Health systems have kept busy in 2024, building up their hospital portfolio and expanding into the post-acute care space. Through October 31, they have announced 113 deals, which puts activity on pace to break the 2023 total of 117 deals.
The uptick in activity can partly be attributed to investment strategies stemming from academic medical centers (AMCs), which have played a larger role in the healthcare M&A space over the past few years. In 2023, AMCs announced 22 deals; through October 31, there have already been 24 deal announcements.
For context, in 2019, there were only 15 acquisitions from AMCs, most of them transactions for a single hospital.
A few elements are driving this trend in the healthcare M&A market, some of them more tangible to measure than others. Community hospitals often seek out larger partners when margins are threatened and find name-brand recognition attractive. Systems like Yale New Haven Health, NYU Langone Health and UCLA Health are recognizable providers and organizations in their local communities, and that factor can help close a deal.
“Partnering with a regional AMC may be [a community hospital’s] best strategic option given that an AMC’s financial scale, reputation, and market-wide connections can help unlock clinical and operational synergies,” wrote Fifth Third Bank in an insight.
AMCs also benefit from lighter regulatory pressures than their for-profit health system competitors. In some states, an exemption known as the “state action doctrine” allows state-affiliated organizations, such as AMCs, to stay guarded against certain Department of Justice and Federal Trade Commission oversight during the transaction process. Although AMCs aren’t entirely immune from anti-trust rules, it simplifies their M&A ventures, allowing them to quickly complete deals.
Here are some of the top deals from AMCs in 2024 that the LevinPro HC team have captured:
- UCI Health, the clinical enterprise of the University of California, Irvine, and the only academic health system in Orange County, purchased four short-term acute care hospitals from Tenet Healthcare for $975 million. The hospitals make up Tenet’s Pacific Coast Network, and it’s not the only portfolio of hospitals Tenet has sold this year. Some local reports give us an idea of the challenges the hospitals were facing. According to the Orange County Register, employees went on a picket strike at some of the hospitals in this deal, including Fountain Valley, Los Alamitos and Lakewood hospitals in June 2021, alleging the facilities had left some workers without health insurance while the company received billions in federal COVID-19 relief funds.
Collectively, this deal adds 853 beds to UCI Health’s network.
- UAB Health System, one of the top academic medical centers in the United States and Alabama’s largest single-site employer, purchased Ascension St. Vincent’s Health System for $450 million. The deal value was reported by WBRC, a local news network. Ascension St. Vincent’s Health System in central Alabama includes hospitals in Birmingham, Blount, Chilton, East and St. Clair, as well as the One Nineteen Campus; the Trussville Freestanding Emergency Department; and imaging centers and other clinics that are part of Ascension Medical Group. It is a division of Ascension, one of the largest health systems in the country.
- University of Iowa Health Care acquired Mission Cancer + Blood, a physician-owned oncology practice in Iowa comprised of board-certified oncology and hematology doctors. The deal is valued at $280 million. University of Iowa Health Care is the state’s only academic medical center and a regional referral center affiliated with the University of Iowa. It is also an 811-bed public teaching hospital and level 1 trauma center
- UT Health East Texas pushed into the outpatient market with two different deals for urgent care centers. In February, it purchased five urgent care clinics in the East Texas region from QuickVisit Urgent Care, and another center from Premier Health in Canton, Texas. Financial terms from these deals were not disclosed.
- Worcester, MA-based UMass Memorial Health added Milford Regional Medical Center to its network in a $368 million deal. Milford Regional is a 148-bed, nonprofit, acute care facility serving a region of 20-plus towns with more than 300 primary care and specialty physicians. In 2015, it opened a 78,000-square-foot building that houses a new emergency department, intensive care unit and private patient rooms. UMass Memorial Health is the largest not-for-profit healthcare system in Central Massachusetts, with nearly 19,000 employees and 2,100 physicians.
For a complete list of all the deals from AMCs, including those in previous years, check out our LevinPro HC platform here.
