Healthcare M&A Activity Highest Since 2007, Report Finds | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

Healthcare M&A Activity Highest Since 2007, Report Finds

November 18, 2013
by Rajiv Leventhal
| Reprints

Healthcare mergers and acquisitions (M&A) activity totaled $143.3 billion in 2012, with the highest volume of transactions reported in the industry since 2007, according to a new report from Hammond Hanlon Camp (H2C), a N.Y.-based strategic advisory and investment banking firm focused on the healthcare sector.

While the total transaction value in 2012 was 38 percent lower than in 2011, the number of transactions increased by 6 percent, to 1,063 deals, with the most growth occurring in the service sector. A favorable capital markets environment along with substantial private equity looking for investment opportunities in healthcare fueled growth in transaction volume, according to the report.

A significant theme across the industry was the drive toward increased size and diversification in order to achieve economies of scale and provide a broader array of services. Recent regulation and legislation have encouraged fundamental changes in the business models of healthcare service organizations, which are reorganizing to accommodate a shift from activity-based to risk-based reimbursement.

The report found several other trends that are influencing healthcare M&A activity. Organizations are shifting toward more creative structures and relationships, and acquiring organizations are demonstrating renewed interest in behavioral health and post-acute sectors. Vertical integration continues through cross-segment transactions as providers increase focus on clinical integration and diversification.

Hospital-to-hospital transactions will continue at a robust pace in 2014. However, those transactions will be more complex and occur at a somewhat slower pace, H2C forecasts.  More unique and complicated transactions, in place of the traditional purchase/sale structure, are likely as companies across the service sector consider how best to mitigate risk and position themselves as the “preferred option” for accountable care organizations (ACOs) and healthcare exchanges.

The report measured M&A activity by specific sector within the healthcare industry. These sectors include: hospitals and health systems; physician practice management; managed care;  long-term care; behavioral care; home health/hospice/DME (durable medical equipment);  laboratory and real estate.

Merger and acquisition activity was robust in 2012, continued in 2013 and the outlook for 2014 is also strong,” William Hanlon III, principal at H2C, said in a statement. “A wave of consolidation has occurred across the industry as organizations position themselves for an uncertain future. Further, some unusual relationships emerged during the year that may indicate a trend of mega-mergers, especially in the hospital and managed care sectors. We expect merger and acquisition activity to continue at a steady pace through the rest of the year and into 2014.”

Topics

News

Community Data Sharing: Eight Recommendations From San Diego

A learning guide focuses on San Diego’s experience in building a community health information exchange and the realities of embarking on a broad community collaboration to achieve better data sharing.

HealthlinkNY’s Galanis to Step Down as CEO

Christina Galanis, who has served as president and CEO of HealthlinkNY for the past 13 years, will leave her position at the end of the year.

Email-Related Cyber Attacks a Top Concern for Providers

U.S. healthcare providers overwhelmingly rank email as the top source of a potential data breach, according to new research from email and data security company Mimecast and conducted by HIMSS Analytics.

Former Health IT Head in San Diego County Charged with Defrauding Provider out of $800K

The ex-health IT director at North County Health Services, a San Diego County-based healthcare service provider, has been charged with spearheading fraudulent operations that cost the organization $800,000.

Allscripts Touts 1 Billion API Shares in 2017

Officials from Chicago-based health IT vendor Allscripts have attested that the company has reached a new milestone— one billion application programming interface (API) data exchange transactions in 2017.

Dignity Health, CHI Merging to Form New Catholic Health System

Catholic Health Initiatives (CHI), based in Englewood, Colorado, and San Francisco-based Dignity Health officially announced they are merging and have signed a definitive agreement to combine ministries and create a new, nonprofit Catholic health system.