SKOKIE, Ill., Oct. 17, 2017 /PRNewswire/ -- Hospital and health system partnership transactions for 2017 total 87 as of the end of the third quarter, setting a pace for transactions in 2017 that may exceed the 102 deals completed in 2016. Twenty-nine transactions were announced in the third quarter of 2017, slightly less than the 31 deals announced in the second quarter, according to the latest analysis by Kaufman Hall, a leading provider of strategic and financial consulting services, and enterprise performance management and decision support software.
Transactions continue to rise among large organizations with nearly $1 billion or more in revenue, with eight such transactions announced so far in 2017, double the four announced in all of 2016. The two large-scale transactions announced in the third quarter include a joint operating agreement between UNC Health Care and Carolinas HealthCare to combine their clinical, medical, and research resources, with plans for a final agreement by the end of 2017. Ascension, the nation's largest Catholic health system, also announced plans to acquire Presence Health, a 12-hospital Catholic health system in Illinois. If completed, Presence Health will join Ascension and become part of AMITA Health, a joint venture of Ascension's Alexian Brothers Health System and Adventist Midwest Health, which is part of Adventist Health System.
"Transactions among larger and like-sized organizations are rising as health systems across the country look to build scale and new capabilities for an uncertain healthcare environment," said Anu Singh, Managing Director of Kaufman Hall. "Large, highly rated systems are coming together to form large-scale, multi-region, and multi-business unit organizations," he said. "These transactions are driven primarily by strategic imperatives and less so, by financial drivers. Organizations are pursuing partnerships and collaborations in order to remain competitive and strengthen their market offerings, so that they can continue serving the healthcare needs of their communities. We're also seeing an uptick in creative affiliations, with partnerships using non-traditional models to achieve their strategic goals in response to a new set of market factors that were not present a decade ago."
Eight of the transactions announced in the third quarter involved acquisitions by for-profit organizations, and 19 by non-profit organizations. Two deals involved joint non-profit and for-profit transactions. Three transactions announced so far this year have involved academic medical centers partnering with for-profit entities, including two in the third quarter. Other transactions announced in the third quarter include five involving a religious related acquirer, and acquisitions of eight not-for-profit, publicly owned hospitals. New York, Pennsylvania, and Illinois had the highest levels of partnership activities, with each announcing three transactions in the third quarter.
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