Latest / Becker’s Healthcare Podcast / Hospital M&A, Outpatient Growth, & Health System Finance Trends with Alan Condon

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Hospital M&A, Outpatient Growth, & Health System Finance Trends with Alan Condon · Becker’s Healthcare Podcast

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  - There's a small circle of people who truly
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  - understand what it takes to lead a health
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  - system right now. The decisions are enormous.
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  - The variables are constantly shifting, and the stakes
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  - of getting a call wrong don't stay contained.
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  - That's not a complaint. It's a structural reality.
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  - And it's why the most effective c suite
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  - leaders are deliberate about where they go to
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  - pressure test their thinking.
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  - Becker's fourteenth annual CEO and CFO roundtable
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  - brings together more than 1,500
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  - executive level attendees
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  - and nearly 400 speakers for four days built
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  - around growth, financial sustainability,
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  - workforce strategy, and the leadership questions that don't
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  - have easy answers.
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  - Join us November second through the fifth in
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  - Chicago.
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  - For the agenda and event details,
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  - visit beckershospitalreview.com
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  - and click on the events tab in the
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  - upper right.
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  - This is Scott Becker with the Becker's Healthcare
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  - Podcast.
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  - I'm thrilled today to join me, Alon Condon.
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  - Alan is one of the leaders. He's the
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  - editor in chief of the editorial team at
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  - Becker's Healthcare.
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  - Tremendous leader. Covers a lot around finances of
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  - health systems and what's going on in that
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  - world.
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  - Alan, take it away.
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  - What are a couple of stories that you're
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  - watching currently,
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  - in in health care and health system finance?
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  - Yeah. Absolutely. So I think,
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  - Fugitive kind of cover a ton of relief,
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  - big big transactions, mergers, acquisitions. And let it
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  - seems like this year, there it's not a
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  - week that goes by or there's not another
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  - big health system transaction in this space. So
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  - just to quickly surface one of these that
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  - we just covered yesterday and then move on
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  - to maybe a broad broader wider look at
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  - how health system hostile finances are stacking up
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  - currently.
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  - But I think, first and foremost, I think
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  - a really interesting deal
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  - that we just covered on Becker's to this
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  - morning, and that's
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  - UW Health in Madison, Wisconsin. Academic health system,
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  - I believe they operate
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  - seven hospitals across Wisconsin
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  - and Northern Illinois.
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  - Just, planning to acquire
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  - a Marshfield
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  - Clinic hospital. Marshfield Clinic, of course,
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  - acquired under the Sanford Health umbrella in a
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  - big, big merger last year.
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  - This is the first hospital sale that Sanford
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  - Health has done in quite some time.
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  - Now, of course, a huge, huge
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  - nonprofit integrated 56 hospital system,
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  - operating in multiple multiple states,
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  - offloading one particular hospital as part of Marshfield
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  - Clinic,
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  - to UW Health. Not over the line yet.
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  - Still, of course, some regular hurdles and clearances
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  - to come, but an exciting deal for UW
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  - Health to expand and grow its presence in
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  - Wisconsin
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  - and an interesting deal for Sanford Health to
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  - upload one of those hospitals that did come
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  - under the Sanford Health system umbrella through that
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  - Marshfield Clinic,
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  - integration last year. I think, just to kinda
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  - pull another note or two out of Sanford
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  - Health,
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  - one one hospital say I'll come into the
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  - works there, but it also, just two months
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  - ago,
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  - signed a definitive agreement to acquire North Memorial
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  - Health System. Now that's a two hospital system
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  - in Minnesota.
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  - So Sanford Health no doubt has some big,
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  - big, plans to grow within the Midwest.
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  - Minnesota, a key market that it that it
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  - really wants to expand and grow into there.
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  - And then on the other side of that
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  - deal, just to kinda focus on UW Health
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  - and the trend that we're seeing across,
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  - academic systems over the last kind of cup
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  - two years or so. We're seeing,
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  - I believe in this year alone, we reported
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  - on
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  - 32 or 33
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  - academic health systems that have either acquired
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  - or plan to acquire,
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  - hospitals. Mostly, these are community hospitals,
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  - rural or safety net hospitals that that are
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  - they're somewhat struggling looking for a larger health
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  - system partner, and academic health systems are really
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  - stepping up to the fold here. And just
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  - over the last couple of months or so,
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  - we've seen UC San Diego Health acquire hospital,
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  - Hackensack Meridian Health in New Jersey looking to
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  - do the same, UNC Health in North Carolina,
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  - Allegheny Health Network in Pennsylvania, part of Highmark
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  - Health. They just acquired two hospitals as well
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  - last month. So really indicative of a wider
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  - trend that we're seeing. Lot of financial challenges
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  - by some small standalone hospitals and health systems,
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  - academic systems with broad balance sheets, the operating
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  - operate operating footprints, really stepping up and acquiring
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  - some of these, financially struggling facilities, which is
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  - quite interesting.
