The Supreme Court’s ruling on the health reform law will spur more consolidation in the healthcare industry, according to a recent survey by healthcare public affairs firm Jarrard Phillips Cate & Hancock.
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More than 200 healthcare leaders were surveyed about organizational, operational and financial decisions within their organizations. Nearly 66 percent of respondents said the ruling will result in more mergers and acquisitions within the industry.
“Executives are gearing up for increased M&A activity, both in the Nashville healthcare community and nationally,” said Molly Cate, partner at Jarrard Phillips Cate & Hancock, in a press release. “In Nashville, where healthcare is a $70 billion industry, we’ll see a flood of new ideas and companies flood the market, according to survey results.”
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[Also: M&A: What is driving the market?]
Reggie Hill, partner at Nashville-based law firm Waller Lansden, agrees that M&A activity has increased in recent years due to the health reform law, but does not think the Supreme Court’s recent ruling will have a substantial impact.
“We have seen an increase in M&A activity over the last couple of years because of decreasing reimbursement rates and the advent of new models such as accountable care organizations,” he said. “I do not think that the Supreme Court’s ruling on the Affordable Care Act will have a material impact on what we have been seeing because I think most providers believed these trends would continue regardless of how the court ruled.”
Jon Krieger, managing director of healthcare banking at New York City-based investment banking firm Berkery Noyes, also believes M&A in the healthcare sector will increase in the near future, but not due to the SCOTUS decision.
“A lot of the initiatives mandated under healthcare reform and affirmed by the Supreme Court last month would occur regardless of the Supreme Court’s ruling last month,” he said.
“The healthcare M&A markets have been very active recently and the velocity of deals will increase in the foreseeable future, particularly for those companies that provide technology enabled services to payers and providers,” he added.