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Hospital Consolidation Explained in One M&A Deal

John Commins, for HealthLeaders Media, April 9, 2014

Duke LifePoint has agreed to spend more than half a billion dollars on Conemaugh Health System over the next 10 years. The CEOs at both organizations detail what drove them to this deal and why we can expect to see more like it.


Trotter


Scott A. Becker
CEO of Conemaugh Health System

If you're trying to explain to someone outside of healthcare why hospitals are consolidating, allow me to direct your attention to Exhibit A: Last month, for-profit Duke LifePoint Healthcare signed an agreement to acquire Conemaugh Health System, a three-hospital not-for-profit system headquartered in Johnstown, PA.

Financial terms were not disclosed for the deal, which is expected to be finalized later this year. However, Duke LifePoint has agreed to spend more than half a billion dollars on Conemaugh over the next 10 years to upgrade inpatient and outpatient services, technology, and facilities.

I spoke with senior leaders at Duke LifePoint and Conemaugh after the deal was announced and I found myself nodding along in agreement as they explained why it all made sense. The rationale they used is why we can expect to see more of these consolidations.

Conemaugh CEO Scott A. Becker described "a great three-way partnership" where everybody wins. "We get the depth and breadth of the clinical strength of the Duke University Health System and we get the partnership and capital and operational skill set from LifePoint," Becker says.

"They are getting a strong player in our marketplace and they will make us stronger. We are coming into their organization as a strong organization and we want to – knock on wood – help them continue to grow strategically to make Duke LifePoint even stronger and more prevalent across the country."

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