Hospital M&A Boom's Top 3 Drivers
It's getting to the point where hospital mergers and acquisitions aren't really news anymore beyond the healthcare trade publications and the local service areas that are affected by the deals.
According to Irving Levin Associates Inc. there has been a fairly steady increase in the number of hospital mergers and acquisitions over the past several years: up from 38 M&A deals involving 56 hospitals in 2003 to 90 involving 156 hospitals in 2011. That's almost two deals a week.
We've seen this cycle before. Hospital M&A accelerated in the late 1990s along with the advent of managed care. Levin notes that M&A fever peaked in 1998 with 139 deals involving 287 hospitals and steadily declined until 2003.
While it is entirely possibly that we could be at the top of an M&A cycle once more, this time it feels different. We are seeing the broad consolidation of the hospital industry in all parts of the nation and it's difficult to see any market forces out there that will reverse this trend.
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