An interesting trend has emerged in our health system M&A advisory work over the past several years. Across the country, hospitals sponsored by local governments are expressing renewed interest in business combination transactions. A principal aim of these partnerships is to bridge health inequity within their markets.

Economic inequality today can be seen directly impacting patient access to high-quality, affordable medical care. The breadth and availability of specialty services are closely tied to the strength of regional demographics.

Local governments that contain both affluent and poor communities are at crossroads. Officials are confronted with how best to configure care for all constituencies. Many are choosing to explore the merits of consolidation to form more integrated delivery networks across diverse populations to better serve communities in need.

Our team has advised public hospitals from Alaska to Florida to assess strategic options. This experience represents all public ownership forms: Authority, Borough, City, County, District, Parish, State, etc.

Two recent examples stand out: Monterey County in CA and Indian River Health District in FL. Monterey County contains Carmel and Pebble Beach, with a median home value of ~$3,900,000. It also includes communities like Salinas inland with a base of largely migrant agriculture workers earning a median annual income of ~$25,200.

A similar story exists in Vero Beach FL, whose exclusive John’s Island is dominated by well-to-do retirees occupying homes with a median value of ~$1,300,000. By contrast, inland is the hub of the US Citrus industry with a median income of ~$28,002. Civic leaders sought to bridge the gap in care opportunities by coordinating under a shared ownership model. Indian River did this through a long-term lease with The Cleveland Clinic. Funds are being used to support educational programming, indigent care, scholarships, primary care development, and research regarding social determinants of health.

Below are several municipalities we have served. Some had elected officials directly overseeing hospital operations. Others had self-perpetuating 501(c)3 boards overseeing hospital operations separately from the Government agency.  We believe this is an important theme to monitor in 2022.