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Study: Acquired hospitals may experience decline in operating margins, revenue post-transaction

On average, acquired hospitals experience a two-year decline in operating margins, revenue and expenses, according to a survey conducted by Deloitte Center for Health Solutions in collaboration with the Healthcare Financial Management Association.

The study analyzed more than 750 hospital acquisitions that occurred between 2008 and 2014 and asked 90 hospital CFOs about their transactions to learn how mergers and acquisitions affect a hospital's performance.

Here are six insights from the study.

1. Acquired hospitals collectively saw a decrease in operating expenses post-transaction; however, operating revenue declined at a greater rate. On average, this trend lasted two-years.

2. The report suggests changes in revenue and capital investments post-transactions as a factor leading to the trend of declining operating margins.

3. Nearly 80 percent of acquiring entities made significant capital investments into the acquired facilities.

4. Thirty-one percent of executives from acquired hospitals sought out mergers to improve their access to capital.

5. Forty percent of executives from acquiring hospitals sought out M&A to increase their market share.

6. When CFOs were asked how much of their financial goals were reached through M&A, 40 percent of respondents said they achieved at least 25 percent of their goal.

To read the full report click here.

More articles on healthcare industry transactions: 
LifePoint divests Georgia hospital to Piedmont Healthcare
Mon Health completes acquisition of Stonewall Jackson Memorial Hospital
Quorum Health sells 2 Pennsylvania hospitals

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