Healthcare M&A spending tumbles

Hospital merger and acquisition spending in the first quarter of fiscal 2013 fell more than half a billion dollars compared with the first quarter of 2012 to $319.7 million, a drop of nearly two-thirds,according to a report by Irving Levin Associates.

The first quarter of 2013 saw 23 hospital transactions, down from 34 last quarter and 27 in the first quarter of 2012. Deal volume was down 33 percent versus the previous quarter, with only 204 deals announced.

"Overall, the health care merger and acquisition market is doing smaller, more strategic deals while it waits for the economy to improve and the results of the sequester to settle in," Lisa E. Phillips, editor of "The Health Care Mergers & Acquisitions Report," said in an an announcement. "Deal-making activity seemed to be picking up towards the end of the quarter, so we expect more positive results in the second quarter."

The long-term care sector, which typically shows the most M&A activity, saw first-quarter deal volume slide by 28 percent compared with the previous quarter to 44 deals.

"In long-term care, the fourth quarter is usually the most active quarter of the year, so it was no surprise to see a drop off in the first quarter of 2013," according to Stephen M. Monroe, a partner at the firm. "That said, where we have seen a decline is in the large, over $100 million transactions. But there has been a decline in the mega deals across most of the health care segments, so long-term care is no exception."

In early March, an American Enterprise Institute panel argued hospital mergers and the monopolies they create cause healthcare costs to rise without improving quality.  Meanwhile, a worldwide survey from Jackson Healthcare found that 50 percent of hospitals plan to acquire a physician practice this year, many calling the move "opportunistic" instead of "strategic."

To learn more:
- read the announcement 

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