One mega deal –– the planned merger of Advocate Aurora Health and Atrium Health –– more than doubled the size of 2021’s recording-setting year-end average size of $619 million. For the second quarter of 2022, average size of the smaller party approached $1.5 billion. In addition, total transaction value reached a new historic high for the quarter, at $19.2 billion.

The number of healthcare deals since 2020 is well below trends in the prior years before the COVID-19 pandemic. For example, there were 27 transactions in the second quarter of 2016, 31 in 2017, 21 in 2018 and 19 in 2021. That’s compared to 14 in both 2020 and 2021 in the same three-month period.

Skilled nursing and long-term care deals are in the spotlight as of late thanks to payment model changes from the Centers for Medicare and Medicaid Services (CMS), ongoing impact from the COVID-19 pandemic, consumer preferences for aging in place and workforce challenges. As a result, many healthcare companies are rethinking their skilled nursing strategies, according to Kaufman Hall. Two recent transactions underscore this trend: Hackensack Meridian Health announced the majority of its long-term care facilities would be acquired by Complete Care in March 2022, and Virtua Health announced the sale of its two skilled nursing facilities to Tryko Partners in April.

Looking ahead, Kaufman Hall expects the trend of fewer, but larger healthcare deals to continue. 

“We expect continued activity in this space, but believe that the emphasis on transformative combinations, strategic rationale, and heightened selectivity will only grow,” the latest report stated. “At the same time, as noted in our 2021 year-end report, ‘we anticipate a greater willingness to engage with specialty providers to complement the traditional inpatient/outpatient services that have been the core offering of hospitals and health systems.’”