What's driving healthcare mergers and acquisitions?

Hospitals continue to team up with other facilities, insurers and for-profit companies, although the cause of the bump in M&A activity varies. While some hospitals cite financial problems, others join forces because of collaboration mandated under the Affordable Care Act and changing reimbursement models, according to Minnesota Public Radio.

"A lot of these changes that are happening are being driven by necessary innovation. It's forcing integrations and affiliations that five or six years ago wouldn't have happened," said Daniel Nikcevich, president of Essentia Health in northeastern Minnesota and northwestern Wisconsin, in another MPR piece.

Healthcare consolidation also enables smaller hospitals to establish electronic medical records and offer specialized and expanded services, thereby making it easier to comply with health reform requirements, MPR noted.

Merging or affiliating with a larger health system is an especially attractive option for independent hospitals struggling with weak profits and Medicaid cuts, as it can lead to savings on overhead and equipment, as well as enhanced physician recruitment, noted MPR.

But finding the right M&A partner can be difficult, as evidenced by the ongoing search of University Hospital in Louisville, Ky., The Courier-Journal reported.

"[W]e're determined to get this right and make sure that we do it within the boundary conditions set by both the attorney general and the governor," University of Louisville Executive Vice President for Health Affairs David Dunn said.

According to hospital officials, University Hospital needs a partner to survive among growing hospital chains and to maintain long-term viability in the community, noted the Courier-Journal.

Earlier this year, University Hospital was left out of the controversial merger that formed KentuckyOne Health.

To learn more:
- read the MPR article about consolidation trends and lessons learned
- here's the Courier-Journal article