Hospital Merger and Acquisition Activity Accelerates in Second Quarter of 2015, According to Kaufman Hall Analysis
Notable Increase in Transactions in the First Half of 2015 Compared with 2014
Skokie, IL, August 25, 2015— Strong hospital merger and acquisition activity continued in the second quarter of 2015, according to the latest analysis by Kaufman, Hall & Associates, LLC, a leading provider of strategic, capital, financial, and transaction advisory services and software tools. Kaufman Hall identified 26 hospital and health system transactions in the second quarter of 2015, up from 23 transactions recorded in the first quarter. A total of 49 transactions were announced in the first half of 2015, a noteworthy increase from the 43 transactions announced in the first half of 2014.
Mergers, acquisitions, and other forms of partnerships continue to be a critical approach to developing the capabilities needed for value-based care, reducing costs, and enhancing competitive positioning. The hospital transactions announced in the first half of 2015 reflect this variety of form, structure, and strategic purpose. Other insights of note from transactions in the first half of 2015 include:
- The transactions occurred across a broad range of acute-care segments, including not-for-profit, for-profit, rural, urban, and academic health centers
- Of the 49 transactions in the first half of 2015, 42 involved the acquisition of a not-for-profit organization – 34 by other not-for-profit organizations, and eight by for-profit organizations
- The total operating revenue of organizations acquired in the first half of 2015 was more than $12.0 billion, up from $10.0 billion in first half 2014
- The largest deal announced in the second quarter of 2015 was Ventas’ acquisition of Ardent Medical Services from Welsh, Carson, Anderson & Stowe for $1.8 billion
“We are not surprised by this increase in M&A activity, as hospitals and health systems work to achieve goals such as optimizing their delivery networks, enhancing efficiency, and solidifying market position,” said Kit Kamholz, Managing Director at Kaufman Hall. “Over time, we expect that fewer transactions will involve acquisition of financially struggling entities and more will involve strategic alignments between successful organizations with complementary strengths.”
About Kaufman Hall
Kaufman Hall provides management consulting services and enterprise performance management software that help organizations realize sustained success amid changing market conditions. Since 1985, we have been a trusted advisor to hospitals and health systems, helping them incorporate proven methods into their strategic planning and financial management processes and quantify the financial impact of their plans to consistently achieve their goals. Kaufman Hall helps clients identify and execute strategic initiatives that drive market and financial performance; provides financial advisory services to clients seeking capital; prepares and implements integrated strategic, financial, and capital plans; designs comprehensive capital allocation processes; and assists in the evaluation, structuring, and negotiation of partnership and divestiture opportunities. Additionally, we provide sophisticated, integrated, and intuitive software solutions for long-range planning, budgeting, forecasting, reporting, capital planning, profitability, and cost management on a single platform.