Mergers and acquisitions in the hospital sector had a good year in 2015, with 101 deals currently on record. That’s virtually equal to last year’s 99 transactions, and close to the most recent high of 107 deals in 2012.
These numbers change, of course, as some deals that reached the definitive agreement stage eventually fall apart in subsequent months, or even years. At least two such deals had to be removed from our 2015 numbers, when agreements unraveled. The Federal Trade Commission is looking hard at a few others, but those wheels turn slowly and the challenged parties are still moving forward with their transactions.
Looking ahead to 2016, the transactional landscape continues to shift away from mergers and acquisitions to “softer” deals that are best described as affiliations, clinical collaborations, joint ventures or partnerships. True, many an “affiliation” is really an acquisition. Just don’t tell that to the local newspaper. However, the FTC is stepping up scrutiny on hospital transactions that look likely to increase health care costs in various markets. That step alone will likely turn more mergers into partnerships or joint ventures, with two entities sharing governance responsibilities.
We expect to see a slowdown in outright M&A in the coming months, as hospitals and health systems take stock of the lastest federal open-enrollment figures, wait to see what some state legislatures decide to do (or not do) about expanding Medicaid, and keep a wary eye on the FTC’s challenges. There’s also a contentious field of presidential candidates using all forms of digital outlets to blast the rising cost of health care and/or the ACA. It’s enough to make a hospial
