Newly Published: 2016 Health Care Services M&A Market Sees Growth in Deal Volume of Transactions, According to Data from HealthCareMandA.com

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Merger and acquisition activity in the health care industry’s services sectors increased in 2016, in deal volume but not in the dollar value of transactions, according to the 2017 Health Care Services Acquisition Report, Twenty-Third Edition.

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The services side contributed 61% of 2016’s combined total of 1,538 deals. But spending on those deals made up just 28% of the total of $256 billion.

Merger and acquisition activity in the health care industry’s services sectors increased in 2016, in deal volume but not in the dollar value of transactions, according to the 2017 Health Care Services Acquisition Report, Twenty-Third Edition. Deal volume for the health care services sectors rose 1%, to 942 transactions versus 935 in 2015. The dollar value of those deals fell 49%, to $72 billion, compared with $140 billion in 2015.

“Once again, health care mergers and acquisitions posted record-breaking totals in 2016,” said Lisa E. Phillips, editor of the 2017 Health Care Services Acquisition Report. “The services side contributed 61% of 2016’s combined total of 1,538 deals. But spending on those deals made up just 28% of the total of $256 billion.”

Some services sectors fared better than others in year-over-year deal totals. Merger and acquisition activity increased in Rehabilitation, (+21%), Physician Medical Groups (+19%), Other Services (+15%), Home Health & Hospice (+12%) and Behavioral Health Care (+2%). Four other sectors saw declines in activity, including Managed Care (-53%), Laboratories, MRI & Dialysis (-21%), Hospitals (-12%) and Long-Term Care (-6%). “The continued shift to value-based outcomes and reimbursements benefitted most post-acute sectors in 2016,” Phillips added. “The slow-down in the Long-Term Care sector is the inevitable result of a bull market finally pausing for breath.”

The election of Donald Trump and Republican majorities in both houses of Congress introduced a great deal of uncertainty at the end of 2016. The campaign promises to repeal and replace the Affordable Care Act are now being put to the test. “Sectors that were directly affected by the enactment of the ACA will be directly affected by its replacement,” Phillips observed. “We’re seeing dramatic declines in M&A in the Managed Care and Hospital sectors, early in 2017. Depending on the final legislation, more sectors could be impacted.”

The 2017 Health Care Services Acquisition Report, Twenty-Third Edition, contains more than 340 pages of hard-to-find information on all publicly announced hospital, managed care, laboratory services, physician medical group, behavioral health, home health and hospice, and rehabilitation mergers and acquisitions in 2016. The Long-Term Care sector is treated separately in The Senior Care Acquisition Report, Twenty-Second Edition. Irving Levin Associates is a Norwalk, Connecticut-based research and publishing firm specializing in health care investments. The Health Care Services Acquisition Report may be purchased for $595 by calling 800-248-1668.

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Kate Wentworth
Irving Levin Associates
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