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Hospital Consolidation: Analysis of Acute Sector M&A Activity

Deloitte study reveals mixed results


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Consolidation in the acute sector is accelerating as hospitals seek sustainability amid increasing stress from margin pressures, regulatory compliance costs, public transparency responsibilities, operational integration in value-based delivery systems, payment reforms, and clinical improvements based on new diagnostic and therapeutic models.

How well do acquired hospitals perform financially post-merger? Do hospitals acquired by national chains outperform local/regional “in market” acquisitions? How does the performance of acquired hospitals compare to a peer group (same size) and acute hospitals?

The Deloitte Center for Health Solutions analyzed 101 hospital transactions in 2007-2008, using three measures to analyze the performance of the acquired hospital pre-merger and up to three years post-merger. The study reveals:

  • The financial performance for acquired hospitals improved, but did not achieve peer group medians.
  • The financial performance of hospitals acquired by national chains outperformed local/regional acquisitions as a result of lower operating costs and increased volume comparatively.

Additional information

Unlocking value in health plan M&A: Sometimes the deals don’t deliver
Deloitte’s analysis of 44 health plan merger and acquisition (M&A) transactions found that fewer than half led to sustained improvements in comparative market value three years after the deal closed.

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