Rural Hospital Mergers and Acquisitions: Who Is Being Acquired and What Happens Afterward?
Background
Hospital mergers and acquisitions1 are changing the face of health care in both rural and urban communities across the country. Declining reimbursement levels, increased capital needs, a weak economy and easier access to credit have all contributed to a level of mergers not seen in more than a decade.2,3 Studies from the 1980s and 1990s showed three anticipated benefits of merger – improved financial performance, service consolidation and operating efficiencies.4 Merger was also suggested as a strategy for rural hospitals in financial distress.5 However, in a study of mergers in general, two-thirds of all deals fell short of pre-merger expectations.6 Concerns have also been raised about the effects of rural hospital mergers on the community.7 To better understand the implications of mergers and acquisitions for small rural hospitals, this brief examined two research questions: 1) What were the characteristics of rural hospitals that merged, and 2) Were there changes in hospital financial performance, staffing or services following a merger?
Results
Characteristics Predictive of Rural Hospital Merger Figure 1 shows the number of rural hospital mergers and acquisitions in each year from 2005 to 2012. From the Irving Levin Associates data, we identified 121 mergers that included a rural hospital for this time period. This represented approximately eight percent of the 1,492 rural hospitals in the study sample, identified as acute non-federal hospitals operating in nonmetro counties.