HEALTH CARE SERVICES MERGER AND ACQUISITION VOLUME CONTINUES DOWNWARD SLIDE According to Irving Levin Associates, Inc.

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Phone: (800) 248-1668
Fax: (203) 846-8300
pressreleases@levinassociates.com
HEALTH CARE SERVICES MERGER AND ACQUISITION VOLUME CONTINUES DOWNWARD SLIDE According to Irving Levin Associates, Inc.
(New Canaan, Connecticut – May 3, 1999) – Irving Levin Associates, Inc. has just released the preliminary results of the Firm’s 1999 first quarter report on the merger and acquisition market in the health care services industry, available in mid-May.
According to The Health Care Merger & Acquisition Report, there were 193 transactions which were publicly announced during the first quarter ended March 31, 1999, down 11% from the previous quarter’s 216 deals. Compared to the first quarter of 1998, however, the number of transactions declined by 39%. As in the past quarter, the Physician Medical Group, Hospital and Long-Term Care sectors together account for nearly half (46%) of all deals transacted. The breakout of transactions by sector and the percentage change from the previous quarter are given in the table below:

SUMMARY OF HEALTH CARE TRANSACTIONS
(By Sector, Number of Transactions, Percentage Change)

Number of
Percentage
Sector
Transactions
Change
Physician Medical Groups
38
-12%
Hospitals
23
-12%
Long-Term Care
23
-36%
HMOs
18
0
Home Health
15
+25%
Psychiatric
13
-19%
Laboratories/MRI/Dialysis
12
-25%
Rehabilitation
11
-8%
Other
40
-11%
Total
193
-11%

"This quarter witnessed the lowest level of health care merger and acquisition activity since the end of 1995, when 163 deals were announced. However, the landscape of the health care services industry has changed markedly", said Stephen M. Monroe, a partner at Irving Levin Associates, Inc. "While for-profit health care companies once dominated the M&A market, nonprofits organizations have since risen to prominence."
"Consolidation among nonprofit HMOs and other payors, notably Blue Cross and Blue Shield plans, now commands a larger share of the market," noted Sanford Steever, editor of the Report. "The kind of deals companies pursue has also changed. Where buyers once sought to buy up a company lock, stock and barrel, the emerging pattern of acquisition now favors looser forms of affiliation. Recent M&A activity in the Physician Medical Group sector reflects this new trend: though the number of deals in the Physician Medical Group sector is down, the number of entities and physicians acquired are both up, indicating that buyers are now more likely to target IPAs," added Mr. Steever.
"For-profit and nonprofit groups alike face a set of financial challenges posed by changes in reimbursement protocols that started with the Balanced Budget Act of 1997," stated Mr. Monroe. "Although these changes have already impacted the finances of the health care industry, providers and payors will continue to pursue mergers and acquisitions as a means of improving operations and further developing regional delivery systems," observed Mr. Monroe. "We anticipate that these and other factors will generate as many as 850 deals for 1999."
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based research and publishing firm specializing in health care investments. The Firm has 50 years experience in the health care acquisition market. To purchase The Health Care Merger & Acquisition Report, consisting of 12 monthly newsletters and four quarterly supplements, please call (800) 248-1668.
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