News | Staff Development

Healthcare News of Note: Report indicates uptick in hospital M&A activity

News | Staff Development

Healthcare News of Note: Report indicates uptick in hospital M&A activity

  • A Ponder & Co. report details an uptick in hospital M&A activity in Q4, with a total of 28 hospital transactions compared to 21 such transactions in Q4 2019 and 24 in Q4 2018.
  • The Biden administration is preparing to extend the declaration of the COVID-19 public health emergency (PHE) through the end of 2021.
  • The Federal Trade Commission is planning to examine the consequences of physician group consolidation with healthcare facilities.

If you missed the latest industry news this past week, here are three stories that deserve the attention of healthcare finance professionals.

1. More M&A activity in Q4 2020, Ponder & Co. report says

A Jan. 19 Modern Healthcare article says, “Hospital merger and acquisition activity rebounded in the fourth quarter, but annual deal volume still hit an 11-year low, according to a new report.

“The COVID-19 pandemic caused many health systems to pause or abandon their merger and acquisition plans, resulting in only 79 announced deals in 2020, Ponder & Co. found. That was down 25% from the trailing 10-year average and the lowest annual tally since 2009.

“But the 28 announced deals in the fourth quarter signaled that hospital executives are more comfortable with the virtual due diligence process and that finances have stabilized, said Eb LeMaster, managing director at the healthcare advisory firm.”

The Ponder & Co. report also noted:

  • Q4 2020 broke a streak of five consecutive quarters of declining volume and outperformed Q4 2019 and Q4 2018 volumes.
  • The number of fourth-quarter hospital transactions reported was 21 in 2019 and 24 in 2018.

2. Biden ready to extend the declaration of the COVID-19 public health emergency

The Biden administration is preparing to extend the declaration of the COVID-19 public health emergency (PHE) through the end of 2021.

Norris Cochran, acting secretary of the U.S. Department of Health and Human Services (HHS), wrote a letter to governors Jan. 22 in which he said, “We have determined that the PHE will likely remain in place for the entirety of 2021, and when a decision is made to terminate the declaration or let it expire, HHS will provide states with 60 days’ notice prior to termination.”

The Trump administration most recently had issued a 90-day extension that is scheduled to expire April 21.

Among numerous stipulations in the PHE are those that:

  • Remove regulatory barriers that inhibit the provision of telehealth services
  • Relax requirements for physicians and other healthcare professionals to be licensed in the state in which they provide services
  • Relax HIPAA privacy requirements in certain care scenarios
  • Ensure continuation of the temporary 6.2-percentage-point increase in the federal government’s share of Medicaid expenditures

— Nick Hut, HFMA senior editor

3. FTC to use claims data from six insurers to help assess impact of physician group consolidation

On Jan. 20, MedPage Today writer Ryan Basen reported, “The Federal Trade Commission (FTC) announced plans to examine the consequences of physician group consolidation with healthcare facilities. The agency said it had sent orders for 6 years' worth of patient claims data to six insurers to inform this review: Cigna, United Healthcare, Anthem, Florida Blue, Aetna, and Health Care Service Corporation.”

The article goes on to quote an FTC news release: “This data will help the FTC assess the impact of physician consolidation during this period [calendar years 2015-2020], including physician practice mergers and hospital acquisitions of physician practices. It should also allow the FTC to assess the impact of healthcare facility consolidation."

“The release said the FTC hopes to learn how the mergers affected competition and ‘the proper functioning of healthcare markets,’ with the latter informing policymakers,” the article adds.

According to MedPage Today, “the FTC asked the insurers for claims data covering inpatient, outpatient, and physician services in 15 states.” The information the FTC requested from insurers includes:

  •  How much patients paid for services
  • What insurers actually paid vs. what insurers promised to pay
  •  How patients chose their insurer
  •  What hospitals billed patients and whether physician services were included in the bill

According to the FTC, this study is part of a broader initiative recently announced by its Bureau of Economics to revamp its merger retrospective program.

Bonus content from HFMA

HFMA provides plenty of original content every week. Here are just a couple of items from this week that you might find of interest:

About the Author

Deborah Filipek

is a senior editor with HFMA, Westchester, Ill.

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