2016 Hospital Merger and Acquisition Activity on Pace to Match 2015 Volume, According to Kaufman Hall Analysis

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Twenty-five transactions announced in the third quarter of 2016

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Hospital and health system mergers and acquisitions in 2016 are on pace to match the level of activity in 2015, based on the latest analysis by Kaufman, Hall & Associates, LLC, a leading provider of strategic, capital, financial, and transaction advisory services, software tools, and data analytics. Kaufman Hall identified 77 transactions announced in the first three quarters of 2016, compared with 78 transactions announced in the same period in 2015.

An analysis of the 25 transactions announced in the third quarter of 2016 shows the following:

  • Two of the announced transactions involved organizations with more than $1 billion in revenue: A $1.25 billion real estate transaction with a minority investment in Steward Health Care System by Medical Properties Trust, Inc., and NYU Langone Medical Center’s proposed partnership with Winthrop-University Hospital.
  • Texas was the most active state with three announced transactions (New York, Wisconsin, Georgia, and New Jersey all had two transactions)
  • Ten of the transactions (40 percent) involved for-profit acquirers
  • In eight of the announced transactions, an academic health system was the acquiring organization; in six of those transactions, the organization to be acquired was a non-academic institution
  • Three transactions involved faith-based acquirers; in two of those transactions, a faith-based organization partnered with a secular organization
  • Eight additional transactions involved less than fully integrated partnerships: six management services agreements and two real estate transactions

Hospital and health system transactions have been on the rise in recent years as organizations have attempted to enhance market presence, achieve economies of scale, and attain capabilities for value-based healthcare. “It is not surprising that hospital transactions are continuing at this volume,” said Kit Kamholz, Managing Director, Kaufman Hall. “Payers and purchasers are intensifying their demands across multiple dimensions of value, and few organizations can rely solely on internal resources to meet those demands.”

About Kaufman Hall
Kaufman Hall provides management consulting services and enterprise performance management software that help organizations realize sustained success amid changing market conditions. Since 1985, we have been a trusted advisor to hospitals and health systems, helping them incorporate proven methods into their strategic planning and financial management processes and quantify the financial impact of their plans to consistently achieve their goals. Kaufman Hall helps clients identify and execute strategic initiatives that drive market and financial performance; provides financial advisory services to clients seeking capital; prepares and implements integrated strategic, financial, and capital plans; designs comprehensive capital allocation processes; and assists in the evaluation, structuring, and negotiation of partnership and divestiture opportunities. Additionally, we provide sophisticated, integrated, and intuitive software solutions for long-range planning, budgeting, forecasting, reporting, capital planning, profitability, and cost management on a single platform.

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Krysta Ferry
Axiom EPM
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