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  - Fascinating. The Marshfield Clinic thing is a fascinating
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  - thing. This Marshfield Clinic, for a very long
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  - time, was one of the most respected names
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  - in health care. And it just seems over
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  - the last few years, trying to find their
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  - footing in rural America
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  - between Stanford and now back to University of
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  - Wisconsin, a fascinating challenge in evolution, but a
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  - great, great system. And and it'll be possible
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  - to watch how that plays out over time.
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  - You know, let me turn it back to
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  - you. Anything else you're watching closely?
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  - Yeah. Yeah. Absolutely. And I guess just to
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  - kinda belabor that point one more bit deeper
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  - to your point there, Scott, I think it's
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  - really interesting. Just drawing a line between,
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  - Sanford Health's acquisition of Mar Marshfield Clinic. Essentially,
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  - they they called it the Marshfield Clinic region
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  - of Sanford Health. Very, very similar
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  - to what Sutter Health is looking to do
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  - with Allina Health, essentially acquired its 12 hospital
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  - system in Minnesota, moved across the country, and,
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  - essentially, have that operate as the the the
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  - Allina Health region of Sutter Health. That's a
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  - really exciting deal that, a lot of folks
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  - are watching and, somewhat similar in terms of
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  - how,
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  - how those are two those two deals will
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  - be structured.
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  - But just to jump to the other store
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  - story, Scott, I guess, just kind of a
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  - wider lay of the land, just kinda covering
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  - the the the most recent Kaufman Hall,
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  - National Hospital Flash Report kinda gives us a
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  - a wider picture of what we're looking at
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  - here as of, May 2026, the most recent
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  - data which we have available.
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  - And, essentially, we see,
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  - nonprofit hospital margins on average dipped to 2.9%
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  - as we saw expenses,
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  - cost grow,
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  - again, month over month as health systems really
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  - strategically planning for care shifting and accelerating, it
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  - seems like, for us at outpatient setting. So
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  - Kaufman Hall noted that outpatient revenue has grown
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  - year over year for the last several months.
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  - Many health systems really looking to accelerate
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  - proactively adapting their portfolios and operations to support
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  - that future of US health care delivery. No
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  - doubt it's something that we've seen happen for
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  - quite some time. It's not a new trend
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  - by any stretch of the imagination,
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  - but certainly seems to be more of an
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  - onus, in 2026
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  - for health systems and hospitals to really accelerate
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  - towards
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  - implementing those outpatient footprints, moving care towards there.
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  - We're seeing a big, big shift on the
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  - ASC side, more complex complex procedures being able
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  - to be done safely, effectively,
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  - and the ASC, the CMS elimination of the
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  - inpatient onlyness. All of these trends really kinda
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  - coupling into each other to really accelerate,
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  - the need for systems to make sure they've
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  - got a robust outpatient footprint and really making
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  - sure that care is, meeting folks where where
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  - they are there. So just a couple of
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  - quick notes in terms of,
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  - key takeaways from the from the Kauffman High
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  - report there.
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  - Certainly interesting to see. Dip in margins,
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  - no doubt to be expected given the financial
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  - challenge we've seen. I think that's something that
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  - we expect to continue, unfortunately, crude through q
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  - three and q
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  - four, but really, interesting to see, Kevin, again,
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  - noting the the real need and,
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  - for for systems to really accelerate
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  - towards, that that outpatient revenue growth.
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  - Thank you very, very much.
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  - Fascinating as always.
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  - Eoin, anything else you wanted to share today
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  - that's top of mind?
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  - I think one of our just kinda quick,
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  - we love to kinda
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  - take a lay of the land in terms
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  - of what we're looking at in q two
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  - just to kinda give readers and audience members
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  - what's coming down the pipeline. We have the
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  - big, big for profit health systems all reporting
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  - their q two finances.
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  - I believe beginning next week, we'll have HCA
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  - health care, community health systems, Tenet health care,
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  - universal health services as well. So no doubt
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  - our finance team will be all over those.
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  - I think, the nonprofit sector will really be
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  - having a keen eye on what what the
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  - executives and the leaders of those big four
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  - profit systems have to say on those q
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  - two earnings calls, particularly as it relates to
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  - the ACA,
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  - enrollment numbers, Medicaid, and whatnot. So, just a
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  - a quick little teaser, I guess, for what's
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  - coming down the pipeline, and, we'll be sure
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  - to make sure keep our readers up to
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  - date there, Scott.
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  - Thank you so much.
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  - As always, great to visit with you, Alan.
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  - You're the best in the business. Thank you
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  - so much for joining us. Thank you. Cheers,
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  - Scott. Thanks so much.