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Healthcare M&A’s down in 2020 but analysts say COVID-19 is a catalyst for future deals

January 14, 2021 / Mallory Hackett, Associate Editor

The financial and operational fallout from the COVID-19 pandemic was felt deeply by the nation’s hospitals and health systems, evident by diminished patient volumes and heightened labor and supply expenses.

Despite that, the year’s hospital M&A activity remained at a similar level as years past, and analysts and health leaders alike expect the pandemic to be a catalyst for future deals and partnerships.

“It appears that COVID-19 has actually confirmed the strategic rationale underlying many transactions that were already underway, and may be acting as a catalyst for innovative strategic partnerships and tactical transactions,” according to Kaufman Hall’s 2020 M&A in Review report. “The pandemic has accelerated the need for strategic initiatives that address the opportunities of industry transformation and that reward well-thought-out alignment opportunities.”

The analysts aren’t the only ones who believe healthcare M&A activity will continue to grow in the new year. Forty-four percent of healthcare CFOs say the pandemic will drive an increase in partnerships across the healthcare ecosystem, according to the 2021 BDO Healthcare CFO Outlook Survey.

In 2021, 31% of CFOs plan to acquire physician practices, 30% want to join a clinically integrated network, 28% expect to merge with another organization, 24% plan to enter into a joint venture, 20% may need to sell to another organization and 17% expect to acquire another organization.

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Chris J. Stewart

Chris currently serves as President and CEO of Surgio Health. Chris has close to 20 years of healthcare management experience, with an infinity to improve healthcare delivery through the development and implementation of innovative solutions that result in improved efficiencies, reduction of unnecessary financial & clinical variation, and help achieve better patient outcomes. Previously, Chris was assistant vice president and business unit leader for HPG/HCA. He has presented at numerous healthcare forums on topics that include disruptive innovation, physician engagement, shifting reimbursement models, cost per clinical episode and the future of supply chain delivery.

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