Mergers & Acquisitions Continue Unabated

Although consolidations appeared to slow in 2014, experts now report that transactions have substantially increased in the first quarter of 2015. One firm that tracks merger & acquisition activity noted 346 deals in January through March 2015, up 109 percent from the same quarter last year.


A preliminary analysis of these transactions by Irving Levin Associates shows disclosed prices worth more than a combined $104.7 billion. The dollar record, set in the first quarter of 2009, topped $127 billion spent on 202 deals. (“Healthcare Deals Surge in 2015,” HFMA Weekly News, April 10, 2015)


The interest in consolidation continued despite Federal Trade Commission (FTC) challenges reported widely in the media. Administrators may be anticipating increased FTC scrutiny of hospital deals after the agency won its first challenge of a health system’s acquisition of a physician group.


iProtean expert Monte Dube, Esq. (Proskauer Rose LLC) noted, however, “In my experience, well meaning healthcare consultants and lawyers have taken these few (FTC) successes and told the industry and hospitals that there is a high risk of successful anti-trust challenges. That conclusion is unnecessarily pessimistic. In fact, fewer than one in ten hospital mergers are ever investigated with seriousness by the FTC. (Excerpt from an upcoming iProtean course on Mergers & Acquisitions)


Faced with increasing structural changes and financial constraints, hospitals have looked to consolidation/collaboration as a way to improve efficiency, access to care, quality of care . . . and lower costs. Worth noting (and repeating), however, is that consolidation tends to make larger hospitals stronger and smaller hospitals weaker, according to a senior Moody’s Investors Service analyst in a recent release.


Also worth noting is that the trend also seems to be shifting from traditional mergers and acquisitions to partnerships, collaborations, joint ventures and other nonbinding agreements, according to another recent report.


Mr. Dube noted, “It is the rare hospital in America that is not today considering or actively talking with a potential partner . . . While there may be compelling reasons for your hospital to remain independent, due to your geography, the fact that you are a sole community hospital with minimal competition or because you are a critical access hospital with cost based reimbursement, I have little doubt that the pace of consolidation of hospitals of all sizes, of all types, will continue from coast to coast for the next five to ten years.”




iProtean subscribers, the new advanced new advanced Governance course, Two Imperatives for Boards, featuring Tom Dolan, Ph.D. and Karma Bass, MPH, FACHE of Via Healthcare Consulting is in your library.



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