Healthcare M&A Spending Swells 11% in 2011 to $227 Billion

Last year saw $227.4 billion worth of healthcare merger, acquisition, and takeover activity, representing an 11% increase from the $205.6 billion spend in 2010, according to Irving Levin Associates, Inc.

In terms of financing dollars, 2011 was the fourth-largest year of the past decade, although the actual number of deals announced in the year decreased 3% from 2010, going from 1,007 transactions across 13 sectors of the healthcare industry to 980.

However, this number is expected to rise as more information is released and other deals are brought to light through annual 10-K filings, says Irving Levin.


Of the 13 healthcare sectors, rehabilitation, laboratories/MRI/dialysis, managed care, medical devices, and long-term care saw the most notable dollar volume growth from 2010 to 2011.

Managed care and long-term care also saw positive growth trends in deal volume, led only by physician medical groups, behavioral health.



Source: Irving Levin Associates, Inc.

“We predict that the dynamics of the 2011 market will forge ahead into 2012,” said Sanford B. Steever, Ph.D., editor of The Health Care M&A Report, in a statement. “In particular, we expect to see strong deal making in the four technology sectors as well as in facility-based service sectors, such as Hospitals and Long-Term Care. Despite the rhetoric of repeal, hospitals and other providers will keep pursuing mergers and acquisitions to assemble the component parts for building accountable care organizations.”

However, external factors such as 2012 being an election year may influence the pace of the M&A market, according to Irving Levin Associates’ managing editor Stephen Monroe.

“Deals in provider sectors dependent on government payments will be particularly vulnerable as changes to reimbursement protocols, real or threatened, are bandied about,” he said in a statement. He added that Europe’s debt and economic uncertainty means American companies will lead the healthcare M&A market.

Ultimately, merger and acquisition activity in the healthcare industry is “expected to remain robust for 2012.”

View a list of fourth-quarter acquisitions covered by Senior Housing News, or go here to check out both recently covered acquisitions as well as those dating back to the beginning of 2011.

Written by Alyssa Gerace