Hospital merger mania continues throughout the country

Hospital mergers and acquisitions were off to a strong start in the first quarter of 2017, and recent announcements show no letup of merger mania in the first couple of months of the second quarter.

This month, the University of Kansas Health Systems announced it will run a joint venture with Ardent Health Services and run St. Francis Hospital, acquired from SCL Health. The partnership will infuse $50 million in the 378-bed Topeka hospital to keep it open, the Miami Herald reported.

Memphis-based Baptist Memorial Health Care recently finalized its merger with Mississippi Baptist Health Systems, according to The Clarion Ledger.

JFK Health in Edison, New Jersey—which described as one of the few remaining independent hospitals in the Garden State—announced in early May it will merge with Hackensack Meridian Health, one of the largest health providers chain in New Jersey.

Newsday reported that South Nassau Communities Hospital is in talks with Mount Sinai Health System for a possible partnership.

And just today Cedars-Sinai and Torrance Memorial in Los Angeles announced plans to formally affiliate in order "to strengthen both organizations' ability to serve the community and to enhance access, coordination and quality of care for the public. The proposed partnership will  provide a platform for future collaborations in primary and specialty care, expanded access to the latest clinical trials and an efficient sharing of resources among both institutions, the two organizations said in an announcement emailed to FierceHealthcare

The acquisitions reflect a continuing trend in the healthcare industry as hospitals look to cut costs, improve quality and expand their service offerings. Kaufman, Hall & Associates reported 102 deals in 2016. And the outlook is strong for 2017. The company noted an 8% increase in transactions during the first quarter of 2017 compared to the same time period in 2016.

But the biggest change is in the number of deals among large organizations, such as mergers of Beth Israel Deaconess Medical Center and Lahey Health in Massachusetts and the partnership of PinnacleHealth System with the Unversity of Pittsburgh Medical Center.

Anu Singh, managing director at Kaufman Hall, said in a recent announcement that the company expects to see more transactions among large organizations this year. "Hospitals and health system executives are looking for strategic opportunities to ensure the continued growth and success of their organizations amongst disruptive forces, including innovative competitors, declining payments, flat or decreasing inpatient volumes, and increasing price sensitivities among consumers," said Singh. "As the number of independent hospitals declines, organizations are seeking to build new capabilities and economies of scale through partnerships."

Despite the uptick in mergers, not all hospitals are choosing this route to offset costs. The Clarion Ledger noted that St. Dominic Hospital remains independently owned and operated but is also the founding member of a physician-led clinically integrated network within the state, partnering with Anderson Regional Medical Center, Mississippi Baptist Health System, Baptist Memorial Healthcare Corp. and more than 1,000 affiliated physicians.

"Today, all healthcare organizations are required to implement strategies to improve the quality of care and patient experience while lowering costs," Andy North, St. Dominic's marketing director, told the publication. "A number of organizations have determined that being consolidated into another health system will assist in accomplishing that goal. Consolidation is only one strategy and it is dependent upon the facts and circumstances surrounding each party to a consolidation or merger.”