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Data shows M&A transactions back up to pre-pandemic levels

Written on Jul 27, 2023

Hospital and health system mergers and acquisitions increased in the second quarter this year, according to a new report. The second quarter had 20 announced transactions, including three megamergers where the seller or smaller party had revenues exceeding $1 billion.  

The 20 transactions in Q2 are the most in a single quarter since the COVID-19 pandemic began — a sign the authors say reflect the M&A market “regaining momentum.” 

With $13.3 billion in total transacted revenue, Q2 2023 was down from the high of $19.2 billion observed a year ago, but above pre-pandemic levels. 

Sellers continue to be larger in size, with an average of $664 million in revenue. The average was down from a historic high of $852 million in 2022. 

One driver behind larger health systems submitting to deals is a desire for synergy: Organizations are selecting partners that “complement, expand and optimize organizational capabilities,” the report from Kaufman Hall said. 

The report noted deals within regional markets as another emerging acquisition trend, suggesting that health systems can deliver more coordinated care by combining in adjacent geographies.  

The authors expect that other players will take a similar approach to mergers and acquisitions moving forward. 

“We anticipate more portfolio optimization from large, multi-market health systems as they look across the geographies in which they operate and determine where scarce resources can be best deployed,” researchers wrote. 

The acquiring parties in the second quarter included eight not-for-profit health systems, four investor-owned health systems, two religiously affiliated organizations, four academic/university-affiliated organizations, one government organization and one academic organization partnering with multiple not-for-profit organizations. 

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