Healthcare M&A Report

The latest report from Bank of America and HealthLeaders examines today’s M&A trends, through surveys and expert analysis, to see why healthcare organizations are exploring M&A—or not.

“Increased pricing power is critical in and after an infla­tionary period environment: if a provider cannot pass on the cost of inflationary pressure on a dollar-for-dollar basis to its managed care payors, then the provider should seek increased pricing power from a merger or acquisition.”

-Mike Quinn, Head of Healthcare Strategic Advisory Services, Managing Director, Bank of America

Healthcare leaders continue to pursue M&A, and 75% say that they’re primarily driven to do so by economic uncertainty.

“If a hospital can’t recruit physicians, they’re not going to blame it on themselves. They’re going to blame the economy… the ‘uncertainty of economy’ [lets] an awful lot of people off the hook.”

-Randy Davis, Vice President and CIO, CGH Medical Center

While many healthcare leaders now admit that their M&A goal is to increase leverage with payers, they also want to help patients.

“M&A does not provide better care for patients. Does it avoid a facility closure? Yes, if you’re talking about not putting a chain on the doors. But if they take away labor and delivery, from your wife’s perspective, that’s shutting down your hospital.”

-Randy Davis, Vice President and CIO, CGH Medical Center

Despite the uncertainty of M&As and the current economic climate, 80% of respondents say they’d do it again. Davis says this makes sense, given that the alternative for many of the acquired hospitals was closure.