2021 sees fewer total mergers and acquisitions, but eight mega-mergers

Hospitals and health systems saw significantly fewer mergers and acquisitions (M&A) in 2021, but according to a new analysis by industry advisor Kaufman Hall, doing business saw significantly larger health systems and higher revenues. Eight of the 49 transactions announced in 2021 (16.3%) were “mega-mergers”, in which the smaller partner or seller achieved an average annual turnover of more than 1 billion US dollars. That was almost double the 2020 percentage (8.9%) and the highest in six years.

Other notable trends include hospitals becoming more focused on core markets and assets, strengthening intellectual capital resources, and addressing societal problems and underserved populations. These trends are expected to continue through 2022, and health systems strategies for the New Year are expected to be influenced by three key lessons from the pandemic:

Recognize the imperatives of scaling. Larger health systems were better placed to respond to and weather the effects of the pandemic.

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Concentration on core markets and services. Pandemic disruptions and financial pressures made non-core assets and markets less attractive, leading to a shift to more core markets and services.

Look for innovative partnerships. Health systems are increasingly looking for ways to offer new services to consumers or to improve the delivery of specialized services.

Researchers say these trends point to a greater process of transformation in the industry as the pandemic continues to reshape the healthcare system.

About Kaufman Hall

Kaufman Hall offers management consulting solutions that help the company’s founding institutions achieve sustainable success in changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards of directors and executive teams, helping them incorporate best practice, rigorous analysis, and industry-leading solutions into their strategic planning and financial management processes to achieve their most demanding goals.

Kaufman Hall services use a rigorous, disciplined and structured approach based on corporate finance principles. The breadth and integration of Kaufman Hall’s advisory services is unparalleled and encompasses a strategy; Financial and capital planning; Performance improvement; Treasury and capital market management; Mergers, acquisitions, partnerships and joint ventures; and real estate.

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