Pandemic spells M&A opportunity for large systems, operators — HCA is among them


The COVID-19 pandemic could spur a temporary increase in mergers and acquisitions of providers struggling to remain solvent, according to experts consulted by S&P Global Market Intelligence.

Five key takeaways:

1. In the short-term, larger hospitals, health systems and hospital operators such as Nashville, Tenn.-based HCA Healthcare could boost revenues through strategic M&A, while smaller systems and practices are forced to sell or permanently close, according to Christopher Whaley, a researcher at the RAND Corp.

2. At a conference May 12, HCA CFO William Rutherford indicated the company may seek M&A opportunities involving troubled providers and facilities over the next one or two years as it evaluates volumes and revenue.

3. Transactions involving struggling entities could occur over the next six to 18 months, though an exact timeline is unclear, said Kaufman Hall Managing Director Anu Singh.

4. Health systems will likely pursue transactions that will grow their capabilities or geographic footprint, and providers and services that are resilient to the pandemic will offer greater value, according to Mr. Singh and Mr. Whaley.

5. The pandemic's effect on healthcare businesses could drive private equity firms to seek a larger presence in the sector, and hard-hit physician offices in particular, Mr. Whaley said.

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