Q1 Hospital Merger and Acquisition Activity Remains Vigorous, Kaufman Hall Reports
Many hospitals and health systems pursuing more loosely integrated partnerships
CHICAGO, April 23, 2019 /PRNewswire/ -- Twenty-seven mergers involving hospitals and health systems were announced in the first quarter of 2019, according to the latest analysis by Kaufman Hall, a leading provider of enterprise performance management software, and data and management consulting services, including a vibrant mergers and acquisitions practice. While down slightly from 30 transactions announced in the first quarter of 2018, activity generally was consistent with levels seen in recent years, which have been among the most active on record.
Total revenue for announced transactions in the first quarter was $4.9 billion, down from a very high $12.7 billion in the first quarter of 2018. The quarter saw fewer large-scale transactions, but a significant number of transactions involving a seller with annual revenues of $100 million or less, resulting in an average size of seller (by revenue) of approximately $196 million. This is down from the record-setting $409 million average size of seller in 2018, noted in Kaufman Hall's 2018 year-end report, but likely will increase as the year progresses.
"2019 got off to an active start, with about half of the first-quarter transactions announced in January," said Anu Singh, managing director at Kaufman Hall. "To construct improved models of care, many hospitals and health systems are pursuing less than fully integrated partnerships, including joint ventures, management services agreements, minority investment models, and other structures. These strategic structures are desirable because they can provide opportunities for organizations to maintain local influence and improve the benefits they offer to their communities, while also exploring the possibility of deeper alignment in the future."
Many of the most significant transactions announced in the first quarter involved academic medical centers (AMCs). These included UPMC (University of Pittsburgh Medical Center)/Western Maryland Regional Medical Center, Loyola Medicine/Palos Health, and Dartmouth-Hitchcock Health/GraniteOne Health.
Announced in March, the transaction involving UPMC and Western Maryland Regional Medical Center represents UPMC's first expansion into the state of Maryland, and its second expansion outside of Pennsylvania (UPMC acquired UPMC Chautauqua—formerly WCA Hospital—in southwestern New York in 2016). UPMC's expansion beyond Pennsylvania is consistent with the trend toward growth of regional health systems, described in the 2018 year-end report. UPMC and Western Maryland entered into a clinical affiliation agreement in 2018.
In addition, Loyola Medicine and Palos Health announced in January a plan to fully integrate Palos Health with the Loyola Medicine health system (which is a member of Trinity Health), building upon an affiliation agreement begun in 2015. Anchored by the Loyola University Medical Center, Loyola Medicine is one of several AMC-based systems in the Chicago market that have expanded their networks to community hospitals in recent years.
AMCs were acquirers in seven of the 27 transactions announced in the first quarter. Religiously affiliated health systems were acquirers in five of the 27 announced transactions. All of the sellers in these transactions were non-affiliated. For-profit systems were acquirers in seven of the 27 announced transactions.
The complete Q1 2019 report is available here.
About Kaufman Hall
Kaufman Hall provides a unique combination of software, management consulting and data solutions to help society's foundational institutions realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods, rigorous analytics and industry-leading solutions into their strategic planning and financial management processes, with a focus on achieving their most challenging goals.
Kaufman Hall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of Kaufman Hall advisory services are unparalleled, encompassing strategy; financial and capital planning; cost transformation; treasury and capital markets management; and mergers, acquisitions, partnerships, and joint ventures.
Kaufman Hall software includes the Axiom Software Suite, providing sophisticated, flexible performance management solutions that empower finance professionals to analyze results, model the future, and optimize organizational decision making. Solutions for long-range planning, budgeting and forecasting, performance reporting, capital planning, and cost accounting deliver decision support, reporting, and analytics within an integrated software platform. Kaufman Hall's Clinical Analytics empower healthcare organizations with clinical benchmarks, data, and analytics to provide a higher quality of care for optimized performance and improved patient outcomes.
Press Contact:
Philip Anast
Amendola Communications (for Kaufman Hall)
Email: [email protected]
Phone: 312-576-6990
SOURCE Kaufman Hall
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