Blog | Strategic Partnerships Mergers and Acquisitions

Hospital M&A volume remained slow in Q2, but revenue per transaction continued to surge

Blog | Strategic Partnerships Mergers and Acquisitions

Hospital M&A volume remained slow in Q2, but revenue per transaction continued to surge

A recent White House executive order calls for closer review of hospital mergers and acquisitions, among other guidance designed to promote competition in various industries.

The COVID-19 pandemic appears to be curtailing the volume of healthcare merger-and-acquisition activity, but deal size has grown considerably.

There were 27 total transactions through the first two quarters of 2021, according to Kaufman Hall’s quarterly tracking report. From 2015 through 2020, there were never fewer than 43 transactions through two quarters.

But the average revenue of the selling entity thus far in 2021 is more than $638 million. That’s more than $240 million higher than the average through the first two quarters of any of the previous six years.

The report attributes the jump in average transacted revenue to a focus on “regional partnerships with systems in new markets” as opposed to acquisitions of smaller hospitals.

It remains to be seen whether a new directive from the White House will affect hospital M&A strategy and activity. In an executive order issued July 9, President Joe Biden sought to promote competition across industries. Pertaining to healthcare, Biden asked the Department of Justice and Federal Trade Commission to “review and revise their merger guidelines to ensure patients are not harmed by such mergers.”

As HFMA previously reported, Congress also is considering ways to address consolidation in the hospital industry, including by granting more authority and resources to the DOJ and FTC.

Highlights of Q2 activity

There were 14 transactions in the most recent quarter, Kaufman Hall reported. Activity was robust in the Southeast, including in Georgia, the site of three deals involving eight hospitals and about $1.5 billion in revenue.

The biggest transaction was the announced combination of Spectrum Health and Beaumont Health in Michigan. With an established footprint in the western and southeastern regions of the state, the united system will have about $13 billion in annual operating revenue.

Other health systems that have been seeking to fortify their operations regionally include:

  • Piedmont Healthcare, which bought five hospitals in Georgia
  • Medical University of South Carolina, which acquired three hospitals in the state after recently purchasing four others
  • Rush Health Systems and Ochsner Health, which announced plans for a merger that will bring together systems in neighboring Mississippi and Louisiana

“For health systems, a focus on regionalization facilitates the sharing of resources within a defined geography, a capability that proved particularly valuable during the heights of the COVID-19 pandemic,” Kaufman Hall wrote. “A robust regional market presence positions health systems to partner with health plans and local employers by offering the necessary scale for population-health-focused initiatives and cross-market access for employees at work and at home.”

The regionalization trend also was seen in efforts by for-profit health systems to divest hospitals “outside of their core business regions,” according to the report.

For example, HCA Healthcare is selling four northern Georgia hospitals to Piedmont but is working to strengthen its presence in the southeastern part of the state.

“Investors are recognizing and rewarding investor-owned systems’ focus on their core businesses and markets,” Kaufman Hall wrote.

About the Author

Nick Hut

is a senior editor with HFMA, Westchester, Ill. (

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