M&A activity increased among larger systems in 2nd quarter

Thirty-one partnership transactions among hospitals and health systems were announced in the second quarter of 2017, and 58 have been announced so far this year, according to an analysis on merger and acquisition (M&A) activity by Skokie, Ill.-based consulting firm Kaufman Hall.

The 2017 activity is an increase over the first half of 2016, when 52 transactions were announced. The second quarter also included six deals involving healthcare organizations with more than $1 billion in revenue. Recently announced mega-deals included the $2 billion merger between Steward Health and IASIS Healthcare, which would create the largest for-profit hospital operator in the U.S.

"As the field of potential partners evolves, leaders of many larger health systems are thinking strategically about how best to build the scale and capabilities needed to remain competitive in a rapidly changing healthcare environment," said Patrick Allen, a managing director at Kaufman Hall. "Traditional providers face an array of uncertainties, from changing federal healthcare policies to shifting payment and care delivery models. Health systems across the country are looking to grow and transform their operations to ensure stability in the face of turbulent times."

Eight transactions involved for-profit acquirers, 22 involved not-for-profit acquirers and one was a for-profit/not-for-profit combination. Pennsylvania and Texas were the sites of the most activity, with four announced transactions each in the second quarter. Tennessee-based Community Health Systems was involved in four transactions, the most of any single company.