Propelled by the search for new drugs to treat the elderly and housing facilities to accommodate them, a total of $54.4 billion was spent to finance mergers and acquisitions in the health care industry during the first quarter of 2011 according to a new report from Irving Levin Associates.

It’s a 65% boost from the first quarter of 2010, which came in at $32.9 billion.

“With renewed sources of capital and novel ways to structure their investments at their disposal, buyers of seniors housing facilities have increased their portfolios so they can accommodate the influx of residents and their health care needs as the population continues to age and retire. The real estate investment trusts have been particularly active in Long-Term Care M&A,” said Stephen M. Monroe, managing editor at Irving Levin Associates, Inc. in a statement.

While the total amount financed increased, the deal volume slipped 16% from the fourth quarter of 2010 and an 8% dip from Q1 2010.

“By annualizing the first quarter 2011 dollar figure, we project that nearly $220.0 billion will be spent in 2011 for M&A activity in the health care industry,” said the report.