HEALTH CARE MERGERS & ACQUISITIONS RISE FOR FIRST TIME IN TWO YEARS 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 MERGERS & ACQUISITIONS RISE FOR FIRST TIME IN TWO YEARS According to Irving Levin Associates, Inc.
NEW CANAAN, CT. – July 21, 2000 – Mergers and acquisitions in the health care services industry witnessed its first increase in two years during the second quarter of 2000, with 17 percent more deals than the previous quarter, according to Irving Levin Associates, a research and health care publishing firm.
In its second quarter 2000 Health Care Merger and Acquisition Report (www.healthcaremanda.com), Levin reports that there were 135 health caremergers and acquisitions announced during April to June 2000.
“After two straight years of decline in health care services M&A activity, the M&A market has finally pulled out of its nose dive,” said Stephen M. Monroe, managing editor at Levin.  
Three sectors — hospitals, physician medical groups and behavioral health care — accounted for 50 percent of the total mergers and acquisitions last quarter. For the third quarter in a row, the hospital sector led all others as the single most active sector in the industry.
“Reminiscent of the market four years ago, the hospital sector appears to be re-establishing itself at the cornerstone of the health care services industry and attracting the lion’s share of attention in the M&A market,” said Monroe.
In the second quarter of 2000, the hospital sector led the activity, with 31 deals accounting for 23 percent of all health care mergers and acquisitions in the quarter.
“These 31 deals represent a total of 45 acute care facilities, which have a combined total of 7,400 beds and generate more than  $1.6 billion in annual revenue,” said Monroe. “Publicly traded corporations, privately held companies and nonprofit organizations all took an active part in this market.”
The behavioral health sector had 16 deals, representing a 167 percent gain. Impressive though it appears, this increase is not broad-based, but can be traced to the sell-off of 24 facilities by a now-bankrupt provider.
“The fact that buyers were found for these facilities at all suggests that, going forward, they feel confident that they can operate inpatient psychiatric facilities in the current reimbursement environment,” said Sanford Steever, editor of the Report.
The managed care sector experienced a 50 percent decrease in activity this quarter. “This stems from two concerns that diverted insurers’ attention from their M&A programs: how the Supreme Court would rule on lawsuits against HMOs and preparations to withdraw from many Medicare markets. As payors and providers adapt to new reimbursement protocols and regulatory regimens, we believe that with the lessons of the last few years in their minds, they will pursue a steady, but prudent stream of deal-making,” said Steever.
The Health Care Services M&A Market
Second Quarter 2000 Deal Volume
Sector
Q2:00
Deals
Q1:00
Deals
%Change
Q2:99
Deals
%Change
Hospitals
31
22
+41%
34
-9%
Physician Medical Groups
20
18
+11%
46
-57%
Behavioral Health Care
16
6
+167%
11
+45%
Long-Term Care
13
12
+8%
11
+18%
Laboratories
11
13
-15%
10
+10%
Home Health
8
6
+33%
20
-60%
Managed Care
8
16
-50%
15
-47%
Rehabilitation
4
1
+300%
11
-64%
Other
24
21
+14%
36
-33%
Total
135
115
+17%
194
-30%
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based research and publishing firm specializing in health care investments. The firm has 50 years of experience in the health care acquisition market. To purchase The Health Care Merger & Acquisition Report, consisting of four quarterly reports, 12 monthly newsletters and 50 weekly bulletins, please call (800) 248-1668.
Click here to get more information or to order any of our Publications.
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