Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Phone: (800) 248-1668
Fax: (203) 846-8300
(New Canaan, Connecticut – March 10, 1999) —The preliminary results of a comprehensive research report on the physician medical group merger and acquisition market have just been released by Irving Levin Associates, Inc., publisher of The Physician Medical Group Acquisition Report, Fourth Edition.
The year 1998 witnessed the first decline in the number of mergers and acquisitions of physician medical groups since 1994. The number of announced transactions declined by 16% to 262 while the number of groups acquired fell by 28% to 369. “The M&A activity during this past year serves to remind us that not every year can be a record breaker,” notes to Stephen M. Monroe, a partner at Irving Levin Associates. “Nevertheless, 1998 is still the second most active year we have seen in the medical group M&A market when measured by the number of physicians involved,” continued Mr. Monroe.
The number of physicians affected by these deals dropped by 20% to 23,889 from 1997’s record level of 30,017. But when compared with the 20,287 physicians involved in the 1996 transactions, the 1998 figures represent an 18% increase. “The drop in the number of groups acquired, coupled with the relatively large number of physicians involved, indicates that buyers are now favoring larger groups such as IPAs,” observed Sanford Steever, editor of the Report.
Not only the volume, but the nature of these transactions is changing. “Rather than buy a practice outright, the practice management companies and other players are now seeking to forge looser arrangements such as IPAs or MSOs,” continued Mr. Steever.
The M&A market for physician medical groups cooled off notably during the second half of the year. Of the 20 most expensive deals of 1998, 80% took place in the first half of the year. “The deal volume also fell off because of a number of well-publicized bankruptcies in the PPM sector, as well as several PPMs deciding to get out of the business altogether,” according to Mr. Steever.
“We expect the volume of physician medical group M&A activity in 1999 to remain close to the levels established in the second half of 1998. With continued fragmentation in this sector as well as pressure from payors, physicians will want to bolster their position in the health care delivery system by aligning themselves with companies that represent their professional and financial interests,” concluded Mr. Monroe.
The Physician Medical Group Acquisition Report, Fourth Edition, has more than 170 pages of hard-to-find information on all of the publicly announced physician medical group mergers and acquisitions in 1998. In addition, the Report contains an analysis of transactions by both the type of acquirer as well as the type of target.
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 over 50 years of experience in the health care merger and acquisition market. The Physician Medical Group Acquisition Report, Fourth Edition, may be purchased by calling 800-248-1668.
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