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.