More on Mergers & Acquisitions

HCA Healthcare to acquire Mission Health for $1.5 billion under terms to keep facilities, services intact

The deal is pending evaluation by the North Carolina Attorney General on the potential effect the transaction could have on market competition.

Beth Jones Sanborn, Managing Editor

HCA Headquarters in Nashville. Credit: Google Street ViewHCA Headquarters in Nashville. Credit: Google Street View

Nashville-based HCA Healthcare and North Carolina-based Mission Health have announced a definitive agreement for HCA to acquire Mission Health for $1.5 billion, the systems announced.

The deal is pending regulatory approval, including an evaluation by the North Carolina Attorney General of any potential effect the transaction could have on market competition, whether the selling price is fair and how proceeds resulting from the sale will continue to benefit western North Carolina.

According to Mission Health, the proceeds of the sale, along with Mission Health's remaining cash and investments after debt resolution, will be transferred to a newly formed trust to be used to "improve the health and well-being of all people and communities of western North Carolina."

Mission Health will continue to be managed locally, but HCA's capabilities in operations, capital access, clinical trials, research, predictive modeling, analytics and other areas will be integrated. HCA Healthcare also includes a large behavioral health services operation as well as geriatrics, including specialized geriatric emergency services and programs tailored to healthy aging.

Under the terms of the agreement, nearly all Mission Health facilities and clinics will become part of HCA Healthcare but will bear the Mission brand. HCA will keep in place key clinical services for a minimum of five years and all rehabilitation and acute-care hospitals will remain open for at least 10 years.

The lone exception is St. Joseph's Hospital, which was already planned for transition. HCA has also agreed not to sell any rehabilitation or acute-care hospital for a minimum of 10 years, Mission said. 

HCA has also committed to $430 million over five years in capital expenditures which includes the completion of the Mission Hospital for Advanced Medicine, replacing Angel Medical Center and building a new Behavioral Health hospital. Additionally, HCA will contribute $25 million, with a matching $25 million from Mission Health, for an innovation fund to invest in businesses providing innovations in healthcare delivery benefiting the people of western North Carolina.

"...HCA Healthcare is the right and best choice for western North Carolina and Mission's team members, providers and patients. It is heartening to share that every single Mission Health member entity Board voted unanimously to approve this transaction," said Mission Health Board Chair John R. Ball, MD.

"As a healthcare provider founded by physicians 50 years ago ourselves, we share Mission Health's focus on excellence and we look forward to investing in western North Carolina to improve the health of the region," said Milton Johnson, HCA Healthcare's chairman and CEO.

Merger and acquisition activity broke records in the first quarter of 2018 after a steady and strong rise in activity for a couple years. Achieving scale and maintaining or increasing market share could be a major reasons why.

A survey by West Monroe and Mergermarket said 58 percent of senior executives cited scale as the top reason behind their consolidation efforts. Expanding into new markets entirely was cited by 37 percent of execs as the main driver and 48 percent said they wanted to disrupt incumbents.

Twitter: @BethJSanborn
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