Merger and acquisition activity in the healthcare industry’s services sectors increased in 2015, both in deal volume and the dollar value of transactions, according to the 2016 healthcare Services Acquisition Report, the 22nd edition. Deal volume for the healthcare services sectors rose 22%, to 936 transactions versus 765 in 2014. The dollar value of those deals grew 183%, to $175 billion, compared with $62 billion in 2014, according to a press release from Irving Levin Associates, a research and publishing firm specializing in healthcare investments.
“Healthcare mergers and acquisitions posted record-breaking totals in 2015,” said Lisa E. Phillips, editor of the 2016 healthcare Services Acquisition Report. “The services side contributed 62% of 2015’s combined total of 1,503 deals, which is even higher than 2014, when services deals accounted for 58% of the deal total.”
Merger and acquisition activity in the following services sectors-Behavioral healthcare, hospitals, laboratories, mri & dialysis, managed care, physician medical groups, rehabilitation and other services-posted gains over their 2014 totals. The exception was the home health & hospice sector, which declined 33% in year-over-year deal volume. “The Affordable Care Act generally benefited healthcare services M&A activity in 2015,” Phillips added. “The shift to value-based outcomes and reimbursement made the post-acute sectors especially appealing for investors.”
Hospital merger and acquisition activity remained strong in 2015, up 3% to 102 transactions, compared with 99 transactions in 2014. An average of 2.6 hospitals were involved in each transaction, compared with an average of 1.8 in 2014 and 3.3 in 2013. “Several deals resulted from the mega-mergers of 2013,” Phillips observed. “We’re seeing more sales resulting from bankruptcies, especially in states that have not expanded Medicaid coverage.”