Topics
More on Mergers & Acquisitions

Healthcare M&A activity to persist in 2015, report states

But while mergers and acquisitions will still continue, partnerships are expected to become more common.

Susan Morse, Senior Editor

The flurry of  healthcare mergers and acquisition activity that shaped most of 2014 will likely keep up pace in 2015, according to a report on health services activity by PricewaterhouseCoopers.

However, the 2016 presidential election and potential legislative changes could shift the regulatory landscape and affect certain sectors of healthcare, a trend that could throw off M&A.

[Also: Tracking 2015 mergers and acquisitions]

The PwC predictions follow a busy 2014 that saw 79 transactions in the sector, with more than half of those coming in the fourth quarter. The year was not quite as busy as 2012, though, which saw 94 deals.

Overall, deal activity for 2014 was up 16.3 percent compared to 2013, the report found.

The two biggest hospital deals in 2014 were Duke LifePoint’s $500 million acquisition of the Conemaugh Health System in August; and in November, UW Health’s acquisition of Swedish American Health for $255 million.

For 2015, PwC said partnerships will often be the more attractive option to an outright merger, and ongoing partnership discussions that originated in 2014 should evolve into a certain level of activity in 2015. Nonprofit transactions historically take longer given the intricate community and governance considerations unique to every transaction, it said.

The PwC looks at deals for hospitals, managed care, post-acute care, physician practices and private equity.

[Also: See how one hospital went green]

Physician medical groups were among the sectors seeing the biggest gain in deal value. Continued consolidation of this sector is expected in 2015, according to the report.

Long-term care delivered the most volume and value of deals, the report stated. Behavioral Health realized a 24 percent increase in deal volume from 2013 to 2014. 

Managed care realized close to a 50 percent increase in deal volume, with 22 deals announced in 2014. The largest transaction was Optum’s $600 million acquisition of Alere Health.

The largest drops were in acute care hospitals, which were down by 88 percent, and rehabilitation hospitals, which were down by 43 percent. However, deal values in these sectors are often not disclosed where private or nonprofit parties are involved, the report stated.

Twitter: @SusanMorseHFN