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Hospital mergers in first quarter reach highest number since 2020

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There were 20 announced deals in the first three months of 2024, according to Kaufman Hall.

Healthcare industry analysts said they expected to see more hospital mergers in 2024, and the first quarter indicates those projections have some merit.

Image: Northwell Health

John M. Murphy, MD, president and CEO of Nuvance Health, left, and Michael Dowling, president and CEO of Northwell Health, announced the planned merger of the two health systems in February. (Image: Northwell Health)

In the first quarter of the year, there were 20 announced hospital mergers and acquisitions, according to a report released Thursday by Kaufman Hall, a healthcare consulting firm.

The 20 deals in the first three months represent the highest number of transactions in a first quarter since 2020, when there were 29 mergers and acquisitions. The COVID-19 pandemic started spreading late in the first quarter of 2020, so some deals had already been announced.

For comparison, there were 15 hospital mergers in the first quarter last year. In 2023, there were 65 announced hospital deals, up from 53 transactions in 2022, according to Kaufman Hall.

In the first quarter this year, Northwell Health and Nuvance Health announced their planned mega-merger of their organizations.

If regulators sign off on the deal, the combined system would operate 28 hospitals and more than 1,000 sites of care. Northwell is based in New York and operates 21 hospitals in New York City and Long Island. Nuvance runs seven hospitals in western Connecticut and New York’s Hudson Valley. While Northwell and Nuvance aren’t far away from each other, they operate in separate markets, which could allay the concerns of regulators.

The Northwell-Nuvance deal helped buoy the total transacted revenue in the first quarter to $12 billion, which is near the height of first quarters in recent years, Kaufman Hall said.

Kaufman Hall has seen more academic medical centers looking at mergers and acquisitions, and that held true in the first quarter. Six of the 20 deals involved academic medical centers, Kaufman Hall said.

UCI Health, the clinical enterprise of the University of California, Irvine finalized the acquisition of four hospitals from Tenet Healthcare Corp. Adventist Health also completed the purchase of two California hospitals from Tenet last month.

A couple of deals were also announced in Pennsylvania in the first quarter. In January, Penn Medicine announced plans to acquire Doylestown Health, as the Philadelphia-based system continues its expansion in eastern Pennsylvania. WellSpan Health said in February it plans to acquire Evangelical Community Hospital, a 131-bed hospital in central Pennsylvania, along with its associated clinics and outpatient locations.

Anu Singh, managing director at Kaufman Hall, told Chief Healthcare Executive® in a January interview that he expects to see more hospital mergers driven by a variety of factors. Some hospitals systems may be looking to pursue mergers or partnerships for strategic reasons, such as expanding services or supplementing areas where an organization isn’t competitive.

Plus, as some hospitals continue to struggle financially, some may be looking to find partners to ensure they stay solvent.

“I think it's going to be all cylinders firing from an M&A driver perspective,” Singh said.

(Healthcare leaders talk about the outlook for hospital mergers in this video.)

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