Stephen M. Monroe
Fax: 203-846-8300

NORWALK, CT – March 31, 2015 – Merger and acquisition activity in the health care industry’s services sectors increased in 2014, both in deal volume and in the dollar value of transactions, according to the 2015 Health Care Services Acquisition Report, Twenty-First Edition.  Deal volume for the health care services sectors rose 18%, to 752 transactions versus 637 in 2013. The dollar value of those deals grew 17%, to $62 billion, compared with $52.7 billion in 2013.
“Health care mergers and acquisitions posted record-breaking totals in 2014, so it would be surprising if the services sectors didn’t keep pace,” said Lisa E. Phillips, editor of the 2015 Health Care Services Acquisition Report. “The services side contributed 58% of 2014’s combined total of 1,307 deals, but only 16% of the year’s $387 billion in spending. The picture would look a bit different if more of the deals in the services sectors disclosed prices.”
Mergers and acquisition activity in the following services sectors— Behavioral Health Care, Home Health & Hospice, Hospitals, Managed Care, Physician Medical Groups, Rehabilitation and Other Services—posted gains over their 2013 totals. The exception was the Laboratories, MRI & Dialysis sector, which saw a slight 8% decline in year-over-year deal volume. “It’s an unusual year when nearly every health care services segment bests its prior year performance,” Phillips added. “The year started off with some uncertainty, as the impact of the state and federal healthcare exchanges still wasn’t clear. By the second quarter, deal making picked up as more and more investors entered the healthcare market and raised valuations beyond what traditional investors were comfortable with, in some cases. By the fourth quarter, the market was settling down, however.” 
The Hospital sector, which had two mega-mergers between publicly traded companies in 2013 (Tenet Healthcare/Vanguard Systems and Community Health Systems/Health Management Associates), saw deal volume increase 14% in 2014, to 100 transactions. The number of hospitals involved in the 2014 deals was down 40% year-over-year, to 178. “Some of the deal-making activity in 2014 was a direct result of the mega-mergers of 2013, as Tenet and Community Health realigned their portfolios. It also reflected the growing impact of the Affordable Care Act, and the shift in reimbursement models, toward value-based payments,” Phillips observed. “Smaller hospitals were ready to merge with larger systems in order to stay afloat.”
In other highlights, the Behavioral Health Care sector recorded more transactions than in the four prior years, while the Home Health & Hospice sector experienced some consolidation. The Physician Medical Group sector saw strong interest from outside companies, as nearly $3.2 billion was spent on physician groups in 2014. The 2015 Health Care Services Acquisition Report, Twenty-First Edition, contains more than 300 pages of hard-to-find information on all publicly announced hospital, managed care, laboratory services, physician medical group, behavioral health, home health and hospice care, rehabilitation and other services mergers and acquisitions in 2014. One other services sector, Long-Term Care, is treated separately in The Senior Care Acquisition Report, Twentieth Edition. Irving Levin Associates is a Norwalk, Connecticut-based research and publishing firm specializing in health care investments. The firm has more than 50 years experience in the health care and seniors housing M&A market. The Health Care Services Acquisition Report may be purchased for $595 by calling 800-248-1668

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