Hospital M&A deals decreased in 2013

Hospital mergers and acquisitions last year fell overall, but the number of beds involved increased dramatically.

There were 84 acquisitions in 2013, down 21.5 percent from 2012, according to data from the Connecticut-based Irving Levin & Associates. However, the number of beds involved was the highest since 2008.

The numbers contradicted a study issued earlier this year by Kaufman Hall that concluded the number of deals involving hospitals and healthcare systems rose last year.

Two deals involving large for-profit chains drove the most money. Community Health Systems (CHS) acquired Health Management Associates for $7.6 billion. Tenet Healthcare Corp. also acquired Vanguard Health Systems for $4.3 billion. "Those two acquisitions alone accounted for more than one-third of the hospitals sold in the U.S. in 2013," said Irving Levin Editor Lisa Phillips.

The CHS and Tenet deals also meant for-profit hospitals comprised the bulk of last year's transactions--78 percent of the hospitals involved. That's about triple their typical involvement, about 25 to 30 percent per year on average, according to Irving Levin.

Altogether, there were 598 mergers and acquisitions in 2013 throughout the nine healthcare-related sectors, representing $52.7 billion in total value. That's up 1.8 percent from 2012, although the total number of transactions declined by 5.8 percent. Only the home health/hospice and long-term care sectors posted declines.

Despite the smaller number of deals involving hospitals in 2013 compared to 2012, many experts believe that market forces will impel facilities to seek out merger and affiliation partners in the years to come. The impetus includes not only mounting financial pressures, but collaboration mandates under the Affordable Care Act and changing reimbursement models.

Tenet Chief Executive Officer Trevor Fetter indicated in an interview last year that his company was not going to stop at the Vanguard deal. He said that the current environment invited acquisitions, and that medium-sized hospitals would be particularly hard-pressed to find collaborative partners.

To learn more:
- read the Irving Levin announcement

Related Articles:
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What's driving healthcare mergers and acquisitions?
Healthcare M&A takes post-reform spotlight
Tenet CEO: Environment ripe for acquisitions
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Hospital mergers and acquisitions increased in 2013

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