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Hospital Mergers and Acquisitions Declined in 2013

John Commins, for HealthLeaders Media, May 12, 2014

The purchase of Health Management Associates by Community Health Systems for $7.6 billion and the sale of Vanguard Health Systems to Tenet Healthcare for $4.3 billion were healthcare's two largest deals last year.

Hospital mergers and acquisitions in the United States declined in 2013, but the number of hospitals and hospital beds involved in those transactions hit a five-year high, according to the 2014 Health Care Services Acquisition Report.

M&A activity in 2013 was paced by the acquisition of Health Management Associates by Community Health Systems for $7.6 billion and the sale of Vanguard Health Systems to Tenet Healthcare for $4.3 billion, the year's two largest Hospital sector deals.

"Those two acquisitions alone accounted for more than one-third of the hospitals sold in the U.S. in 2013," said Lisa E. Phillips, an editor at Norwalk, CT-based Irving Levin Associates, which compiles the annual report.

Usually, Phillips said, beds owned by not-for-profits dominate the hospital M&A market, but because of those two billion-dollar deals last year, 78% of the target hospitals in 2013 were for-profit, compared with between 25% and 30% in a more typical year.

Globally, the dollar value of M&A activity across nine healthcare industry service sectors, including managed care and pharmaceuticals, increased by 1.8% to $52.7 billion in 2013. However, the number of transactions declined by 5.8% to 598 publicly announced healthcare services mergers and acquisitions in 2013.

In terms of number of M&A transactions, all but the long-term care and home health/hospice sectors posted declines in 2013 compared with 2012. The hospital sector declined 21.5% in deal volume to 84 announced acquisitions, which includes one large transaction in Germany, the report said.

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