​​​​​​​Hospital ‘merger-mania’ keeps up momentum

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Kaufman, Hall & Associates found that the number of hospital mergers increased 55% between 2010 and 2016.

The ongoing trend of hospital mergers shows no signs of slowing down, according to a new analysis.

The report, which was published by Kaufman, Hall & Associates, found that the number of deals increased from 66 announced in 2010 to 102 in 2016, a jump of 55%. Last year's figure, though, was a slight drop from the 112 deals announced the year before, according to an announcement of the findings.

The largest jump between years, according to the report, came after the passage of the Affordable Care Act, when the number of mergers went from 66 in 2010 to 88 in 2011, an increase of 33%.

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“Hospitals and health systems today face an array of disruptive forces, including rising demand for ambulatory and virtual care, flat-to-declining inpatient utilization, increasing consumerism and price sensitivity, and the emergence of non-traditional competitors,” Patrick Allen, managing director at Kaufman Hall said in the announcement. “As the pool of smaller, independent hospitals and health systems shrinks, we are seeing more transactions among larger, more stable organizations that are opting to partner to help meet evolving demands and bolster market essentiality for the new healthcare era.”

Advocates of hospital mergers have said that such alignment can reduce disparities in outcomes, though others point to lack of competition as a driver of patient costs. A number of large organizations began the merger or alignment process in 2016, including two giant Catholic health systems, Dignity Health and Catholic Health Initiatives.

The report also noted that among the transactions announced in 2016, in 27 of them the acquiring party was a for-profit organization; in 74 it was not-for-profit; and in one case a nonprofit and for-profit system made a purchase together.

In total, the operating revenue of the acquired parties in 2016 was more than $22 billion, according to the report.