05 Feb Top 10 Healthcare M&A Deals of 2019
If interoperability was the buzzword for 2018, the continued consolidation of provider organizations took top billing in 2019. Hats off to law firm Baker McKenzie which predicted a rebound in merger and acquisition activity after West Virginia University Health System (“WVUHS”) announced agreements with the Summersville Regional Medical Center and acquisition of Jackson General Hospital in January (they followed up by announcing a deal with Barnesville Hospital in June).
As for the rest, here’s a list of the more significant transactions of 2019.
Summa Health Joins Beaumont Health
In July 2019, Summa Health signed a definitive agreement to join Beaumont Health in a move to strengthen the quality of care provided to the communities in which they operate. Anthony Lockhart, the Chair of the Summa Health Board of Directors notes the efficiencies gained in the M&A deal.
“We believe that by becoming part of the Beaumont family, we will be able to gain efficiencies from being part of a larger organization, further invest in delivering high-quality, patient centered care and improve local access to the services most needed by our patients and communities.”
University of Louisville Acquires Assets of CHI Saint Joseph Health Partners
In August 2019, the University of Louisville agreed to acquire assets of CHI Saint Joseph Health Partners (formerly, known as KentuckyOne Health), including the Jewish Hospital. In the announcement, Neeli Bendapudi, the President of the University of Louisville noted the efforts of the community to prevent the closure of various local medical facilities.
“These medical facilities and the thousands of professionals who work there have for decades provided high quality medical care to patients throughout our community and beyond. We are proud to protect that legacy and to ensure the continuation of that care as we acquire and enhance these facilities.
Walmart Health Expands Partnership with Amedisys
In December 2019, Walmart Health announced a new expanded partnership with Amedisys to increase health care access across the country. As the move deals with two public companies, William Blair analyst Matt Larew noted the potential impact the partnership has on patient care because almost 90% of the US population lives within 10 miles of a Walmart.
“If Walmart Health is successful in redirecting patient flow from the primary care algorithm into its locations, or driving additional patient interactions by providing more convenient access points, Amedisys stands to benefit from any home health referrals generated.
Healthpeak Restructures Deal with Brookdale Senior Living
In another financial deal, Healthpeak (which operates as part of HCP, Inc.) announced a series of transactions that restructures the relationship with Brookdale Senior Living in October 2019. The deal helps strengthen the financial well-being of HCP, which Tom Herzog, the President and CEO of HCP detailed in the announcement.
“We are pleased with the outcome of this mutually beneficial transaction, which reflects the collaboration and partnership we share with Brookdale. This transaction will allow HCP to improve its operator diversification, as well as strengthen its remaining Brookdale triple-net portfolio.”
University of Pittsburgh Medical Center acquires Western Maryland Regional Medical Center
Earlier in 2019, the University of Pittsburgh Medical Center signed a letter of intent with the Western Maryland Regional Medical Center to expand out of Pennsylvania and into Maryland. The deal expands on an existing affiliation, which Leslie Davis, the Senior VP of UPMC noted in the announcement.
“This began as a clinical affiliation in early 2018, now we are collaborating on a shared vision to preserve high-quality healthcare services closer to home for local patients and their families.”
GraniteOne Health merges with Dartmouth-Hitchcock Health
In October 2019, two of the leading health care systems in New Hampshire signed a letter of intent to merge. GraniteOne Health and Dartmouth-Hitchcock Health will combine to form an integrated system that aims to transform health care delivery in New Hampshire. Rick Botnick, the Chair of the GraniteOne Health Board of Trustees explains the rationale for the merger.
“Throughout this process, we have learned so much about what makes each of our organizations important to our communities. The system we are forming honors those long-standing commitments and builds on our clinical excellence, to create opportunities for all of New Hampshire to enjoy better health.”
KPC Group acquires hospitals from Verity Health System
KPC Group received sign off from a bankruptcy court to acquire four hospitals within the Verity Health System (which previously filed for bankruptcy). KPC Group managing director Peter Baronoff, foresees an optimistic future for the LA-based hospitals as the company already owns several other hospitals in Southern California.
“KPC remains very optimistic about the future of these hospitals, their employees, and the value they bring to delivering quality health care to many California communities.”
Atrium Health acquires Wake Forest Baptist Health
In November 2019, Atrium Health announced an agreement with the Wake Forest Baptist Health network to create a unique and transformative academic healthcare system. Although currently under regulatory review, officials believe the approval will be granted in early 2020. Eugene A. Woods, president and CEO of Atrium Health shares the vision ahead.
“Simply stated, we have a bold vision to combine our respective talents and create the nation’s leading modern academic healthcare system. We have now taken a giant step forward in bringing that collective vision to life. Our teams cannot wait to initiate planning for the second campus of the Wake Forest School of Medicine in Charlotte in 2020, while making new investments in the research and innovation core in Winston-Salem, as we strive daily to discover new ways to bring more health, hope, and healing to the 7 million people residing in the communities we serve. The possibilities truly feel limitless.”
Gundersen Health System Explores Merger with Marshfield Clinic Health System
Announced in May 2019, Gundersen Health System and Marshfield Clinic Health System continuing exploring a merger that would include over 2,000 clinicians and 19,000 employees. Scott Rathgaber, MD and CEO of Gundersen Health System noted the shared vision and impact a combined system would have on the quality of care in Wisconsin.
“We realize the success of our journey to provide high-quality, outstanding experience, and affordable care to enrich lives and enhance the health of the communities we serve relies on working with many partners in a variety of ways. This opportunity to unite promises the potential to magnify our impact and bring our care model to even more communities by leveraging the strengths of two mission-driven systems with more than a century of commitment to rural healthcare.”
Anthem Acquires Beacon Health Options
In June 2019, Anthem announced plans to acquire Beacon Health Options. The deal increases Anthem’s diversified health service strategies by adding the largest independently owner behavioral health organization in the country. Gail K. Boudreaux, CEO and president of Anthem, describes the rationale behind the acquisition.
“As Anthem works to improve lives, simplify healthcare and serve as an innovative and valuable partner, we’re focused on providing solutions that address the needs of the whole person. With an extensive track record in behavioral health, Beacon fits well with our strategy to better manage the needs of populations with chronic and complex conditions, and deliver integrated whole health solutions. Together with Beacon, we will enhance our capabilities to serve state partners, health plans and employer groups as they seek to address consumer behavioral health needs.”
However, great ideas are often in the eye of the beholder (as we shared in a recent review of a smaller, but well intentioned M&A deal) and not every M&A deal goes as planned. In February 2019, Baylor Scott & White called off a merger with Hermann Health System. The merger would have created a 69-hospital organization in Texas. In November, Sanford Health and UnityPoint Health called off a proposed merger that would have created a health system with over 75 hospitals spread across 26 states and nine countries.
What’s in store for 2020? If January is any indication, a lot! We’ll keep our eyes out for more and let you know.