HOSPITAL MERGERS AND ACQUISITIONS FALL FOR THE FIRST TIME IN FOUR YEARS According to Irving Levin Associates, Inc.

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Kathy Hammell, Editor
Phone: (800) 248-1668
Fax: (203) 846-8300
pressreleases@levinassociates.com
HOSPITAL MERGERS AND ACQUISITIONS FALL FOR THE FIRST TIME IN FOUR YEARS According to Irving Levin Associates, Inc.
(New Canaan, Connecticut – March 4, 1999) —The preliminary results of a comprehensive research report on the hospital merger and acquisition market have just been released by Irving Levin Associates, Inc., publisher of The Hospital Acquisition Report, Fifth Edition.
For the first time since 1993, there was a decline in the number of hospital mergers and acquisitions during 1998. The number of hospital transactions declined by 27% to 144, a level that has not been seen since 1995. “There is definitely a changed sentiment in the market. The merger fever of a few years ago has died down with fewer hospitals rushing into defensive partnerships,” according to Stephen M. Monroe, a partner at Irving Levin Associates. “Consolidation will continue in the hospital sector, just not at the pace of 1996 and 1997,” continued Mr. Monroe.
Number of Hospital Transactions
1994
92
1995
129
1996
161
1997
197
1998
144
The report confirms the ongoing trend that most of the buyers in the market continue to be nonprofit hospitals and systems. “The growing influence of nonprofit hospitals began in the second half of 1995, and for the past two years they have been the purchaser in approximately 75% of all hospital transactions,” stated Mr. Monroe.
With the decline in the volume of transactions, the number of hospitals involved in the transactions also declined. However, because there were more multi-facility deals, the number of hospitals sold or merged in 1998 dropped only 4.2% to 297, compared to 310 in 1997. “This indicates that there remains a high level of activity in this sector. The number of hospitals sold in 1998 is just below the average for the previous four years,” observed Kathy Hammell, editor of the Report.
“The various valuation indicators all edged upward in 1998, with the median price to revenue rising to 0.88x and the median price per bed increasing to just over $210,000, or 3.5% above 1997’s level,” stated Ms. Hammell.
“We expect the volume of hospital merger and acquisition activity in 1999 to remain close to 1998’s levels. With continued excess capacity in this sector as well as managed care pressure, hospitals will continue to seek merger partners and other strategic alliances,” concluded Mr. Monroe.
The Hospital Acquisition Report, Fifth Edition, has more than 100 pages of hard-to-find information on all of the publicly announced hospital mergers and acquisitions in 1998. In addition, the Report contains an analysis of transactions by both the type of acquirer as well as the type of target.
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based research and publishing firm specializing in health care and seniors housing investments. The Firm has over 50 years of experience in the health care merger and acquisition market. The Hospital Acquisition Report, Fifth Edition, may be purchased by calling 800-248-1668.
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