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LifePoint Hospitals: An ambitious acquisition strategy

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Jan. 28 2015, Updated 12:19 p.m. ET

Acquisition activity

Since 2011, the healthcare industry, represented by the Health Care Select Sector SPDR Fund (XLV), has witnessed a surge in mergers and acquisitions activity.

The above graph shows the acquisition activity for LifePoint Hospitals (LPNT) and its major competitors, Universal Health Services (UHS), Tenet Healthcare (THC), and HCA Holdings (HCA), from 2010 to 2014. In 2014, LifePoint Hospitals announced the highest number of acquisitions among its peers. The company has a strong focus on acquiring hospitals in its key rural markets and adding new service lines in areas including cardiology, oncology, and imaging.

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Major deals

LifePoint Hospitals’ ambitious acquisition strategy is to buy hospitals and create healthcare networks in those states that are either adopting or are thought to be adopting Medicaid expansion.

In May 2011, LifePoint partnered with Duke University Health System to create a joint venture, Duke LifePoint Healthcare, combining Duke’s research capabilities with LifePoint’s financial resources.

In September 2014, Duke LifePoint Healthcare acquired Conemaugh Health System in Pennsylvania for a total consideration of $125 million. This acquisition is a part of LifePoint’s strategy to build a hospital network in Pennsylvania, a state where Medicaid expansion become effective January 1, 2015.

In August 2014, LifePoint Hospitals acquired two acute-care hospitals and one critical-access hospital in North Carolina. In July 2012, LifePoint hospitals acquired Woods Memorial, a 72-bed hospital and 88-bed long-term facility in Tennessee. Both North Carolina and Tennessee are expected to adopt Medicaid expansion in the coming years.

Healthcare network

LifePoint Hospitals has created a network of healthcare providers in the upper peninsula of Michigan by acquiring companies such as Marquette General Hospital, Bell Hospital, and a 80% stake in Portage Health.

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