Bigger healthcare mergers are on the horizon
Sluggish levels of healthcare mergers and acquisitions have marked the third quarter of 2021. However, the few deals that have come to pass have higher values.
That’s according to the latest report from Kaufman Hall, which found just seven transactions were announced in the third quarter. The transactions included 20 hospitals, with total transaction value reaching $5.2 billion. Combined with the first two quarters of the year, transaction value for the year so far has reached $22.4 billion.
The average seller size was more than double that of the past six years, reaching $659 million, compared to $329 million from 2015 to 2020. That higher deal value is expected to continue.
“We believe that the trend of high average seller size will continue into Q4 as larger health systems look to partner to overcome adverse effects from the COVID-19 pandemic and seek strategic combinations that broaden their reach,” KaufmanHall reported.
Transactions of note for the quarter include a planned merger between Utah-based Intermountain Healthcare and Colorado-based SCL Health. Combined, the health systems would reach $11 billion and operate 33 hospitals operating in six states. In addition, HCA’s planned acquisition of five hospitals in Utah from Steward Health Care adds to HCA’s existing presence in the state. The five hospitals have a combined revenue of $616 million.
In addition, a planned merger between Edward-Elmhurst Health and NorthShore University HealthSystem would create a $4+ billion system.
Despite the low transaction volume, more mega-mergers are on the horizon, KaufmanHall predicted.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."