A year of fewer, but larger, health system deals 


Overall health sector M&A activity bounced back in 2021 across nearly every subsector except one: hospitals, which saw a significant decrease in deal volume. Drawing on data from Kaufman Hall, the graphic above shows the scale of the most recent wave of health system consolidation, driven by last year’s eight “mega-mergers” between entities with over $1B in annual revenue each. 

While the total number of hospital transactions decreased, the average seller size increased, with the total valuation of all hospital M&A activity nearly tripling from 2020 to 2021. With a dwindling number of independent hospitals left, health systems are pursuing larger combinations with their peers, to achieve greater scale and maintain economic “relevance.”

But as systems who have struggled to complete such mergers can attest, getting a larger deal across the finish line isn’t easy. The path to hospital consolidation now hinges on navigating complex organizational structures and issues of cultural compatibility, in addition to simply identifying “synergies” and avoiding antitrust pitfalls.

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