Investment activity in healthcare is extremely healthy this year, with deal volume expected to break records. However, the hospital market seems to be in a different spot, based on year-to-date numbers. Through Q3, there have been 42 announced transactions, compared with 70 total in 2021. Deal closures have been slower, most likely due to market headwinds facing health systems and providers, such as labor shortages.
There has also been stricter scrutiny of mergers and acquisitions from the Federal Trade Commission (FTC). The regulatory agency has sued to block several mergers, such as the deal between HCA Healthcare and Steward Health Care System for a sale of five hospitals in Utah and the merger of RWJBarnabas Health and Saint Peter’s Healthcare System in New Jersey.
Other deals have been canceled for economic reasons. Wilmington, Delaware-based Christiana Care Health System, Inc. and Pennsylvania-based Prospect Medical Holdings, Inc. announced the signing of a Letter of Intent for Christiana Care to acquire Crozer Health from Prospect on February 11, 2022. However, in August, the organizations called off the deal, stating in the release, “the economic landscape has significantly changed, impacting the ability of the sale to move forward.”
There are still several deals in the negotiation phase, however.
- Excela Health and Butler Health System in southern Pennsylvania are currently ironing out a deal to merge. When combined, the system is expected to generate more than $1 billion in revenue, employ 7,300 people and have more than 1,000 physicians and practitioners to serve about 750,000 people in Butler, Clarion and Westmoreland counties. The new health system would combine Excela’s three hospitals, Frick Hospital in Mt. Pleasant, Latrobe Hospital in Latrobe and its flagship Westmoreland Hospital in Greensburg, with the two Butler Health System hospitals, Butler Memorial Hospital in Butler and Clarion Hospital in Monroe Township, Clarion County.
- According to a local news report, a deal between the Medical University of South Carolina and Regional Medical Center is in the works.
- OhioHealth Corp. is looking to purchase Southeastern Ohio Regional Medical Center from Guernsey Health Systems.
- Speaking of Guernsey Health Systems. The not-for-profit entity is in talks with OhioHealth. The two organizations have signed a non-binding letter of intent to merge.
Some other notable deals managed to make it over the finish line recently. Yale New Haven Health (YNHH) and Prospect Medical Holdings, Inc. closed a sale this month for YNHH to acquire two Connecticut health systems from Prospect. The agreement also includes the health systems’ related businesses, real estate assets, physician clinic operations and outpatient services
University of Chicago Medicine acquired a controlling interest in AdventHealth’s Great Lakes Region — which includes its four Illinois hospitals in Bolingbrook, Glendale Heights, Hinsdale and La Grange, with AdventHealth retaining the remaining ownership and continuing to manage daily operations of the facilities. UChicago Medicine and AdventHealth will each keep their current system-level governance and administrative structures.
Mon Health System and Charleston Area Medical Center Health System in West Virginia merged to form one system called Vandalia Health. The new system was quick to expand, announcing a deal for Greenbrier Valley Medical Center in Ronceverte, West Virginia only days later.
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