M&A activity among health systems picked up last year key trends included cross-market mega-mergers and academic medical centers expanding their community hospital networks. Despite tough economic conditions, Kaufman Hall experts expect this activity to continue growing in 2023.
Butler Health System and Excela Health, both based in Pennsylvania, have merged to form a five-hospital system that is now the third largest in the state. The new health system will generate more than $1 billion in revenue and serve a population of 750,000 in western Pennsylvania, the organizations said.
Inflation and shrinking operational margins are among the key factors that will influence hospitals and health systems’ strategies in 2023. To deal with this, more hospitals will merge with other systems, predicted Tina Wheeler, Deloitte’s leader for its healthcare sector.
Cross-market mergers can be defined as health system mergers, or components of these mergers, that combine providers that are not substitutes from the point of view of patients i.e. mergers in which the merging systems are not located within the same markets