M&A Interest Still Strong

This article appears in the January 2012 issue of HealthLeaders magazine.

Look for mergers and acquisitions to remain strong in 2012 and for physician groups to remain at the top of almost everyone's must-have list. Some 78% of healthcare leaders say they will have deals under way or will be exploring deals in the next 12–18 months, according to the 2012 HealthLeaders Media Healthcare Mergers & Acquisitions Survey. Only 21% have no M&A activities planned. Physician practice acquisition is of high interest to 59% of the respondents.

The level of M&A activity surprises Kevin Gross, who is president of the Oklahoma division of for-profit Ardent Health Services in Tulsa. "I knew there was a lot going on, but 78% is surprisingly high. That means four out of five are doing something." He suggests that uncertainty could be driving some of the M&A activity.

As healthcare reform is implemented, it's no longer business as usual. Hospitals and health systems are expected to improve patient outcomes, meet new quality standards, and master new payment models while they contend with reduced government reimbursements. "It's a difficult time and place. Everyone wonders how they will navigate through the next couple of years and where they will be in 2013."

As they explore M&A, healthcare leaders say they are sticking with the tried and true. Some 65% say their M&A strategy is to look for properties that will strengthen their existing geographic markets.

A similar approach is being taken with physician practice acquisitions. Some 52% of respondents want to acquire practices that strengthen existing services lines.

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