Mergers, acquisitions, and other forms of partnerships continue to be a critical approach to developing the capabilities needed for value-based care.
Strong hospital merger and acquisition activity continued in the second quarter of 2015, according a report from Kaufman, Hall & Associates,, a provider of strategic, capital, financial, and transaction advisory services and software tools.
The firm identified 26 hospital and health system transactions in the second quarter of 2015, up from 23 transactions recorded in the first quarter.
A total of 49 transactions were announced in the first half of 2015, a noteworthy increase from the 43 transactions announced in the first half of 2014.
"One of the key drivers of hospital and health system mergers, acquisitions, and partnerships is a desire to position the organization for value-based health care," Kit Kamholz, managing director of Kaufman, Hall & Associates, told eWEEK.
"IT is critical to a successful value-based platform—for example, the ability to exchange information among providers, ensure evidence-based practice, understand population health status and risk, identify and meet consumer needs, and engage patients and caregivers, among many other capabilities."
He explained the critical role of IT means that IT capabilities and complementarity will be a key and likely increasing consideration as organizations assess partnership options.
The report said mergers, acquisitions, and other forms of partnerships continue to be a critical approach to developing the capabilities needed for value-based care, reducing costs, and enhancing competitive positioning.
The hospital transactions announced in the first half of 2015 reflect this variety of form, structure, and strategic purpose, the report noted.
"We believe that hospital and health system M&A transactions will continue at a strong pace as organizations seek the scale and capabilities to achieve the goals of value-based care and to reduce costs," Kamholz said. "We expect that over time fewer transactions will involve financially struggling organizations being acquired by financially healthy ones and that a growing number of transactions will involve a coming together of financially strong organizations to better manage population health."
The transactions occurred across a broad range of acute-care segments, including not-for-profit, for-profit, rural, urban, and academic health centers, according to the report.
Of the 49 transactions in the first half of 2015, 42 involved the acquisition of a not-for-profit organization – 34 by other not-for-profit organizations, and eight by for-profit organizations.
The total operating revenue of organizations acquired in the first half of 2015 was more than $12.0 billion, up from $10.0 billion in first half 2014.
The largest deal announced in the second quarter of 2015 was Ventas’ acquisition of Ardent Medical Services from Welsh, Carson, Anderson & Stowe for $1.8 billion, the report found.