Hospital M&A activity accelerated in the fourth quarter of 2017. The number of hospital acquisitions rose to 21 in the fourth quarter, up 40% from the 15 publicly announced acquisitions in the third quarter of 2017. Compared with the same quarter in 2016, which posted 23 transactions, activity was down 9%. None of the transactions disclosed a purchase price in the third quarter of 2017. Four of the deals disclosed prices, for a combined total of $2.82 billion. None of the transactions in the third quarter disclosed a price, although the fourth quarter of 2016 posted a total of $2.31 billion.
The largest deal in the quarter was UnitedHealth Group’s (NYSE: UNH) $2.8 billion acquisition of the Chilean Banmedica SA (SSE: SGO), which operates hospitals, sells health insurance and provides other services.
In the United States, consolidation among large not-for-profit systems peaked in the fourth quarter with the definitive merger agreements between Dignity Health and Catholic Health Initiatives, and Advocate Health and Aurora Health.
For-profit chains continued to sell financially troubled facilities. Community Health Systems (NYSE: CYH) sold two hospitals, one in Florida (to Adventist Health) and another in Mississippi (to Curae Health). Tenet Healthcare (NYSE: THC) sold a sizable hospital (257 beds) in Illinois, and LifePoint Health (NASDAQ: LPNT) unloaded Rockdale Medical Center (138 beds) in Georgia.
Those divestitures will continue in 2018, as Community Health just announced it will sell more hospitals, with combined revenue of up to $2 billion.
Several privately held hospital companies have popped up in recent years, such as Americore Health, LLC in Florida, and are potential buyers. Like Curae Health, Americore Health specializes in managing rural hospitals. In 2017, the firm acquired Lee Regional Medical Center in Pennington Gap, Virginia for $2 million. Wellmont Health System closed this 43-bed facility in 2013, and the Lee County (VA) Hospital Authority acquired the building in 2015.
