An assessment of hospital acquisition prices

Abstract

Although much has been written about hospital acquisitions by investor-owned systems, little attention has been paid to how the systems determine the prices they are willing to pay for acquired hospitals. In this study, we attempted to ascertain whether certain market and management variables explain the purchase price of 37 hospitals acquired by investor-owned systems during the period 1978-1984. Our findings suggest that the systems were willing to pay a higher price per bed for more highly utilized facilities in high-income community settings, but paid less for older, aging facilities that were more likely to require major capital improvements after acquisition.