Commentary by: Eric Murphy, Managing Director, Global Healthcare Services
For the past three quarters, healthcare mergers and acquisitions activity has followed a similar theme: fewer transactions while the total transaction revenue and average size of seller by revenue remain at an all-time high level. Kaufman Hall reported in its Q3 2021 Healthcare Merger & Acquisition Activity Report that the average seller size for the first three quarters of 2021 was $659 million, which is nearly double 2020’s average of $393 million. The number of transactions through third-quarter 2021 (34) are almost half of what was announced through the first three quarters of 2020 (62).
The three major transactions announced for the third quarter include:
- Intermountain Healthcare and SCL Health, both based in the Mountain West, will combine to operate 33 hospitals, making it an $11 billion system
- HCA announced plans to acquire five hospitals from Steward Healthcare in Utah
- In the Chicago metropolitan area, NorthShore University HealthSystem and Wedward-Elmhurst Heath announced plans to merge. With combined geographic coverage throughout Chicago and its north and west suburbs, this will create the second-largest physician network in Illinois.
The trend of fewer, more strategic transactions within healthcare M&A activity is likely to continue. We expect providers to look to acquire or merge where they can increase market share in new geographies and expand their core service offerings.
