Increase in Mergers and Acquisitions among Health Care Sector

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According to a recent research, there has been a sharp rise in mergers and acquisitions among hospitals and health care systems. Just last year alone there were more that 98 new combinations among hospitals and health care systems, which represent a 51% rise as compared to 2010. The total operating revenues of the acquired organizations totaled $32.3 billion.

An expert investment analyst says, “Mergers and acquisitions among hospital and other health care systems are on the rise because it allows them to serve larger segments of society.”

Of the 98 mergers and acquisitions in 2013, 70 were nonprofit organizations. Through consolidation, these non-profit health care providers are positioning their businesses as a value based services to their customers. The revenue of non-profit organizations mergers came to about $18.5 billion, which will allow them to offer their services to the public at marginally lower fees.

The biggest acquisitions were Dallas-based Tenet Healthcare‘s acquisition of Vanguard Health Systems, and Tennessee-based Community Health Systems’ purchase of Florida’s Health Management Associates.

According to the Managing Director of an independent consulting firm, the increase in trend in mergers and acquisitions substantiate the fact that more and more health care providers are now pursuing partnerships in order to enhance their infrastructure and capabilities. These firms are looking for ways to adapt to the changing scenario in the health care sector. They want to beat the intense competition in health care sector by consolidating and offering better services to their customers. 

The need to build accountable health care capabilities is driving the health care firms to merge and collaborate in the hope that it will help them to cope with the competition and increased cost of operation.

The above stats on the mergers and acquisitions of health care centers in 2013 took account of short-term acute-care hospital systems only. The above number will increase substantially if mergers and acquisitions of long-term acute care center, specialty hospitals, and surgical centers are also included. Another study claims that figure comes to around 267 new transactions among hospitals and health care systems.

Experts predict that this will also see phenomenal growth in merger and acquisitions of health care systems. At present, the hospital market remains a fragmented market with a number of independent non-for-profit and regular health care providers. There are still a number of hospitals and other related health care firms to be consolidated.


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