New agreements on the M&A front as trend toward consolidation continues

The trend toward mergers and acquisitions continues nationwide, with some of the country's biggest systems entering into new agreements.

In Pennsylvania, Holy Spirit Health System has signed an agreement with Geisinger Health System to become one of its affiliates, according to the Times Leader.

"This is an important step forward for Geisinger and Holy Spirit to enhance care in south central Pennsylvania," said Geisinger Health System President and Chief Executive Officer Glenn Steele, Jr., M.D., according to the article.

"This affiliation with Geisinger will enable us to build upon our efforts to deliver innovative and collaborative medical services to the community, as well as to maintain our mission-driven Catholic identity," added Sister Romaine Niemeyer, Holy Spirit's president and CEO. 

Meanwhile, in Michigan, the boards of Beaumont Health System, Oakwood Healthcare and Botsford Hospital are progressing to a three-way merger that, if the deal goes through, would create a $3.8 billion nonprofit organization called Beaumont Health, which would be the largest hospital system in the region, the Detroit Free Press reported.

The Michigan deal is part of a trend state- and nationwide, as providers hope to cut costs and offset Medicare reimbursement cuts, according to the article.

Some providers, however, are stopping short of full mergers to preserve their own organizational culture. In the Chicago area, Alexian Brothers Health System and Midwest Health signed a letter of intent to form joint operating company overseeing nine hospitals, according to Chicago Healthcare Daily; the resultant network will be the third-largest in Illinois. However, the agreement will not have the integration level of a full merger, since both systems belong to larger national systems with distinct religious identities, according to the article.

Healthcare CIOs named cultural disparities between participants as a major obstacle to healthcare mergers, with about three-quarters of CIOs saying it was the biggest challenge during the M&A process, FierceHealthIT previously reported.

And at its at its annual national institute conference in Las Vegas this week, the Healthcare Financial Management Association announced results of a survey that found financial need is no longer the primary incentive for many hospital mergers, acquisitions and affiliations. Rather, efficiencies and economies of scale, improved and sustained competitive position and physician network and clinical integration are driving deals, FierceHealthFinance reported today.

To learn more:
- here's the Times Leader article
- here's the Free Press article
- read the Chicago Healthcare Daily article