Sanford B. Steever, Editor
Gretchen S. Swanson, Analyst
Fax: 203-846-8300

NORWALK, CT – June 22, 2010 – During the five-year period ended December 31, 2009, a total of $52 billion, based on disclosed prices, was committed to fund hospital mergers and acquisitions.  This amount exceeds by 140% the total amount of capital committed to fund hospital deals announced during 2001-2005.  In a continuation of a trend evident in health care services M&A over the past few years, in the hospital merger and acquisition market, dealmakers have become increasingly focused on middle-market transactions. 

Two hospital transactions announced during 2005-2009 were each valued at a price in excess of $1 billion, although no hospital deals in this price range were announced during 2009.  In 2006, the $33 billion privatization of HCA, Inc., with 41,850 beds, by a private equity consortium was announced.  In 2007, the $6.8 billion acquisition of Triad Hospitals, with 8,070 beds, by Community Health Systems was announced. 

While the current market in 2010 continues to reflect the impact of constriction in the credit market and the economic downturn, certain crucial indicators of hospital pricing rose in 2009 from the levels seen in 2008 and 2007.  For example, two figures that are higher for 2009 than either of the two preceding years are the median price-to-revenue multiple for hospital transactions (0.77x) and the median price per bed ($382,920). 

The total amount of funding committed to hospital mergers and acquisitions announced during 2009 was down 32% in 2009, compared with 2008, and was also significantly lower than the total committed to hospital deals announced during 2007.  One factor contributing to the decrease in this area is that financial buyers such as private equity groups, which had been extremely active in this market during 2004-2006, were largely absent in 2007-2009.  Further, buyers in today’s market favor transactions undertaken for strategic reasons and are unlikely to overextend their finances with extravagant proposals.

The fact that certain indicators of hospital pricing rose in 2009 may be associated with an increased level of quality of hospital targets available in the current M&A market.  “The hospitals targeted in 2009 tended to be of higher quality and greater financial stability than in previous years,” commented Sanford B. Steever, Ph.D., Editor.  “Accordingly, sellers that were actually in the market during that year could generally command higher prices, but hospitals that faced bankruptcy seem to have been unable to find financially robust buyers, due in good part to the effects of the credit crunch.” 

During 2005-2007, the acquisitions of certain large for-profit companies had tipped the balance of hospital M&A in favor of for-profit targets, but nonprofits have again become more active on both sides of the market.  “The percentage of nonprofit acquirers announcing transactions in the hospital M&A market has been steadily increasing, and on the sell-side, the percentage of nonprofit targets has also been increasing,” noted Gretchen S. Swanson, Analyst.  “The proportion of targets and also the proportion of acquirers represented by nonprofit entities exceeded 50% in 2009 and in 2008.”  

Information in this press release is based on information in The Hospital M&A Market Five-Year Review and Outlook, Second Edition, 2010, a publication of Irving Levin Associates, Inc.  The Hospital M&A Market report contains statistics on the hospital market, including prices per bed, the number of hospitals per announced transaction, a breakdown of single-facility versus multiple-facility transactions, and income multiples, in more than 175 pages.  The statistics are based on 278 hospital mergers and acquisitions, totaling $52 billion, that were publicly announced during 2005-2009 and the Report includes transaction information on each of these hospital deals.  The Hospital M&A Market Five-Year Review and Outlook, Second Edition, may be purchased for $595.  For more information, or to order the report, click here or call 800-248-1668.  Irving Levin Associates, Inc. was established in 1948 and has headquarters in Norwalk, Connecticut.  The company publishes research reports and newsletters, and maintains an online database of health care mergers and acquisitions, accessible 24/7 at   Call 1-800-248-1668 for details on subscriptions, or email

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