Providers jeopardize deals as they rush into M&A talks

Healthcare executives often point to a persistent financial pressure that has accelerated strategies to cut costs, grow revenue or potentially scale up. That pressure may be causing providers to hastily enter mergers or acquisitions without the proper due diligence, some M&A experts say.

Hospitals, particularly of the not-for-profit ilk, have struggled to boost revenue enough to keep up with rising labor, technology, supply and compliance costs. They are also closely eying threats to their business models as new competitors take shape. Outside investors are behind the scenes of many healthcare deals, scanning for new opportunities.

In some cases, hospital and health system executives are prematurely signing a letter of intent to get under the hood and...