In a potential sign that healthcare transaction mania may be cooling off, the number of hospital-related mergers and acquisitions during the third quarter of this year dropped considerably compared to the third quarter of 2011, according to a new report from Irving Levin Associates.
The industry saw 11 hospital-related deals during the quarter, down 31 percent from the 16 transactions announced during the third quarter of 2011, according to the report. And the volume of hospital deals is down 52 percent from the second quarter of this year, which had 23 deals announced.
A total of 135 deals took place in the healthcare services segment, compared to 132 in the year-ago quarter and 136 in the second quarter of 2012.
The dollar value of hospital-related M&A totaled only $121.9 million in the third quarter, representing less than 1 percent of the overall value of all healthcare transactions. For the first six months of the year, dollars committed to hospital M&A totaled $812.5 million. That compares to $9.9 billion for all of 2011, which was the first total to exceed the pre-recession numbers of 2007.
The drop in transactions comes as a pending report from Booz & Company suggests hospital mergers may not reap the expected financial benefits, although it is unclear if that realization is behind the merger slump.
The total dollar volume of all transactions in healthcare fell 36 percent from the third quarter of 2011 and 35 percent from the second quarter of 2012, noted Irving Levin.