THE BALANCED BUDGET ACT OF 1997 DECIMATES HOME HEALTH AND THERAPY MERGER & ACQUISITION MARKET According to Irving Levin Associates, Inc.

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Kathy Hammell, Editor
Phone: (800) 248-1668
Fax: (203) 846-8300
pressreleases@levinassociates.com
THE BALANCED BUDGET ACT OF 1997 DECIMATES HOME HEALTH AND THERAPY MERGER & ACQUISITION MARKET According to Irving Levin Associates, Inc.
(New Canaan, Connecticut-August 2, 1999)—The preliminary results of a new comprehensive research report on the merger and acquisition market for long-term care ancillary service companies have just been released by Irving Levin Associates, Inc., publisher of the LTC Ancillary Services Acquisition Report, First Edition. The Report covers transactions in the home health care, contract rehabilitation therapy and institutional pharmacy markets.
As the demand for post-acute care services grew in the 1990s, the volume of acquisitions, as well as the pricing, increased dramatically. Providing home health care, rehabilitation therapy and medication management services all were viewed as essential to the future success of post-acute care providers, especially as acuity levels rose. "The Balanced Budget Act of 1997 (BBA), however, has practically destroyed many of these service areas," according to Stephen M. Monroe, a partner at Irving Levin Associates, Inc. "As an example, one of the largest contract therapy companies in the country closed down after being unable to find a buyer, and another sold its $100 million-plus business for a nominal amount," continued Mr. Monroe.
In the past 12 months, merger and acquisition volume has dropped by nearly 50% in the home health and contract therapy sectors, with institutional pharmacy not too far behind. The number of transactions by sector are as follows:

Home Health
Institutional Pharmacy
Contract Therapy
1994
57
22
12
1995
75
21
12
1996
137
47
6
1997
135
61
16
1998
84
34
5
1999*
35
5
3
*Through 6/30/99

 


"Some home health care company consolidators have questioned the rationale for buying a home health company when they could pick up the customers for free if the seller goes out of business, which has frequently been the case," commented Mr. Monroe. "Although presumably not intentional, the changes in Medicare reimbursement that came with the BBA have caused extreme financial hardship to many providers."
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based research and publishing firm specializing in health care and seniors housing investments. The Firm has 50 years experience in the health care merger and acquisition market. The LTC Ancillary Services Acquisition Report, First Edition, has approximately 100 pages of hard-to-find information on all of the publicly announced home health care, institutional pharmacy and contract therapy mergers and acquisitions from January 1, 1998 through June 30, 1999. The Report may be purchased by calling 800-248-1668.
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