How mergers and acquisitions reshape the Midwest hospital market

Acute care providers in the Midwest are reshaping themselves and the market through a series of mergers and acquisitions, Becker's Hospital Review has reported

The recent deals announced or closed include a proposed merger of NorthShore University HealthSystem and Advocate Health Care, which would create Illinois' largest hospital system. Also in Illinois, Northwestern Memorial HealthCare and Centegra Health System are exploring an affiliation. In Michigan, Henry Ford Health System recently acquired Allegiance Health. 

"Both Medicare and commercial payer cuts ... are requiring levels of operating efficiency that are very difficult for a standalone hospital or health system to achieve," Gregory Hagood, senior managing director and president of SOLIC Capital, told the publication.

Hagood noted that if all these deals are completed, they will likely beget even more transactions. Two to four dominant systems with six to 12 hospitals are emerging in most major metro markets, he said.

Merger mania has been occurring for the past several years. In 2014, the healthcare industry completed a record number of deals.

Whether all these mergers will stay in place remains to be seen. In recent years, the Federal Trade Commission has taken steps to unwind mergers after they have already taken place. But it appears its approach has sharpened even more. For example, it intervened last December to block the Advocate/NorthShore deal. The month prior, it intervened to block the merger of two hospitals in semi-rural West Virginia.

To learn more:
- read the Becker's Hospital Review article

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