Maybe competition is good for what 'ails' hospitals

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Maybe competition is good for what 'ails' hospitals

Thomas Dworetzky, Contributing Reporter | February 15, 2019
Business Affairs

– The percentage of announced transactions involving financially distressed sellers continues to decline, down to 20 percent in 2018 from 21 percent in 2017.

– Not-for-profit systems remain active as acquirers. A not-for-profit system was the acquirer in 75 percent of transactions in 2018, tracking closely with the numbers from 2015 and 2016 (75 percent) and 2017 (76 percent). In 23 percent of deals, a not-for-profit acquired a for-profit, up from 16 percent in 2017.

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– Consolidation in some states is moving faster than in others. Texas, with eight deals, saw the most transactions in 2018, followed by Florida (seven deals), Pennsylvania (six deals), and Louisiana and Tennessee (five deals each) .

– Texas and Florida led the way in terms of transacted revenue for announced deals in 2018. But distribution of revenue across deals differed significantly between the states. Transacted revenue in Texas is anchored largely by Baylor, Scott & White Health and Memorial Hermann Health System's planned merger. In Florida, transacted revenue is more evenly distributed across several deals, including those involving Boca Raton Regional Hospital, Martin Health System, and Health First.

– Sixteen states saw no announced transactions in 2018. These include states that in recent years have seen relatively high volumes of transactions (for example, Kentucky, with five transactions in 2017) or large deals (for example, Massachusetts, with one deal representing $5 billion in combined revenue announced in 2017).

Perhaps its key takeaway for hospitals, according to Ken Kaufman, chair of Kaufman Hall, is that, “hospitals used to compete with the hospital across town for inpatient business. Today, hospitals are struggling to hold onto large chunks of their outpatient business in the face of a new set of competitors that have scale and technological knowledge never before seen in healthcare.”

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(1)

carey frix

really?

March 07, 2019 10:20

Might want to pass this along to HHS who still has in place the laws prohibiting new physician owned hospitals and whose policies have caused this consolidation to start with.

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