Hospital merger and acquisition transactions zoomed ahead in an extremely active third quarter of 1995, according to Irving Levin Associates.
The New Canaan, Conn.-based firm's Health Care Merger & Acquisition Report listed 43 hospital transactions announced in the third quarter, up 39% from the 31 deals in the second quarter.
"Not since we began tracking healthcare mergers and acquisitions in the third quarter of 1993 have we seen such a surge in consolidation activity," said Stephen Monroe, a partner at Irving Levin.
The number of all healthcare mergers and acquisitions announced in the third quarter rose 28% to 178, compared with 139 in the previous quarter, Irving Levin reported.
The number of deals announced in the third quarter for industry care segments: physician groups, 32; home healthcare, 20; long-term care, 19; rehabilitation facilities, 17; psychiatric facilities, 12; laboratories/MRI/dialysis, 8; HMOs, 7; and other medical businesses, 20.
Of the 43 hospital deals, 25 involved mergers between not-for-profit hospitals or not-for-profit hospital systems.
Of the 18 deals that involved for-profit chains, nine included Columbia/HCA Healthcare Corp. Columbia's largest deal announced in the quarter was its $250 million offer to the Medical University of South Carolina, Charleston. Columbia has offered $90 million for the hospital's assets and $8 million in annual lease payments, which amounts to $160 million over a 20-year lease.
In other deals in which prices were disclosed:
Columbia agreed to buy Good Samaritan Health System, San Jose, Calif., for $165 million. The deal involves four tax-exempt hospitals and a medical foundation that is affiliated with 400 physicians.
OrNda HealthCorp, based in Nashville, Tenn., agreed to buy Houston Northwest Medical Center for $153 million. OrNda already owns a $74 million stake in the hospital and is buying the remaining interest.
Sierra Health Services, Las Vegas, agreed to buy Mohave Valley Medical Center, Bullhead City, Ariz., for $11 million.
Vencor, Louisville, Ky., agreed to buy shuttered Physicians' Community Hospital, St. Petersburg, Fla., for $5.5 million.
The largest chain deal announced in the quarter was the acquisition of Brim, a Portland, Ore.-based chain of rural hospitals, by Paracelsus, based in Pasadena, Calif. Paracelsus will emerge with 90 facilities in 27 states and annual revenues of about $700 million.