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Becker’s Healthcare Podcast
Healthcare Transactions and the Financial Pressures Driving Them with Laura Dyrda
00:07:54
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- [00:03]
A
Every year, Becker's annual meeting brings healthcare leaders together to unpack the most pressing issues facing the industry. And every year, those conversations shift in profound and unexpected ways. This April, more than 3,500 healthcare executives will return to Chicago for Becker's 16th annual meeting. 795 elite speakers will offer new lessons, new case studies, and predictions about what comes next. Join us April 13th through the 16th. For the agenda and event details, visit BeckersHospitalReview.com and click on the Events tab in the upper right.
- [00:39]
B
Hello and welcome to the Becker Self Care Podcast. My name is Chanel Bunger. Today I'm excited to speak with Laura Dearda, vice president and editor in chief at Becker's Healthcare, who joins us regularly to share insights in a healthcare trend she's keeping an eye on. Laura, thank you as always for joining me today. Why don't you take it away and tell us about some of the things you're seeing out there.
- [00:58]
C
Thanks so much, Chanel. Absolutely. So one of the big things that we've been keeping our eye on closely over the last six months or so is really just some of the transaction activity within the healthcare space and trying to figure out what that signals in terms of the future financial health of hospitals, systems and more. So recently we've seen a couple of big health systems really sign definitive agreements or make plans to sell hospitals to more regional based systems or smaller organizations within the local space, which has been fascinating to see. One recent example was providence, a large 51 hospital system announced plans to work with California based North Bay Health to offload a 198 bed hospital in Napa. North Bay signed a letter of intent to acquire the hospital which would bring its network to three hospitals overall. And the transaction is set to close by the end of 2026, pending regulatory approvals. I know North Bay is a hospital that we've really in system we've worked with in the past that really has a lot of ambitions, does a lot of great things for the community. And so it makes sense to see them making a move to bring in the local hospitals within their space. And so that's very interesting to see. In another deal, Community Health System signed a definitive agreement to sell four hospitals to Freeman Health System for $112 million in Arkansas. Freeman will double its footprint with the transaction, which is expected to close within the second quarter of the year. And then finally, Common Spirit Health sold Critical Access Hospital to North Dakota System Altru, which is in the process of acquiring three other hospitals from Common Spirit as well. And you Know, when we look at the financial space for all of these health systems, it's really interesting to kind of see where they're at. Common Spirit reported an operating loss of $165 million during its first quarter of the fiscal year reported last November and a margin of minus 1.6% which was down from 2.1% margin in the same period of previous year. The health system also reported strong salary, cost management, length of stay improvements and higher productivity, but cited expenses still growing faster than revenue as a significant impact from payer denials and slow payments as the reason for some of its financial challenges. So you know, we're seeing some of these movements because of that challenge at the health system level. Now Providence is in a little bit of a different position. Providence reported $21 million operating gain up over 208 million doll last year for the third quarter, which is most recent financial report. Back in November, the system did report Supply expenses were up 8% year over year and pharmacy expenses were up 12% indicating similar expense growth, which is definitely challenging for health systems as they're looking to try to figure out what's going to be next and how they can most efficiently and effectively manage their budgets. On the flip side, CHS has started offloading hospitals last year and really put itself in a different position than the other two. CHS reported at one point billion on an 11.9% margin for the year end in 2025, really driven by the hospital divestiture gains and then continue as we see here to make some of those moves. And so it seems like these portfolios of large systems are really taking a look at what they can do well and figuring out what makes more sense to offload from their systems and really have other local systems take on some of those operations and really look at what they can do with those hospital. So that was one thing that we have been following closely and we'll continue to talk about these trends heading into the rest of the year. We'll have our annual meeting in April where mergers, acquisitions, financial health of hospitals and systems and what could potentially happen ahead will be a central topic of conversation for us and will be exciting to hear from leaders, CEOs, CFOs and more across the spectrum of how they're thinking about the next 12 months or so. And you know, similarly we're also seeing some really interesting acquisitions across the board that are non traditional and more creative. So a recent deal that we saw done, Pennsylvania based Universal Health Services is acquiring online behavioral health provider Talkspace in a deal valued at around $835 million, Talkspace has a network of around 6,000 licensed behavioral health professionals serving 50 states, Washington, D.C. and Puerto Rico. It has services available for more than 200 million people through their health insurance plans, employee assistance programs or as a benefit through employers, schools or government Agen. Last year, the online therapy company recorded $229 million in revenue and provided more than 1.6 million patient sessions, according to the company. In a news release now, UHS President and CEO Mark Miller said the acquisition will allow the for profit health system to expand access and offer more flexible stepped solutions to address the growing demand for behavioral health. And we're seeing that here at Beckers too so many times. Executives and leaders when and you ask them what one of their top concerns is, it's looking out and seeing the behavioral health needs of their communities, their patients, and trying to figure out how to extend capacity to meet all of those needs. If those needs go unmet, behavioral health patients often end up back in the emergency rooms or needing additional services at the hospital which are preventable and really add a good deal of cost to the system as well as deteriorating health for people. And so I think the communities and hospitals and systems are really trying to find ways that they can dig deeper into the behavioral health space and make sure that they're caring for their communities overall. Mr. Miller said that this acquisition really aligns with UHS goals and growth objectives to accelerate outpatient and telehealth behavioral health strategies as well as diversify the payer mix and deliver a comprehensive technology enabled continuum of care. So we're really excited to see this type of partnerships and you know, looking at some of the real solutions that can make a big difference for the healthcare ecosystem. The deal is still subject to approval by talkspace shareholders, regulatory approvals and customary closing conditions, but is expected to close in the third quarter of 2026. Now we also have a Behavioral Health Summit coming up in April as well as one in November that will continue to dig deeper into some of these themes and topics and bringing together leaders from across the country, which is exciting to have that type of energy and decision makers in the room together looking at how they can be creative and thoughtful in their process.
- [07:42]
B
Perfect. Well Laura, I want to thank you as always for joining me today and for sharing your insights on the Becker's Healthcare podcast. Can't wait to see you at the annual meeting in April. Thank you so much.