Oct. 1, 2021 — Data from the H2C Securities Inc. ("H2C") mergers and acquisitions ("M&A") database shows 7 hospital transactions were announced in Q3 2021, bringing nine-month YTD volume up to 43. This represents a 30 percent decrease over YTD 2020, and lower volume than the YTD average of the past 10 years of approximately 65.

Key insights from Q3 include the following: 

​

• Hospital M&A activity is on pace for the lowest hospital M&A volume in the past 10 years. 

​

• The pandemic accelerated trends such as a push to value-based arrangements, the focus on primary care, investments in asset-light models, and emphasis on consumerism. Ensuring that hospitals are well-positioned to respond to these trends is a key area of focus in evaluating strategic initiatives and the potential for M&A. 

​

• While hospitals and health systems have been buoyed by stimulus payments, challenges loom as they repay Medicare Advance Payments and deal with increased labor costs. In this environment, the need for operational excellence will become increasingly important. 

​

Despite the limited volume, there were a few notable transactions: 

​

• HCA plans to acquire five Utah hospitals from Dallas-based Steward Health Care. These five hospitals will become part of HCA's Mountain Division, growing the segment to 16 hospitals. Steward Health Care will exit Utah and look to reinvest in different states.

​

• Intermountain Health Care and SCL Health recently announced their intent to merge. The proposed merger would create a combined system with more than 58,000 employees, 33 hospitals, and 385 clinics across six states and provide health insurance to about one million people.

​

• NorthShore University Health’s merger with Edward-Elmhurst Healthcare will continue the consolidation in the Chicagoland market and will create another major health system in the region. The combined organization will operate in some of suburban Chicago’s most attractive markets.

​

​