Deloitte: Reform spurs M&A activity

The implementation of healthcare reform is likely to spur mergers and acquisitions, particularly among medical groups, according to a new report by Deloitte Development LLC.

"There is an expectation that, due to expanding Medicaid coverage and proposed decreases in Medicare reimbursement, providers will be experiencing more fiscal challenges ... many will need to determine whether being part of a larger system ... will help them be more effective over the long run," noted the report, "Health Plans and Providers: Implementing Strategic M&A Transactions in a Post-Reform Environment."

The report suggested that many medical groups are already under pressure to consolidate. "Our research indicates that many physician practices currently are in play; either they are looking to sell or--if they are a larger IPA--looking to acquire," said Deloitte.

The report also noted that there will be a lot of M&A activity on the hospital side, particularly those organizations whose reimbursement levels are under threat. New sources of money, such as private equity firms, are also driving up deal-making.

By contrast, health plan leadership has been more "selective" in its deal-making, primarily because most are trying to launch initiatives that will allow them to comply with components of the healthcare reform law that have become effective this year and beyond.

For more:
- read the Deloitte report
- read the Healthcare Finance News article