Over the past year, mergers and acquisitions have increased considerably in the healthcare IT sector, with smaller deals yielding big returns on investment, according to report from New York-based investment bank Berkery Noyes released Jan. 11.
The report, which analyzes M&A activity in 2012--comparing the data since 2010--shows that healthcare IT M&A transaction volume increased 21 percent annually, with private equity firms accounting for four of the industry's top-value deals last year.
According to the report, San Francisco-based healthcare IT vendor McKesson was the most active acquirer in 2012, while Fort Worth-based private equity investment firm TPG Capital was the industry's most active sponsor. Health IT deals kept up their domination in transaction volume, accounting for 41 percent of the industry's dealings.
"We are seeing [healthcare] technology sent to private equity groups, who are not healthcare centric per se, but who are pulling toward healthcare because healthcare is in desperate need of technology innovation and fresh ideas, and fresh capital," Thomas O'Connor of Berkery Noyes said in an article in Healthcare IT News.
Health IT is a key driver in physician practice acquisitions. In 2012, the Federal Trade Commission challenged 17 out of 1,450 merger transactions, with the concern that healthcare consolidation threatened services in some instances.
Companies considering mergers or acquisitions are wise to consider non-conventional targets that "build capabilities outside of a payer's core operations," Jill Dailey of consultant firm Accenture told FierceHealthPayer in 2012.