Companies, particularly in orthopedics, are trying to get complementary technologies and hopefully get cheaper so the products can be cheaper because Medicare often contracts and says we are only going to pay so much for an implant and no more," he says.
The remaining $7.3 billion was accounted to mergers and acquisitions of providers, including hospitals ($3.5 billion), managed care ($1.6 billion, long-term care ($985 million), and physician practices ($416 million). Steever attributes a lot of the activity directly to healthcare reform.
"It's accelerating as hospitals are trying to build up their accountable care organizations."
"So," he said, "I am seeing far more deals involving hospitals acquiring physician groups to meet the needs of the ACOs. Hospitals definitely want to beef up their local and perhaps regional provider networks. They see strength in numbers and you can get efficiencies and economies of scale."
Managed care companies are also anticipating the effect of healthcare reform and attempting to diversify, Steever says. "That is one area that has been thrown into confusion by the implications of healthcare reform," he explained. "You are getting a couple of deals where managed care companies buy other managed care companies. I am seeing more instances of managed care companies diversifying their risk by buying into other sectors. Some are in sectors of technology like E-health, and others are in areas like retail outpatient workers' comp clinics. They're looking to buy services that don't rely necessarily on a managed care model."