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Ponder & Co: 2016 M&A activity down from last year

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.

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