Hospital Mergers in 2024: On Pace for Robust Activity

Hospital mergers continue to be a hot topic in the healthcare industry as the number of deals announced in 2024 is keeping pace with last year’s numbers. According to Kaufman Hall, there have been 31 announced hospital mergers in the first half of the year, with 20 deals in the first quarter alone, the highest number since 2020.

Anu Singh, managing director at Kaufman Hall, predicts robust M&A activity in the hospital sector in the coming months. Despite a slight dip in the number of deals in the second quarter, the transacted revenue for that period reached $10.8 billion, remaining near historic highs.

One key driver of hospital mergers is the financial distress many hospitals are facing. While some are performing better, others are struggling to stay afloat. Smaller hospitals are seeking mergers to secure their future, while larger systems are looking to expand their capabilities and resources to deliver better care more efficiently.

The trend towards strategic partnerships over sheer scale is also evident in recent deals, such as the planned merger between Sanford Health and Marshfield Clinic Health System, which would create a $10 billion system with 56 hospitals. Academic health systems are also increasingly partnering with community hospitals to enhance their regional care networks.

While regulatory hurdles have led to some deals being abandoned, the overall pace of hospital mergers is expected to remain steady. Singh believes that the financial pressures and strategic imperatives driving these mergers will continue to outweigh any regulatory challenges.

As hospitals and health systems look towards the future and plan for long-term sustainability, mergers and acquisitions will likely remain a key strategy for growth and success in the ever-evolving healthcare landscape.