Hospital M&A Boom's Top 3 Drivers
Muller told me that Duke LifePoint was not the highest bidder, but that the Marquette General board picked it because of its mix of business and clinical expertise. Duke LifePoint will invest $300 million in capital improvement projects that will include an outpatient surgery center, cancer center, private patient rooms, new technology and new IT infrastructure. Duke LifePoint will also invest $50 million for physician recruiting over the next 10 years.
In addition, the deal allows Marquette General to retire about $100 million in long-term debts and unfunded pension liabilities, and provides another $23 million for the hospital foundation.
For Duke LifePoint the toehold in northern Michigan provides an opportunity to compete with blue chip providers that include Cleveland Clinic, Mayo Clinic, University of Michigan Health System, and Henry Ford Health System. Muller says Duke LifePoint also sees an opportunity to expand its orthopedic sports medicine program in Marquette, which is the home of a U.S. Olympic Education Center.
The biggest knock on hospital M&As is the loss of local autonomy. Hospitals are often the biggest employers and economic engines in the regions they serve and a source of local pride. No matter what guarantees are put in place the boards at most acquired hospitals are usually reduced to advisory status and their control is greatly diminished.
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