Health Care M&A Activity Reaches All-time High
NEW YORK – Health care mergers and acquisitions (M&A) activity reached an all-time, record-high value of $388 billion in 2014, which was more than $136 billion higher than 2013 levels, according to a report released June 15.
New York-based Hammond Hanlon Camp (H2C), an advisory and investment-banking firm, released the second-edition research report, “Merger and Acquisition Trends in Healthcare Services.” The report found that the M&A activity was driven by nearly 1,300 transactions. Among the industry’s service sectors, long-term care and hospitals were leaders in terms of number of transactions and value over the past two years. Continued impact of the Affordable Care Act (ACA), cost pressures and access to capital and patient sources were key drivers of hospital merger and acquisition activity.
The report found several prominent trends, including larger hospital systems, as well as other sector players, expanded their scale, geographic reach or concentration through acquisition activity. Additionally, the majority of transactions (70 percent) within the hospital sector during 2014 involved transactions in which nonprofit institutions were both the target and acquirer.
The report also found affiliations and vertical integration to access new revenue streams, expertise or new services was evident. There was also a growing trend of strategic partnerships that was evident over full asset mergers, including creative and non-traditional relationships. Furthermore, the report found both long-term care and medical office building sales activity reached historically high levels in 2014.
“Mergers and acquisitions remain a key avenue by which many organizations are responding to trends and pursuing growth. Many organizations are hiring mergers and acquisitions hong kong lawyers to help with the process and this allows things to run more smoothly.” said Michael Hammond, H2C principal, in a statement. “Furthermore, creative partnerships are becoming a vehicle in regional markets that have reached saturated consolidation and concentration.”
According to the report, the outlook for health care M&A activity in 2015 and beyond remains strong, with the impacts of reimbursement changes, price transparency, technology costs, competitive pressures of ACOs/ health exchanges and need for efficiencies continuing to fuel transactions.
Increased investment in the health care industry is likely to be seen among private equity and venture capital firms, especially within technology and specialty sectors that can be aggregated for future sale. Those companies that demonstrate capabilities that improve quality, patient satisfaction, cost efficiency and utilization of “big data” to drive performance will be in high demand.
“The rising use of technology and ‘big data’ in all aspects of delivering care will have a transformative effect on health care cost, quality and convenience factors, influencing future M&A trends,” said Bill Hanlon, H2C principal, in a statement.