using non-traditional models to achieve their strategic goals in response to a new set of market factors that were not present a decade ago."

More articles on transactions and valuations:
Cleveland Clinic in line to manage proposed hospital in China
Connecticut hospital's plan sell outpatient facilities to Quest Diagnostics draws criticism
Georgia AG approves sale of bankrupt hospital to Navicent Health subsidiary

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