The health care services segment had an active month with 53 announced transactions for a total of $6.4 billion in disclosed prices. The real activity, however, was in just two sectors: hospitals and long-term care, with 25 deals between them. The hospital market has seen its share of potential mergers and affiliations called off (see the October 2012 issue), partly because of the rush to find a financially stronger partner without fully understanding all the ramifications of such an arrangement, and partly because they may not have made sense in the first place, not to mention other potential partners that may latently express an interest.
But as we stated last month, there are so many varieties of relationships that can be forged between not-for-profit hospitals that aren’t actually mergers or acquisitions, one has to be careful in what label to use for many of these transactions. We try to be careful, but sometimes the parties themselves obfuscate things a bit, and the nature of the transaction often changes once discussions begin.
In the most significant merger of the month, and probably of the year, the boards of Michigan-based Trinity Health and Pennsylvania-based Catholic Health East, have signed a letter of intent to join as a unified health system. Combined, they will operate 82 hospitals, more than 60 long-term care and assisted living facilities, LTACs, CCRCs, outpatient clinics and a very large home health and hospice business (which may be one of the top 10 in the country post-merger), all in 21 states. Now, things can always cause a merger of this size to break apart before it reaches the finish line, but at least there is no religious issue, since both are Catholic-based, and we don’t believe there will be any anti-competitive issues either since they pretty much operate in different areas. Compared with this transaction, all the other hospital mergers and acquisitions look fairly small, usually involving just one or two hospitals as the target………Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today