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Medical practice merger activity surges in first quarter 2017, report says

Acquisitions rose to 48 in the first quarter, a 78 percent jump from fourth quarter of 2016, data shows.

Beth Jones Sanborn, Managing Editor

Merger and Acquisition activity for physician medical groups spiked in the first quarter of 2017 to a high number not seen in years, according to data from HealthCareMandA.com. The number of acquisitions rose to 48 in the first quarter, a 78 percent jump from fourth quarter of 2016 and a whopping 109 percent increase from first quarter 2016.

Optum's purchase of Surgical Care Affiliates for $3.277 billion clearly stood out as the one large acquisition. Optum is a subsidiary of UnitedHealth Group.

Data shows MEDNAX and Envision Healthcare Corporation were the busiest buyers, with five and four deals respectively. Privately-owned Dermatology Associates and Epiphany Dermatology closed three acquisitions each.

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Nine of the acquired medical groups had 20 or more physicians.

[Also: Tracking 2017 mergers and acquisitions]

"Physicians are quickly realizing that not affiliating with larger entities, whether health systems or large medical groups, is going to make the practice of medicine more difficult in the future," said Lisa Phillips, editor of the Health Care M&A Report.

Merger and acquisition activity has been a hot button issue for some time, with the trend predicted to continue rise in 2017. Physician practices, especially small ones, are finding it increasingly difficult to remain independent as reporting burdens and financial challenges mount. New regulations like MACRA that require operational and technological changes and upgrades have presented further challenges. Many practices who lack the resources to continue as stand-alones find that aligning with larger systems provides the resources needed to survive.

Twitter: @BethJSanborn