Hospital merger and acquisition transactions picked up in the second quarter of 1995, and activity in the industry overall maintained a strong pace, according to Irving Levin Associates.
The New Canaan, Conn.-based firm's Health Care Merger & Acquisition Report said 31 hospital transactions were announced in the second quarter, up from 25 in the first quarter. The deals involved 112 hospitals and $8.3 billion in assets.
The number of all healthcare mergers and acquisitions announced in the second quarter was 139, up one from the previous quarter, Levin reported.
"Merger and acquisition activity in the hospital sector has reached its highest level in two years," said Stephen Monroe, a partner at Irving Levin. "While the physician medical group sector tied for third place this quarter, we can expect activity in this sector to become increasingly significant in the months to come," he predicted.
The number of deals announced in the second quarter for nonhospital industry segments were: rehabilitation facilities, 20; physician groups, 19; long-term care, 19; laboratories/MRI/dialysis, 15; home healthcare, nine; psychiatric facilities, seven; HMOs, five; and other medical businesses, 14.
Of the hospital deals, 12 involved mergers between not-for-profit hospitals or not-for-profit hospital systems.
The largest deal, valued at $4 billion, was the three-way merger of Catholic Health Corp., Omaha, Neb.; Sisters of Charity Health Care Systems, Cincinnati; and Franciscan Health System, Aston, Pa. The new system comprises 66 hospitals in 20 states.
Seventeen transactions involved investor-owned hospital chains buying not-for-profit hospitals.
The largest of those was the estimated $370 million purchase of HealthOne Health Systems in Denver by Columbia/HCA Healthcare Corp., Nashville, Tenn. That deal is a joint venture that brings three acute-care and three specialty hospitals to Columbia's Colorado system.
Another deal could be larger, but the purchase price has not yet been disclosed. That's the joint venture in Cleveland between Sisters of Charity of St. Augustine and Columbia. In that deal, the investor-owned and Catholic systems would form a 50-50 joint venture to operate Sisters of Charity's four hospitals in Ohio and South Carolina.
Of the 12 deals announced during the second quarter, eight involved Columbia.
One deal during the quarter bucked the trend, involving a for-profit hospital that was purchased by a tax-exempt one.
Another deal involved Singapore hospitals owned by Tenet Healthcare Corp., which were sold to another investor-owned corporation.