Health Services Mergers, Acquisitions Rise 43% in First Half 2014
The total value of U.S. health services mergers and acquisitions rose 43 percent from $17.2 billion in the first half of 2013 to $24.6 billion in the first half of 2014, according to a just-released analysis of M&A activity in the healthcare sector from PricewaterhouseCoopers.
The total value of U.S. health services mergers and acquisitions rose 43 percent from $17.2 billion in the first half of 2013 to $24.6 billion in the first half of 2014, according to a just-released analysis of M&A activity in the healthcare sector from PricewaterhouseCoopers.
In its quarterly Health Services Deals Insights, PwC reports 138 announced deals in Q2 for a total of 281 deals in the first half of 2014. Of particular note, the firm finds that the managed care sector saw a 160 percent increase in deal volume in the first half of 2014, compared to the same period for 2013, as strategic buyers looked for new opportunities to offset potentially lower margins under the Affordable Care Act and to better manage the shift toward population health strategies.
The dollar value for managed care deals with a disclosed value was $330 million in Q2 2014. Of the $330 milion, $125 million related to Centenes acquisition of Community Health Solutions of America Inc.s Lousiana Medicaid contract.
Other healthcare sectors experiencing volume upticks in the first half of 2014 compared to the first half of 2013 include long term care which increased by 20 percent. In long term care, the periods activity was primarily marked by Ventass acquisition of American Realty Capital--accounting for over half of the sectors deal value for the second quarter.
However, for the majority of the sectors and consistent with the overall trend, PwC saw reduced sector deal volumes from the first half of 2013 to the first half of 2014. The most notable decreases are seen in hospitals (-68%), behavioral health (-50%), and home health (-25%). With only a 7% decrease in deal volume, the physician practice sector may consider itself unscathed compared to these other sectors, states the report. Most notable is the acquisition of Sheridan Healthcare by AmSurg Corp. for $2.35 billion.
Despite the fact that the deal volume indicators for reported and closed hospital transactions decreased between 2014 and 2013, the report says there are many active discussions across the U.S. regarding consolidations and mergers among hospitals and health systems, which are not reflected in the figures based on the stage of the potential deal.
Activity in this sector will continue for the foreseeable future as consolidation continues in all aspects of the hospital space regardless of the for-profit or not-for profit status of a facility or system, according to PwC.
Overall, the firm concludes that signs point to continued M&A activity in 2014 to capture the highly fragmented consumer-focused healthcare market. We expect this evolution in care delivery to continue, states PwC. While many players will try to address this new market with homegrown options, we expect that companies will use M&A to consolidate the necessary technology and intellectual property needed to capture the consumer.
In its quarterly Health Services Deals Insights, PwC reports 138 announced deals in Q2 for a total of 281 deals in the first half of 2014. Of particular note, the firm finds that the managed care sector saw a 160 percent increase in deal volume in the first half of 2014, compared to the same period for 2013, as strategic buyers looked for new opportunities to offset potentially lower margins under the Affordable Care Act and to better manage the shift toward population health strategies.
The dollar value for managed care deals with a disclosed value was $330 million in Q2 2014. Of the $330 milion, $125 million related to Centenes acquisition of Community Health Solutions of America Inc.s Lousiana Medicaid contract.
Other healthcare sectors experiencing volume upticks in the first half of 2014 compared to the first half of 2013 include long term care which increased by 20 percent. In long term care, the periods activity was primarily marked by Ventass acquisition of American Realty Capital--accounting for over half of the sectors deal value for the second quarter.
However, for the majority of the sectors and consistent with the overall trend, PwC saw reduced sector deal volumes from the first half of 2013 to the first half of 2014. The most notable decreases are seen in hospitals (-68%), behavioral health (-50%), and home health (-25%). With only a 7% decrease in deal volume, the physician practice sector may consider itself unscathed compared to these other sectors, states the report. Most notable is the acquisition of Sheridan Healthcare by AmSurg Corp. for $2.35 billion.
Despite the fact that the deal volume indicators for reported and closed hospital transactions decreased between 2014 and 2013, the report says there are many active discussions across the U.S. regarding consolidations and mergers among hospitals and health systems, which are not reflected in the figures based on the stage of the potential deal.
Activity in this sector will continue for the foreseeable future as consolidation continues in all aspects of the hospital space regardless of the for-profit or not-for profit status of a facility or system, according to PwC.
Overall, the firm concludes that signs point to continued M&A activity in 2014 to capture the highly fragmented consumer-focused healthcare market. We expect this evolution in care delivery to continue, states PwC. While many players will try to address this new market with homegrown options, we expect that companies will use M&A to consolidate the necessary technology and intellectual property needed to capture the consumer.
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