The morning segment of day two of the 5th Annual Healthcare Deal Making Summit at Gaylord Springs continued day one’s message that health care companies are on the cusp of partnering, creating joint ventures, selling or otherwise doing whatever it takes to strengthen their capital positions before year's end.
Panelists representing several of the major hospital players in the industry agreed that the sector is in a state of flux and that deal possibilities abound.
“We turn down seven or eight offers of one kind or another every week,” said Leo Brideau, president and CEO of Ascension Healthcare Network, the joint venture between the large Catholic health organization and private-equity firm Oak Hill Capital Partners.
James Hoffman, vice president of business development at Franklin-based Iasis Healthcare, said the industry is in a unique selling cycle unlike any time before.
“Since 1982,” Hoffman said, “there have been four health care selling cycles and the major difference between this one and all the others is simply that partners are being sought.”
Historically, hospitals had to sell, several panelists said. Economic realities took their toll as administrators decided — often too late — that their institutions needed capital to stay viable. These days, owners of every type of facility, both investor-owned and nonprofit, are seeking partners in one form or another while presenting strong balance sheets to potential buyers. Local players such as LifePoint Hospitals, which early last year partnered with Duke University, and Vanguard Health Systems, which this week said it is in talks with Tufts Medical Center, are at the forefront of that movement.
That dynamic — which could pit operators with deep pockets against each other and drive up prices — has the potential to be a mixed bag for the summit panelist, which also included executives from Steward Health, Tenet Healthcare and RegionalCare Hospital Partners. Some are looking to buy, some want to sell, some would like to do both.
But excessive prices aren't yet becoming a fact of M&A life in this cycle — maybe because of the lingering economic and regulatory uncertainty — and panelists agreed that deal terms are much better than in past cycles.
“There was a lot of irrational pricing in the 1990s,” said Dan Slipkovich, chairman and CEO Capella Healthcare, which has itself partnered with Ascension's local Saint Thomas Health Services division. “We expect much more rational pricing as we move forward,” he said.
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- JACOBS, JESSICA ALEXANDRA; JACOBS, ERIKA BESS