FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Kathy Hammell, Editor
HOSPITAL M&A ACTIVITY SLOW IN 2000 AS HEALTH CARE INDUSTRY BEGINS TO STABILIZE According to Irving Levin Associates, Inc.
NEW CANAAN, CT. – March 28, 2001 – In 2000, for the third year in a row, the number of U.S. hospital mergers and acquisitions declined, with 22 percent fewer deals announced than in the previous year, according to Irving Levin Associates, Inc., a health care research and publishing firm based in New Canaan, CT.
In its seventh edition of The Health Care Acquisition Report, Levin reports that with 86 transactions announced in 2000, the hospital sector had the greatest number of mergers and acquisitions for the year of any health care services industry segment. Year 2000 hospital M&A activity dropped from 110 deals reported in 1999, 139 deals in 1998, 197 deals in 1997, and 163 deals in 1996. The largest deal of the year was more than 4 times larger than the largest deal of 1999.
While M&A volume decreased, health care stocks and especially hospital stocks improved markedly during the year 2000. “The outlook for 2001 is positive. Reimbursement relief was obtained for certain segments of the industry after two years of suffering from The Balanced Budget Act of 1997. Now the health care industry is beginning to stabilize,” stated Kathy Hammell, editor of the report. Hospitals account for the largest share of the more than $1 trillion that Americans spend annually on health care.
For the first time in seven years, for profit hospital acquisitions surpassed nonprofit acquisitions in terms of number of hospitals, with 69% of acquisitions involving for profit and only 31% involving nonprofit hospitals. Indicative of the rise in corporate acquisitions was the largest deal of the year – the $2.4 billion acquisition of Quorum Health Group by Triad, a spin-off from Columbia/HCA (now HCA-The Healthcare Company), historically a major player in the hospital acquisition market. None of the largest acquirers in 2000 or 1999 were affiliated with Roman Catholic institutions, contrary to the prior year. “While considerably more attention has been focused on the corporate acquisitions of the past five years, this industry will continue to be dominated by nonprofit entities,” stated Stephen M. Monroe, a partner at Irving Levin Associates, Inc.
Transaction volume in the managed care sector also dropped in 2000, reflecting the declining financial health of that sector. There were 49 managed care transactions announced, compared to 66 deals in 1999, 62 deals in 1998 and 57 deals in 1997. In the past five years, six managed care deals exceeded a transaction value of $1 billion, but no deals have exceeded this level in the past two years.
The behavioral health sector witnessed 33 announced acquisitions in 2000. The sector was dominated by the bankruptcy of Charter Health, the company involved in nearly half of the behavioral health deals for the year.
The Health Care Acquisition Report, Seventh Edition, contains nearly 100 pages of hard-to-find information on all publicly announced hospital, managed care and behavioral health mergers and acquisitions in 2000. In addition, the Report contains an analysis of the type of acquirer and of the type of target, as well as a section updating transactions from previous years.
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. The HealthCare Acquisition Report, Seventh Edition, may be purchased for $495 by calling 1-800-248-1668.
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FOR IMMEDIATE RELEASE