Healthcare M&A Scrutinized To Define Endgame

Pursuing Scale Through M&A? You Still Need a Local-Market Mindset

(from HealthLeaders)

Deciding whether to merge and managing a post-merger organization can be tricky, even when the acquisition is a good fit.

KEY TAKEAWAYS

- Leaders must consider carefully whether their definitions of success align with what the community needs.

- An operating-company approach comes with cost-cutting potential. But there are tradeoffs.

As mergers and acquisitions among healthcare providers continue at a frenzied pace in certain markets, some healthcare executives are prodding their peers to scrutinize their own M&A motivations more thoroughly.

Physician Practice M&A Transactions Still Hot

No Summer Slump for Health-Care Industry Deals

(from Bloomberg Law)

- July saw most deals closed and announced in 2019

- Physician practice sector led month

There has been no summer slowdown in the health-care industry, as dealmakers amped up the number of transactions they announced or closed in July.

The month outstripped each of the prior six with a total of 161 transactions, according to a list of select deals prepared for Bloomberg Law by investment bankers at ECG Management Consultants and Provident Healthcare Partners LLC.

Physician Practice Acquisitions - Part 1 of 3

A Primer on Hospital and Private Equity Consolidation

(By David Lopez)

For the better part of the last decade, physician practices have seen a wave of consolidation by hospitals and private equity with 2018 being no exception [1]. M&A activity in physician practices continues to grow and outpace other sectors as deals in the healthcare industry are coveted by investors for their strong growth, recession resistance, and superior historical returns. In fact, acquisitions by hospitals and private equity in provider services broke records last year according to Bain & Co’s 2019 global healthcare report.

This is not a new phenomenon as during the 1990s competition to consolidate physician practices reached a feverish pitch with the emergence of Health Maintenance Organizations (HMOs), and the resulting joint ventures formed to integrate and operate acquisitions while adhering to federal and state regulations [8]. It is widely regarded that these earlier attempts at consolidation ultimately failed; however, important lessons were learned by hospitals and private equity evident in how present-day physician practice transactions are structured [10] [26].

The healthcare industry has changed since the 90s as new regulatory frameworks and financial incentives now drive the consolidation we see from hospitals and private equity, which continue to pursue physician practice acquisitions, albeit taking distinctly different approaches and for uniquely specific objectives which this article will attempt to shed some light on in a three part series [21]. 

Orthopedics - The Next Wave of M&A Consolidation

Private equity sees ripe opportunity in healthcare this year

(from HealthcareDive)

Private equity investment in healthcare has ballooned over the past decade, and experts say 2019 is poised to be another robust year, with potential ripe targets in orthopaedics and mental health and addiction treatment.

Private equity deals in healthcare in the U.S. more than doubled over the past 10 years, according to financial data firm Pitchbook. In 2008 there were 325 deals (including buyers and sellers) and in 2018 that number swelled to 788, a record number of deals representing more than $100 billion in total value.

Why Are Hospitals Rolling-Up Physician Practices At A Record Pace?

Hospital Acquisitions of Physician Practices Rose 128% Since 2012

New data shows hospital acquisitions of physician practices are increasing, causing the number of hospital-employed physicians to rise by 70 percent from 2012 to 2018.

(from Revcycle Intelligence)

Hospital acquisitions of physician practices continues to be a strong trend in the healthcare space, according to new data from Avalere Health and the Physicians Advocacy Institute (PAI).

In an emailed press release, the organizations reported that hospitals acquired approximately 8,000 physician practices between July 2016 and July 2018. That number is on top of the 5,000 hospital acquisitions of physician practices from July 2015 to July 2016.

2019 JPM Healthcare Conference Recap – Deals, ACA, Outlook, & More!

(By David Lopez)

The 37th Annual J.P. Morgan Healthcare Conference kicked-off on Jan. 7 with a bang as Eli Lilly and Company (LLY) announced that it would acquire Loxo Oncology (LOXO) for $8 billion. Loxo Oncology will provide Eli Lilly with access to several cutting-edge cancer fighting drugs including those that inhibit oncogenic drivers in cancer. Eli Lilly purchased Loxo at a premium of about 68% or $235-per-share. 

The deal is the second largest biotech acquisition since the start of the new year. The first being Bristol Myers Squibb Co’s (BMY) acquisition of Celgene Corp. (CELG) for $74 billion, which was announced on Jan. 3.

High Valuations Not Detering M&A In Healthcare IT

Healthcare IT Investment is Overvalued, But Will Increase Next Year

(from HealthLeaders)

While most healthcare industry players believe healthcare IT is an overvalued subsector, they still expect investment to rise in 2019, according to the KPMG-Leavitt Partners 2019 Investment Outlook survey.

More than 60% of healthcare professionals view healthcare IT asset prices as overvalued but also expect the subsector to grow faster than the overall healthcare market, according to a new survey released by KPMG-Leavitt Partners Monday morning.