Healthcare M&As to surpass 2010 deals, fueled by reform
Deals between buyers purchasing physician practices--many of them hospitals--doubled in the third quarter year-over-year, according to healthcare research firm Irving Levin Associates, reports American Medical News. The number of increasing transactions is largely attributed to healthcare reform, according to the report.
Physician practice deals are the third most active types of mergers and acquisitions, following medical devices and long-term care industries, notes amednews. Physician practice mergers and acquisitions totaled 25 deals in the third quarter, slightly down from the 27 reported deals in the second quarter, according to the report.
Hospitals saw 16 M&As this past quarter, half of the 31 deals in the second quarter.
Despite some reports, healthcare M&As are poised to continue, according to Irving Levin Associates. In fact, the fourth quarter is expected to bring in $20 billion in deals and surpass last year's amount of transactions.
Healthcare M&As in Q3 totaled 217 transactions this year, estimated at $58.4 billion. Overall, deals totaled 704 transactions in 2011, estimated at $185.6 billion.
However, at last month's 16th Annual Wall Street Comes to Washington Conference, experts noted that more hospitals are entering into employment arrangements with physicians instead of acquisition deals.
"There's less acquisition of practices, less acquiring and paying physicians good will for actually buying their practice, and more just pure employment arrangements," said Gary Taylor, managing director of financial conglomerate Citigroup. "[T]here's a defensive strategy. Because we are in a recession, patient volumes, inpatient admissions, outpatient visits have slowed," he said. "... If you actually employ the physician, you're going to end up getting the bulk of their admissions and outpatient business."
For more information:
- read the amednews article
- read the Irving Levin Associates newsletter report (reg. req.)
- here's the conference transcript
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