Health: The Pace of Mergers Slows, But Does Not Stop

The Story:

The year 2019 was a big one for mergers and acquisitions within the US health care industry, and the urge to merge continued into the first quarter of this year (the period just before the economic devastation due to Covid-19). In the first quarter 2020 there were 29 such M&A transactions. In the second quarter, there were still 14. This is a cut by more than half, but it is decidedly not a freeze-up. Transactions continue, a good deal more quickly, and larger, than bears might have expected.


Contemporary medicine involves an expensive infrastructure, with access to Big Data and artificial intelligence, as well as everything from state-of-the-art diagnostic imaging to care coordination. Institutions without the deep pockets necessary to maintain the infrastructure may have to continuing consolidating with one another until their pockets deepen properly. Technological imperatives were one of the drivers behind the consolidation of 2019 into the start of this year, and that imperative remains.

In Pill Form:

Anu Singh, the managing director of mergers, acquisitions, and partnerships at Kaufman Hall, a financial consultancy, says that the “path of transformation” is more powerful than Covid-19. “There are new capabilities within health systems, efficiency around expenses and care management, and the migration to value instead of volume,” he said.

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