In a report released April 10, consulting firm Kaufman Hall indicated that M&A activity among hospitals and health systems continues to increase. During 2013, there were 98 mergers and acquisitions, up three percent over 2012, but up 51% compared to 2010. In their analysis, Kaufman Hall stated, “The level of activity shows consolidation continuing to occur among not-for-profit hospitals and health systems as they position themselves for value-based payment and population health management.”
The numbers are even more substantial when taking into consideration other healthcare entities such as physician groups, labs, MRI, dialysis, home health, behavioral health and hospice. The most recent figures available indicate that there were 267 mergers and acquisitions during the third quarter of 2013 alone. That was an increase of 16% over the second quarter of 2013, and a 35% increase compared to the third quarter of 2012. Those numbers were reported by Irving Levin Associates, a business intelligence firm that specializes in healthcare finance.
Commenting on the data released by Irving Levin, Lisa Phillips, editor of Health Care M&A News, said, “Health systems that have made strategic acquisitions such as physician medical groups will now turn their attention to long-term care, home health care and rehabilitation to fill out their care continuum requirements. We still expect a fluid market in physician medical groups and continued consolidation among hospitals.”
Ernst & Young’s senior managing director for U.S. healthcare mergers and acquisitions, Gregory Park, indicated last month that the Affordable Care Act was causing a “tectonic shift” in hospital operations. Michael Finnerty, Managing Director at Kaufman Hall, commented, “Our analysis confirms that hospitals and health systems are continuing to pursue partnership arrangements as one approach to accessing the enhanced infrastructure necessary to provide care successfully in the changing environment.”
This changing landscape in our industry presents unique opportunities for healthcare executives to differentiate themselves among their peers. There’s no better time than now to evaluate how you can position your leadership skills and accomplishments to take advantage of the transformation that’s occurring in the healthcare industry.