An analysis by Mergermarket, an Acuris company, reveals the top U.S. cities for healthcare M&A.
With Bristol-Myers Squibb’s and Celgene merger announcement, 2019 M&A activity is off to a robust start.
“After a volatile end to 2018 for public markets, depressed valuations could lead to a year of heightened M&A as an ever-evolving industry tries to come to terms with a growing outcry against price increases and a shift to outcome-based care,” says Kevin McCaffrey, reporter, Acuris.
“Healthcare executives should be prepared for a turbulent year as politicians look to find bipartisan solutions to the increasing cost of care and industry sectors could look to consolidate to increase their remit,” says McCaffrey.
According to an analysis by Mergermarket, an Acuris company, here are the top 5 U.S. cities for healthcare M&A:
“Chicago has seen a bevy of mega hospital tie-ups in recent years-and as the healthcare industry continues to trend toward vertical integration, health systems will seek deals to remain competitive with new payment models and tech-focused competitors,” says Claire Rychlewski, reporter, Mergermarket. “We can expect to see straightforward M&A and other types of affiliations as Chicago-area hospitals work to keep up with a rapidly changing industry.”
Healthcare service providers in Florida saw a flurry of M&A activity in 2018, highlighted by Humana’s acquisition of the Family Physician Group in Central Florida in April. The insurer also added MCCI Group Holdings, a medical center services provider that same year, according to McCaffrey.
3. Dallas-Fort Worth
The past year saw increased consolidation among behavioral health firms in Texas, not just in the Dallas-Fort Worth area, with Vistria Group’s acquisition of the Behavioral Health Group and NexPhase Capital’s acquisition of Action Behavior Centers, to name a few. The city saw 73 healthcare deals between 2015-2018.
2. San Francisco
With 86 healthcare deals between 2015-2018, “It should come as no surprise to see the two largest biotech hubs in the country, Boston and San Francisco, at the top of this list,” says McCaffrey. “As pharma looks to bolster its pipeline with innovative medicines, it will likely look to Massachusetts and California to fuel its future growth.”
San Franciso-based Dignity Health merged with nonprofit Catholic Health Initiatives, which operates the CHI St. Vincent hospitals and clinics in Arkansas. This new health system is called CommonSpirit Health.
There were 93 Boston-based healthcare companies sold between 2015 and 2018. A proposal for the merger of Beth Israel Deaconess Medical Center and Lahey Health is said to be biggest hospital merger in Massachusetts in two decades. The state Public Health Council voted unanimously to approve it, but tied several conditions to the deal.