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Hospital mergers up 13%, says Kaufman Hall

Hospitals and health systems are trying to compete with national health insurers and outpatient providers by achieving scale and market share.

Jeff Lagasse, Associate Editor

There were 115 hospital and health system mergers in 2017, enough for a 13 percent increase, according to a new report from consulting firm Kaufman Hall and Associates. 

Of those transactions, 11 involved organizations with at least $1 billion in annual revenue.

[Also: Tracking 2017 mergers and acquisitions]

One of the biggest drivers of this increased M&A activity is that hospitals and health systems are trying to compete with national health insurers and outpatient medical care providers by achieving scale and competing for market share. 

Competition from Optum and CVS Health may have played a role in the uptick. Optum, the health services arm of UnitedHealth Group, has pledged $5 billion to expand its OptumCare clinics and urgent care centers into more states. 

Drugstore giant CVS, meanwhile, is looking to close its $69 billion purchase of Aetna, one of the nation's largest health insurers, in a bid to expand the scope of its services.

The number of mergers is the most since the 84 that were recorded in 2000. Only about one third of 2017's transactions were among for-profit companies. They include Quorum Health Corp., Tenet Healthcare and Community Health Systems.

Increasingly, nonprofits are looking to expand through mergers. Dignity Health and Catholic Health Initiatives formed a new entity last year, and Advocate Health Care and Aurora Health Care also joined forces.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com