The number of hospital mergers and acquisitions this year is on pace to top the number of deals reported in 2016, according to a new analysis.
Kaufman Hall reports that 29 deals were announced in the third quarter of 2017, which is a slight decrease from 31 in the second quarter but brings the total so far this year to 87. At that pace, the total number of deals this year is likely to surpass last year's total of 102.
The two mergers headlining activity in the third quarter were the merger of Carolinas HealthCare System and the University of North Carolina Health Care and Ascension's plans to purchase Precision Health, the largest Catholic system in Illinois.
Kaufman Hall noted that eight transactions so far this year have included hospitals with $1 billion or more in revenue, double the number reported in all of 2016, a trend it also reported in its second quarter analysis.
"Transactions among larger and like-sized organizations are rising as health systems across the country look to build scale and new capabilities for an uncertain healthcare environment," Anu Singh, managing director of Kaufman Hall, said in an announcement.
"These transactions are driven primarily by strategic imperatives and less so by financial drivers."
Eight of the transactions reported in the third quarter were between two for-profit entities, while 19 were between nonprofit providers. Two mergers included both for-profit and nonprofit hospitals. In addition to traditional merger and acquisition activity, Kaufman Hall found that hospitals are also engaging in more strategic partnerships and collaborations.
Singh said that Kaufman Hall saw an uptick in "creative affiliations," where providers form nontraditional partnerships to achieve strategic goals, in part "in response to a new set of market factors that were not present a decade ago."
The third quarter included five deals involving a provider with a religious affiliation, and the highest number of partnerships were announced in New York, Pennsylvania and Illinois, each with three, according to the report.
Two deals announced in the third quarter also involved an academic medical center aligning with a for-profit provider.