H2C INDUSTRY INSIGHTS • M&A
Q3 M&A Update
Hospital M&A Activity Continues to Lag
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.
Source: Based on an H2C analysis of industry data
It is important to note that some announced transactions do not go on to close due to unforeseen risks, regulations, or other factors.
If your organization is considering evaluating options and opportunities for merger, acquisition, divestiture, or partnership, H2C is uniquely positioned to offer expert advice. Let us put our market knowledge and expertise to work for you.
About H2C Securities Inc.
H2C is a strategic advisory and investment banking firm committed to providing superior advice to healthcare organizations and related companies throughout the United States. H2C’s professionals have a long track record of success in healthcare mergers and acquisitions, capital markets, real estate, and restructuring transactions, acting as lead advisors on hundreds of transactions representing billions of dollars in value.
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About H2C Mergers & Acquisitions
H2C’s M&A Services team is dedicated to serving healthcare and healthcare-related organizations. Our commitment to exceed our clients’ expectations begins with senior leadership on every engagement and continues with independent and objective strategic advice. Our belief in the markets and in the power of competition has resulted in loyal clients and long-term relationships.
Nicholas R. Beale
William B. Hanlon III
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