Q1 2021 M&A Activity


Q1 2021 M&A Activity

Announced transaction volume matches that of Q1 2020 but trails average of Q1 volume for the past decade

After a pickup in activity in Q4 2020, quarterly volume in Q1 2021 retreated to the more moderate levels of the past two years.

Number of Change of Control Transactions Q1 2021

Number of Change of Control Transactions Q1 2021 list

Total number of Announced Transactions Q1 2021

It is clear that COVID continues to impact deal volume in the acute sector. After a pickup to 28 transactions in Q4 2020, activity moderated to lower recent levels. Seven of the past nine quarters have had 22 or less announced transactions.

Year-Over-Year Q1 Announced Transactions

Although there were 20 announced transactions in both Q1 2021 and Q1 2020, the composition of target hospitals varied greatly. Q1 2020 was dominated by transactions including member hospitals of not-for-profit health systems (9) and for-profit divestitures (7), with only four independent hospitals announcing change of control transactions. Q1 2021 saw an increase in the number of independent hospital transactions to nine, which at 45% of the total for the quarter draws closer to the 2010-2019 average of 61%. Seven hospitals in the recent quarter were for-profit divestitures or member hospitals of not-for-profit health systems, which at 35% of the total for the quarter exceeds the 23% historical quarterly average for the prior decade but is down from the outsized 80% reported in Q1 2020.

Non-Acute Partnership Activity

As health systems continue to evaluate strategic options in light of the pandemic, many have sought to focus on their acute operations and decompress their inpatient chassis. Q1 2021 saw several partnerships in behavioral health, including announced joint ventures by Geisinger Health System and CHS’s Lutheran Health Network which both partnered with Acadia Healthcare on new behavioral health hospitals. Acadia also acquired a behavioral health hospital in the San Francisco market from Adventist Health in the quarter.

Academic Affiliation Activity

Several academic health systems announced affiliations and extensions of existing affiliation agreements during Q1 2020. In March, the University of Oklahoma College of Medicine faculty practice, University Hospitals Authority and Trust (parent organization of OU Medicine) and OU Medicine, Inc. announced a letter of intent to create a unified academic health system. On the same day, Beaumont Health System and Oakland University announced an extension of their affiliation through 2041. In January, Henry Ford Health System and Michigan State University finalized an expansion of their long-term partnership with a 30-year agreement that aligns clinical and educational goals.

For-Profit Acquisition Activity

Transactions involving for-profit acquirers represented only 10% of announced transactions in Q1 2021. This is down from a recent high of 40% in Q1 2019 and from an average of 21.5% since 2017. It is unclear how quickly this will rebound in light of a number of factors, including continued integration of major mergers, rumors regarding LifePoint and Ardent and continued delevering at Community Health. Also, many of the for-profit systems are focused on non-acute plays, including HCA’s acquisition of a majority stake in Brookdale Senior Living’s hospice, home health and outpatient therapy division.

Mega-mergers Activity

One mega-merger (target hospitals with greater than $1 billion in revenue) was announced in the recent quarter. Care New England entered into a definitive agreement with Lifespan in February that includes an investment of $125 million over five years from Brown University to create an academic health system in conjunction with Brown University’s medical school.

Other Affiliation Activity in Q1


  • Mercy (MO) announced the sale of its outreach laboratory business to Quest Diagnostics
  • Keck Medicine of USC and Methodist Hospital of Southern California entered into a letter of intent towards an affiliation
  • Trinity Health’s Mercy Hospital & Medical Center in Chicago received state approval to transfer the safety-net hospital to Insight Chicago, a not-for-profit affiliate of Insight Inc. based in Flint, MI


  • HCA announced the acquisition of 80% of Brookdale Senior Living’s hospice, home health and outpatient therapy division
  • UVA Health signed a letter of intent to acquire Novant Health’s stake in the three-hospital Novant Health UVA Health System
  • Aultman Health Foundation began a management agreement with Pomerene Hospital following a letter of intent in May 2018
  • Geisinger Janet Weis Children’s Hospital and Children’s Hospital of Philadelphia announced an affiliation agreement to advance the delivery of pediatric health care to families in central and northeast Pennsylvania


  • Essentia Health and CommonSpirit executed a letter of intent for Essentia to acquire CommonSpirit’s north Dakota and western Minnesota hospitals
  • Rush University System for Health and Lurie Children’s Hospital announced a clinical affiliation designed to improve access to high quality pediatric health care
  • Baptist Health and Deaconess Health System entered into a memorandum of understanding to create a joint venture to operate Baptist Health Madisonville

Signs of Increased Activity

Although announced activity and other consolidation news were modest in Q1, Ponder believes discussions among health systems are on the rise as we begin to see the light at the end of the tunnel with COVID. After focusing on the pandemic for the past year, systems will need to again focus on the core needs of lowering cost and driving top line growth. Announced activity as reported by Ponder may not reflect these increased discussions until 2022 due to the time involved from initial discussions to definitive agreements. But the long-term drivers of consolidation will come back into focus and drive increased activity over the medium term.