Dive Brief:
- ChristianaCare and Virtua Health have called off talks to combine after mutually deciding a merger was no longer in their best interests, the regional health systems said Thursday.
- The hospital operators determined “they can best fulfill their missions to serve their communities by continuing to operate independently,” Wilmington, Delaware-based ChristianaCare and Marlton, New Jersey-based Virtua said in a press release.
- ChristianaCare and Virtua first said they were exploring a merger in July. The deal would have created a health system with more than $6 billion in annual revenue and a footprint spanning 10 contiguous counties in New Jersey, Delaware, Pennsylvania and Maryland.
Dive Insight:
The health systems didn’t provide details on why they decided to scrap the merger plans, which would have combined four-hospital ChristianaCare and five-hospital Virtua. ChristianaCare declined to comment beyond the press release, and Virtua didn't respond to a request for comment by press time.
But hospital mergers and acquisitions have generally declined this year as systems grapple with market and policy uncertainty, according to Kaufman Hall. The first and second quarters included just 13 transactions, compared with 31 in the first half of 2024.
Policies like President Donald Trump’s tariffs likely chilled interest in dealmaking early in the year, and health systems remained cautious about M&A as they awaited the impact from the One Big Beautiful Bill Act, according to the consultancy. The legislation included significant cuts to federal healthcare spending, especially in the safety-net insurance program Medicaid.
M&A increased in the third quarter, with 15 announced deals, according to Kaufman Hall. More policy clarity after the massive tax and policy legislation passed this summer has allowed health systems to reexamine their strategies.
Still, sellers with revenues above $1 billion are becoming more selective in their acquisitions, potentially looking for larger deals compared with targeted small and midsized purchases.
Other hospital mergers have fallen through this year, including Saint Peter’s Healthcare System and Atlantic Health in New Jersey, which scrapped their plans to combine in October after inking a merger agreement last year.
