Acute-care hospital merger and acquisition activity ballooned in the fourth quarter of 1993, as the number of transactions grew to 21, compared with nine in the third quarter.
Hospitals led the healthcare industry in the number of deals announced in the fourth quarter, according to a study done by Irving Levin Associates, a New Canaan, Conn.-based financial services firm. Levin Associates reported 102 healthcare transactions of more than $1 million were announced during the quarter, up from 77 deals unveiled in the third quarter.
The long-term-care segment also was active in the fourth quarter, with 17 deals announced, up from eight in the third quarter.
Activity in the hospital sector was buoyed by the announcements of Columbia Healthcare Corp.'s merger with Hospital Corporation of America, and a three-way merger involving OrNda HealthCorp, American Healthcare Management and Summit Health. Both of those deals were completed earlier this year.
The Columbia/HCA merger was a $5.7 billion tax-free stock swap. Nashville, Tenn.-based OrNda bought Summit, Burbank, Calif., for $369 million, and merged with American Healthcare Management, King of Prussia, Pa., in a $400 million stock swap.
Unfortunately, prices were not disclosed for most of the individual transactions. One of the deals, Quorum Health Group's sale of 118-bed Westside Hospital, Des Moines, Iowa, to Mercy Health Center, Des Moines, was recently disclosed as $2.6 million in Quorum's prospectus. The prospectus was filed with the Securities and Exchange Commission for the Nashville, Tenn.-based company's initial public offering.
Some of the deals announced in the fourth quarter have been held up by antitrust concerns. Earlier this month, the U.S. Justice Department and the state of Florida filed suit to block the merger of Morton Plant Health System, Clearwater, Fla., and Mease Health Care, Dunedin, Fla. (May 9, p. 3).
In addition, the acquisition of Holy Cross Health Services of Utah, a three-hospital system, by Healthtrust-The Hospital Co., Nashville, is being challenged by the Federal Trade Commission.
Both of those deals were announced in October.
Other merger and acquisition transactions announced in the fourth quarter by industry segment were: contract management services, five; HMOs, six; home healthcare companies, nine; laboratories/diagnostic/imaging centers, 12; medical groups, five; psychiatric providers, six; rehabilitation specialty hospitals and clinics, 10; other healthcare, 11.