Last year was a busy one for the health care services industry—though not all sectors were as active as others.
In fact, the number of health care services transactions rose slightly in 2016, even as the number of deals in the long-term care sector declined, according to the 23rd edition of Irving Levin Associates’ Health Care Services Acquisition Report.
Deal volume for the health care industry’s services sectors increased 1% year-over-year, from 935 transactions in 2015 to 942 transactions in 2016, the report says. The dollar value of those transactions, however, dropped 49% from $140 billion in 2015 to $72 billion in 2016.
Different sectors experienced different levels of deal activity in 2016. Merger and acquisition activity decreased 6% year-over-year in the long-term care sector, but rose 12% year-over-year in the home health and hospice sector and 21% in the rehabilitation sector, the report notes. Deal activity also fell 53% year-over-year in the managed care sector.
Despite its future being up in the air, the continued embrace of value-based care was welcome news to many post-acute sectors last year.
“The continued shift to value-based outcomes and reimbursements benefitted most post-acute sectors in 2016,” Lisa E. Phillips, the report’s editor, said in a press release. “The slow-down in the long-term care sector is the inevitable result of a bull market finally pausing for breath.”
Sectors that were directly impacted by the passage of the Affordable Care Act (ACA) will be directly impacted by its replacement, Phillips added.
“We’re seeing dramatic declines in M&A in the managed care and hospital sectors, early in 2017,” she said. “Depending on the final legislation, more sectors could be impacted.”
Written by Mary Kate Nelson