Health Systems Pursuing More M&A in 2017

Health Systems

Large health systems pursuing more M&A deals in 2017

Health Systems Pursuing More M&A in 2017

Health systems are pursuing more M&A and aren’t just being contained to for-profit systems. The 31 total transactions announced in the second quarter included eight for-profits, 22 nonprofits and one for-profit/nonprofit combination.

Healthcare has seen plenty of M&A activity over the past couple of years, but what’s surprising about the first half of this year is the size of the mergers and acquistions. In addition to the Steward deal, Partners HealthCare in Boston announced it is buying Providence, R.I.-based Care New England Health System and Greenville Health System and Palmetto Health are looking to merge.

The Partners deal would allow Massachusetts’ biggest health system to expand to a neighboring state. Meanwhile, the Greenville/Palmetto merger would create the largest South Carolina health system with 13 hospitals, 1.2 million patients and $3.9 billion in annual net revenue.
Health Systems Pursuing More M&A in 2017

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Patrick Allen, managing director at Kaufman Hall said M&A activity among large organizations will continue. Just last week, Beth Israel Deaconess Memorial Center and Lahey Health signed a merger agreement that would create Massachusetts’ second largest health system with 13 hospitals.

Allen said the uptick in activity is because large health systems are trying to build the scale and capabilities to remain competitive in a changing healthcare industry. “Traditional providers face an array of uncertainties, from changing federal healthcare policies to shifting payment and care delivery models. Health systems across the country are looking to grow and transform their operations to ensure stability in the face of turbulent times,” said Allen.
Health Systems Pursuing More M&A in 2017

Pennsylvania and Texas were the busiest states for M&A activity in the second quarter. Both saw four announced transactions in the second quarter. Community Health Systems was involved in four transactions and HCA in three deals. That might just be the start for HCA, which recently announced it will offer senior secured notes to fund hospital purchases.

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