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COVID-19 spurs rise in hospital mega mergers, finds Kaufman Hall

Average seller size by revenue was $676 million, well above historical averages for the first quarter and for recent year-end averages.

April 15, 2021 / Jeff Lagasse, Associate Editor

The number of hospital and health system mergers and acquisitions saw a sharp decline in the first quarter of the year, but the average transaction size soared, finds new analysis from industry consultant Kaufman Hall. This trend is a reversal from Q1 2020, when COVID-19 first began to take hold in the U.S.

In total, there were 13 announced deals in Q1 2021, compared to 29 in 2020.

Average seller size by revenue was $676 million due to a pandemic-induced rise in “mega mergers” — involving two companies with over one billion dollars in annual revenue — and transactions with seller revenues between $500 million and $1 billion. The scale of Q1 transactions led to a high number of hospital facilities, 72 total, included in the announced deals.

There were a number of notable transactions recorded in the first quarter. OU Health, for example, signed a letter of intent to merge with the University of Oklahoma College of Medicine to create a fully integrated academic health system. And CommonSpirit Health announced the planned sale of 14 hospitals in North Dakota and Minnesota to Essentia Health — one tertiary hospital in Bismarck, North Dakota, and 13 critical access hospitals.

Meanwhile, UK HealthCare and King’s Daughters Health System announced a joint venture partnership that will expand access to tertiary-level services for residents of eastern Kentucky and southern Ohio. And Aspirus Health announced its plan to acquire seven hospitals in central and northern Wisconsin from Ascension Health.

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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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