July 2, 2020 / Jeff Lagasse, Associate Editor
The COVID-19 pandemic is having a profound effect on hospital finances, exemplified by data showing that operating EBITDA margins fell a dramatic 174% in April, and remained down 9% year-over-year in May. So far, though, mergers and acquisition activity hasn’t taken as serious a blow. Transaction volumes are down from the norm, but only slightly, suggesting the public health crisis may be strengthening the rationale for future partnerships.
According to second-quarter data from Kaufman Hall, there were 14 transactions announced in the quarter. That’s a dip from the 29 transactions recorded in Q1, but year-over-year it’s not a significant change from 2019, which saw 19 transactions in the second quarter. The coronavirus notwithstanding, deals are moving forward.
“Even more powerful than COVID right now is the path of transformation healthcare was on,” said Anu Singh, managing director of mergers, acquisitions and partnerships at Kaufman Hall. There are new capabilities within health systems, efficiency around expenses and care management, and the migration to value instead of volume. Strategic partners were booking for strategic partners pre-COVID, and that has continued.”