Hospital Consolidation Explained in One M&A Deal
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.
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."
- CEO Exchange: Preparing for Population Health
- Advocate, NorthShore Deal Would Create 16-Hospital System
- Better HCAHPS Scores Protect Revenue
- Narrow Networks Cut Costs, Not Quality, Economists Say
- 3 Strategies for Retaining Millennial Employees
- Power of price: In South FL and the nation, healthcare costs often are shrouded in secrecy
- Two NY hospitals to offer free hip and knee replacement surgeries for qualifying patients in December
- Hospital mergers may lead to higher prices
- Healthcare data of 1 million NJ patients compromised since 2009
- 'Early Offer' Malpractice Programs May Spur Reform