Hospital Consolidation: Analysis of Acute Sector M&A Activity
Deloitte study reveals mixed results
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.
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.