Hospital mergers and acquisitions during the first quarter of 2014 were substantially lower than during the first quarter of 2013, but deal value increased, according to a new report by PriceWaterhouseCoopers.
The number of hospital deals consummated during the first quarter of the year was 12, down from 21 during the first quarter of 2013--a drop of more than 40 percent, according to data from the PwC publication Health Data Insights. However, the value of the deals closed so far this year increased more than 20 percent, reaching $388 million, compared to $320 million a year ago.
Upticks in transactions among post-acute care providers, health plans and other sectors, and big leaps in terms of the value of such deals also offset the downward turn in deal volume among hospitals. As a result, the entire healthcare services sector held about even in terms of M&A activity during the first quarter, while values increased dramatically.
Industry observers indicated that healthcare reform and unsteady financial prospects will continue to drive mergers and strategic alliances in the coming years.
"While deal activity held steady during the first quarter of this year compared to Q1 2013, having deal value jump 152 percent is an indication of renewed confidence in the industry as the dust settles from the implementation of the Affordable Care Act," said Brett Hickman, partner and PwC's U.S. healthcare deals leader, in a statement. "The impetus for greater alignment and size remains unchanged in the hospital sector. Combined with positive signs we're seeing in the other health services sectors, we're optimistic that there will be heightened deal activity in 2014."
The news from PwC contradicts data issued late last year by Irving Levin & Associates, which said that the volume of transactions in the entire healthcare sector was up, but that their dollar value had decreased. Another study by Kaufman Hall also said that dealmaking was up during 2013.