- Hospital operators Ascension and Providence St. Joseph Health are in talks for a possible merger, The Wall Street Journal reported.
- The deal would create the largest hospital operator in the country, with 191 hospitals in 27 states and an estimated annual revenue of nearly $45 billion.
- Still, people familiar with the discussions say a merger is “far from assured” and the talks include potential deals other than a merger, according to WSJ.
An intense flurry of M&A activity has overtaken the healthcare industry as 2017 comes to a close. In just the past week: CVS Health announced it will acquire Aetna in a $69 billion deal, Advocate Health Care announced a merger with Aurora Health Care, UnitedHealth’s Optum said it will acquire DaVita Medical Group for nearly $5 billion, and Catholic Health Initiatives (CHI) and Dignity Health finally reached a merger agreement to create the second largest nonprofit health system.
An Ascension-Providence deal would be another game changer for the industry. If the two nonprofit organizations were to merge, the combined company would overtake HCA as the largest operator.
It would be a horizontal integration similar to Advocate-Aurora and CHI-Dignity. Hospitals are turning to mergers, and in some cases divestitures, in the face of difficult financial trends such as softening patient admissions, lower reimbursements and a push from payers for more care in outpatient settings.
In contrast are vertical integrations like CVS-Aetna and Optum-DaVita. Those deals are looking to cut costs by improving efficiency, streamlining care and making use of enhanced data analytics.
While an Ascension-Providence merger is still only in discussion, it reflects the way M&A will dramatically change the healthcare landscape in the coming months and years.