Approaching the mid-way point of 2023, Levin Associates examines the state of the hospital M&A market so far. Through mid-May, strategic buyers and investors announced 27 hospital deals, 16 of which were in the first quarter, according to data captured in the LevinPro HC database.
Considering the number of mergers already in the letter-of-intent stage, deal activity is on pace to beat the volume from 2022. Health systems and hospitals were battered with headwinds in 2022, such as staffing issues and operating expenses, forcing hospitals to partner with a more extensive system or network. But another challenge has been competing in the outpatient care market, which has seen significant growth due to aging demographics, rising demand and other investors pushing into the market fast.
CVS and Walgreens have invested significant capital in the outpatient care market this past year. CVS purchased Signify Health for $8 billion in 2022 and in February 2023, it spent $10.6 billion for Oak Street Health to bolster its primary care network and services. VillageMD, a subsidiary of Walgreens, acquired Summit Health-CityMD, a provider of primary, specialty and urgent care, for $8.9 billion.
These deals from major retailers are raising flags for health systems. Read more.
