Hospital acquisitions have surged since the Affordable Care Act was passed in 2010. That year, 76 deals were announced, with a U.S. hospital or health system as a target. By 2012, 107 transactions were recorded for hospital targets, and that still stands as the highest number of deals per year. Only 2015 came close, with 102 hospital transactions. Through mid-November, there have been 79 deals announced with U.S. hospitals or health systems as the target.
But what are U.S. hospitals acquiring for their own financial health? Other hospitals or health systems make up the majority of targets every year, of course. So far this year, through mid November, 66 transactions for U.S. hospital targets have reached the definitive agreement stage (which is when we record them). Of those 66 deals, 38 were for not-for-profit targets, 20 were privately held and eight were publicly traded. Nine targets were in bankruptcy proceedings.
Those are just 66 deals out of the 102 announced by U.S. hospitals and health systems in 2016, through November 15. Here’s a list of transactions by target sector.
- Three targets are in the eHealth sector, with two of the targets providing mobile applications to improve clinical workflow and communications.
- Three are in the Home Health & Hospice sector. Two targets were multi-site home health services, based in British Columbia and Texas. The third was a not-for-profit hospice in Washington State.
- Two are in Long-Term Care sector. Both are single-site facilities, although one was a skilled nursing facility owned by a not-for-profit that had fallen on hard times, and the other was an independent living/memory care facility.
- Two targets in the Managed Care sector were acquired by a single buyer. Minneapolis-based Fairview Health Services acquired PreferredOne in January 2016, and added UCare in April.
- In the Other Services sector, 12 deals have been announced, and all of the targets provide some type of outpatient services. Three deals targeted multi-site rural health clinics (10 in all). Two deals targeted multi-site urgent care clinics, with Arizona-based Banner Health buying 32 Urgent Care Extra facilities and Colorado-based UCHealth, LLC bringing the three-clinic Integrity Urgent Care aboard. Three deals for free-standing emergency room companies have been announced by two Texas-based hospital systems. CHI St. Luke’s Health made two of those acquisitions, and acknowledges it will be adding more. Also, Texas Health Resources acquired the single-site First Choice Emergency Room from Adeptus Health. Three deals targeted ambulatory surgery centers, and one oncology center.
- Of course, physician practices are looking for new relationships with hospitals and health systems. In the Physician Medical Group sector, 14 deals have been announced by hospitals so far this year. Premier Health in Dayton, Ohio has made three acquisitions, and the University of Vermont Health Network announced two.
The year isn’t finished, of course, and the Trump administration takes over in January 2017. It will be interesting to see what, if anything, U.S. healthcare providers target as critical to their financial well-being in the coming years. We’ll keep you posted.