Merger and acquisition activity among U.S. hospitals and health systems increased from 2013 to 2015, the 2016 Health Care Services Acquisition Report from Irving Levin Associates shows. These deals do not appear to be occurring at the same pace this year as only about 80 deals have been announced this year, compared to 102 deals last year, according to the consulting firm's Lisa Phillips, editor of the report.
This year's decrease could be partially explained by at least one state (Connecticut) putting a halt to major deals of this kind in February until next year, and the Federal Trade Commission increasing its efforts to prevent hospital monopolies and duopolies.
Yet there are several reasons why hospitals have been engaging in M&A activity. Some are looking to expand their geographic footprint, gain efficiency, and/or increase their pricing negotiation power with health insurance companies, Phillips tells Healthcare Dive.
Despite the increase in the number of Americans with health insurance coverage and the recent multi-billion dollar decrease in uncompensated care, many hospitals and health systems that engaged in this activity over the past year have cited substantial financial struggles. Since the implementation of the Affordable Care Act in 2010, hospitals have had to adapt to changes like payment cuts, and the rate of M&A activity increased by 70%, ProMarket reported earlier this year.
If the ACA were to be repealed, especially without an alternative being simultaneously implemented, it may cost hospitals billions, which could in turn lead to further consolidation not just to have more leverage with payers, but also to share costs. However, research shows that this M&A activity has resulted in lower quality of care and increased prices to consumers as it significantly reduces competition.
This list, broken down by geographic regions in the U.S., of some of the major hospital and health system M&A deals starts with this year, includes some details about each one, and will be continuously updated to monitor reductions in competition in the sector:
(Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, New Jersey, New York, and Pennsylvania)
- Impacted states include: New York
- Impacted states include: Pennsylvania
(Illinois, Indiana, Michigan, Ohio, Wisconsin, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota)
(Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia, Alabama, Kentucky, Mississippi, Tennessee, Arkansas, Louisiana, Oklahoma, and Texas)
- Acquisition of four CHS hospitals
- Impacted states include: Alabama, Mississippi
- Impacted states include: Arkansas
- Financials: $39 million purchase
(Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming, Alaska, California, Hawaii, Oregon, and Washington)
- Impacted states include: Arkansas, Oklahoma, Oregon, South Carolina, Washington, Alabama, Arizona, Connecticut, Iowa, Montana, Ohio, and Texas
- Financials: $1.7 billion in revenues
- Impacted states include: Maryland, Virginia, Delaware, Pennsylvania, Alabama, Ohio