January 12, 2024

KPMG forecasts hospital closures, healthcare and life sciences mergers

Editor's Note: 

Investors see particular opportunity for mergers in healthcare and life sciences companies, Chief Healthcare Executive reported January 5.

Citing the 2024 outlook of audit, tax, and advisory firm KPMG, the report notes that 61% of investors expect deal-making to increase in these sectors, while only 9% expect to see further mergers and acquisitions.

Increased merger activity would be a reversal from last year’s levels, the lowest since 2019 despite a host of high-profile hospital deals. Among other factors driving the expectation of increased activity, the report cites hospitals seeking mergers to stay afloat; the prospect of lower interest rates and inflation; increased activity in the specialty pharmacy market; and hospitals and health systems seeking to supplement inpatient beds via a shift to more ambulatory surgical care.

KPMG reportedly also singled out the high-growth states of Texas and Florida (the latter of which no longer has a “certificate of need” requirement for hospital construction) as areas ripe for mergers. Organizations operating in single states are also expected to consider moving into adjacent states.

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