PROVIDER M&A

Share­holder ac­tivism and payer con­sol­i­da­tion forced hos­pi­tals and physi­cians to mus­cle up through ac­qui­si­tions in 2016.

Modern Healthcare - - NEWS - —Dave Barkholz

The $10 bil­lion merger in Novem­ber be­tween physi­cian-staffing gi­ants AmSurg and En­vi­sion Health­care will give the com­bined com­pany a “first-mover ad­van­tage” as it seeks to be­come a one-stop ven­dor ca­pa­ble of staffing ev­ery depart­ment of a hos­pi­tal, En­vi­sion CEO Chris Holden said.

Catholic Health Ini­tia­tives and Dig­nity Health said in Oc­to­ber they are ex­plor­ing a merger. If that hap­pens it would cre­ate the na­tion’s largest, not-for-profit hos­pi­tal com­pany, with an­nual rev­enue of $27.8 bil­lion and 142 hos­pi­tals spread over 25 states. A stick­ing point could be that their com­bined debt to­tals $14.3 bil­lion and re­quires an­nual debt ser­vice of $868 mil­lion.

Un­wieldy debt fu­eled by ques­tion­able deals prompted big ac­tivist in­vestors to stick their noses into the gov­er­nance and op­er­a­tions of some of the in­dus­try’s largest play­ers, in­clud­ing TeamHealth and Com­mu­nity Health Sys­tems.

In­vestor Jana Part­ners helped oust TeamHealth CEO Michael Snow, paving the way for pri­vate eq­uity firm Black­stone Group to agree in Oc­to­ber to buy TeamHealth for $6.1 bil­lion.

With a debt of $15 bil­lion, CHS is sell­ing off hos­pi­tals and as­sets to re­duce debt and try to keep bar­gain hunters from ac­quir­ing a con­trol­ling in­ter­est in its de­pressed shares.

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