PHYSICIAN MEDICAL GROUP, HOSPITAL AND LABORATORY SECTORS CONTINUE TO DOMINATE HEALTHCARE M&A MARKET 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
PHYSICIAN MEDICAL GROUP, HOSPITAL AND LABORATORY SECTORS CONTINUE TO DOMINATE HEALTHCARE M&A MARKET According to Irving Levin Associates, Inc.
NEW CANAAN, CT - October 26, 2000 - The Physician Medical Group, Hospital and Laboratory sectors accounted for 43% of all mergers and acquisitions in the health care services industry during the third quarter, according to Irving Levin Associates, Inc., a research and health care publishing firm. In its third quarter 2000 Health Care Merger and Acquisition Report (www.healthcaremanda.com), the firm reports a total of 127 deals during the three-month period ended September 30, 2000, representing a 5% decline from the previous quarter.
The Physician Medical Group sector witnessed a 25% increase in activity from the previous quarter, with 25 deals. Seven of these deals, or a total of 28% within the sector, were sales of practices by physician practice management companies (PPMs) back to their original physician owners even though six publicly traded PPMs took part in the market as acquirers. "The return of physician practices back to their original physician owners is a result of the crumbling financial model of many of the large PPMs," stated Sandy Steever, Editor of the Report.
The Health Care Services M&A Market
Third Quarter 2000 Deal Volume By Sector
Sector
Q3:00
Deals
Q2:00
Deals
%Change
Q3:99
Deals
%Change
Physician Medical Groups
25
20
+25%
35
-29%
Hospitals
15
29
-48%
24
-38%
Laboratories
15
11
+36%
13
+15%
Long-Term Care
13
13
0%
27
-52%
Home Health
12
8
+50%
11
+9%
Managed Care
10
9
+11%
17
-41%
Rehabilitation
4
4
0%
2
+100%
Behavioral Health
3
16
-81%
11
-73%
Other
30
24
+25%
34
-12%
Total
127
134
-5%
174
-27%
In the Hospital sector, Levin recorded 15 deals, representing a 48% decrease from second quarter 2000 and a 38% decrease from third quarter 1999. Only two of the acquirers were publicly traded hospital companies and three of the deals involved bankruptcies by two companies. “Although the number of hospital acquisitions hit the lowest level of the decade, we expect volume in this sector to begin to rise.  With hospital company stock prices surging, there will be more deals by the publicly traded companies, as evidenced by the recently announced $2.4 billion acquisition of Quorum Health by Triad Hospitals," according to Stephen M. Monroe, senior editor of the Report.
The Laboratory sector, with 15 deals, showed an increase of 36% from the previous quarter and is up 15% from a year ago. Four of the fifteen deals involved sales by a single company, US Diagnostics. 
The two smallest sectors, Rehabilitation and Behavioral Health, together accounted for only 6% of the quarter’s transactions. The 81% drop in deal volume in the Behavioral Health sector was mostly the result of Charter Behavioral Health Systems’ bankruptcy, which led to the sale of several assets in the second quarter, leaving the market with only three transactions in the third quarter.
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 1-800-248-1668.
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