The total value of U.S. health services mergers and acquisitions rose 5.7 percent to $36.5 billion in the first 9 months of 2014 compared to the same period last year, according to an analysis from consulting firm PricewaterhouseCoopers.

Although deal values for the third quarter of 2014 have dropped slightly to $11.9 billion from the second quarter total of $12 billion, PwC reports that Q3 saw 169 announced deals, an increase over both Q1 and Q2 this year, which had 143 and 138 transactions respectively. The firm also notes that the managed care sector saw continued momentum with a 64 percent increase and long term care saw a 23 percent increase in deal activity over the first three quarters of 2014 versus 2013.

“While the dynamics driving the managed care sector’s activity remains consistent with prior periods, the more notable activity in the YTD 2014 period is seen in the long term care sector—leading the sectors in both deal volume and value,” according to PwC. “The sector’s third quarter activity was marked by two large REIT (real estate) transactions including NorthStar Realty Finance’s $4 billion acquisition of Griffin-American Healthcare—accounting for approximately half of the published deal value in the sector.”

However, at the same time, the hospital sector saw deal volume decline 58 percent over the first three quarters of 2014 due to a shift toward more alliance-based transactions, including joint ventures and other partnerships.

“Looking more deeply into the continued decline in the hospital sector’s deal volume, we note one primary driver of this trend is the surge in non-traditional M&A structures that are excluded from our analysis,” states PwC. “These structures include alliance based transactions such as joint ventures and other forms of market based partnering. As these deal structures take hold, we do see them as pre-cursors to ultimate M&A deals in the future after the parties align interests and become more familiar with each other.”

The behavioral care (-43%) and home health (-13%) sectors also experienced significant declines in deal volume over the first three quarters of 2014 compared to the same period last year.

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