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Mega-Mergers Becoming the Norm in Hospital M&A

Analysis  |  By Alexandra Wilson Pecci  
   October 06, 2021

The total revenue transacted year-to-date is nearly on par with past years, despite only half of the total transaction volume.

There were fewer merger and acquisition deals among hospitals and health systems in the third quarter, but those that did happen generated big bucks.

In fact, the total revenue transacted year-to-date ($22.4 billion) is nearly on par with that of years past, despite only half of the total transaction volume, found a new analysis from Kaufman Hall, which examined seven transactions involving 20 hospitals that were announced in the third quarter.  

Total transacted revenue for the quarter was $5.2 billion.

The average seller size by revenue year-to-date was $659 million, which is more than double the average between 2015 and 2020. Of those seven transactions were two "mega-mergers," in which the smaller partner or seller has average annual revenues over $1 billion.

According to the analysis, two of the most significant third-quarter transactions were in the Mountain West, including the planned merger of Utah-based Intermountain Healthcare and Colorado-based SCL Health, where the combined $11 billion system would operate 33 hospitals and provide services in six states: Colorado, Idaho, Kansas, Montana, Nevada, and Utah.

Also significant is HCA's planned acquisition of five hospitals in Utah from Steward Health Care. The acquisition would add to the eight hospitals HCA already operates in the state.

This trend of fewer transactions with higher dollar amounts will likely continue, experts say.

It's driven by factors like fewer independent hospitals (data suggests that that 67% of community hospitals are already part of a larger system) and an emphasis on strategic partnerships and adding new capabilities or access to new markets.

Alexandra Wilson Pecci is an editor for HealthLeaders.

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