Analysis: Number of Hospital Mergers Increased in 2013

Hospital and health system mergers and acquisitions increased 3 percent in 2013, with Dallas-based Tenet Healthcare Corp.’s merger with Vanguard Health Systems accounting for the majority of all for-profit deal revenue.

A Kaufman-Hall analysis found that 98 hospital and health system combinations were announced last year, 87 of which involved nonprofit organizations worth $18.58 billion in revenue.

The total signifies a 3 percent jump over 2012 and a 51 percent increase since 2010, when the recession soured the market.

“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,” according to the findings.

The 11 for-profit mergers generated $13.8 billion. About $12.7 billion of that came from just two deals: The Tennessee-based Community Health Systems acquisition of Florida’s Health Management Associates and the aforementioned Tenet/Vanguard merger.

“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,” Michael Finnerty, a Kaufman-Hall spokesman, said in a statement.

Tenet CEO Trevor Fetter has been quite forthcoming about the success of the merger. Snapping up the concentrated locations of Vanguard hospitals extended Tenet’s reach in a number of attractive urban markets, including San Antonio, Phoenix, and Detroit.

Speaking in Miami at the Barclays Global Healthcare Conference last month, Fetter reported that the move doubled its revenue in Texas.

The state was also home to one of the nation’s largest nonprofit health system mergers: Baylor Health System joining with Temple-based Scott & White in September.

The move resulted in a new system, known as Baylor Scott & White Health, with $8 billion in assets, 43 hospitals, more than 500 patient care sites, more than 6,000 affiliated physicians, 34,000 employees, and the Scott & White Health Plan.

The analysis pulled from the independent consulting firm’s database of U.S. acute-care hospitals. It does not include the mergers of specialty hospitals, long term acute care centers, or surgical centers.

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