Merger and acquisition activity in rehabilitation facilities, laboratories, and managed care contributed to an 11% increase in the dollar value of M&A deals in the healthcare industry in 2011, according to Norwalk, CT-based Irving Levin Associates Inc.
The $227.4 billion in deals makes 2011 the fourth-largest M&A year since 2001, in terms of dollars spent. A total of 980 transactions in 13 sectors of the healthcare industry were announced for the year. The figures are preliminary, pending review of additional information such as annual 10-K filings in March.
Sanford Steever, editor of The Health Care M&A Report, told HealthLeaders Media in an interview that the numbers dispute some media stories that have suggested that interest in M&A in declining. That outlook "doesn't reflect reality," he says. A recent HealthLeaders Media survey on M&A interest among C-suite executives indicates that activity will continue at a brisk pace in the coming year. Nearly 80% of healthcare leaders say they will have M&A deals under way or will be exploring deals over the next 12–18 months.
Interest in rehabilitation facilities, which posted an enormous 465% increase in M&A dollar volume to $1.3 billion, is something of a surprise because of declining government reimbursements. But Steever says there are "opportunistic deals" available for companies that are large enough to have their own provider networks, adding that "Companies want to get out of this business, so if you're big enough it's a chance to fill out your provider network."
The lab segment, which also includes MRI and dialysis facilities, reported $5.6 billion in deals—a 145% increase—driven almost entirely by several large deals for dialysis clinics.