Health Care M&As Lowest in Seven Years

Mar 1, 2001 12:00 PM, J. P. Pieratt

New Canaan, Conn.

Health care mergers and acquisitions for the fourth quarter of 2000 hit a seven-year low, according to health care research and publishing firm Irving Levin Associates.

The health care industry posted 90 transactions for the quarter, a 30 percent drop from the third quarter of 2000 and a 43 percent decline from the fourth quarter of 1999. “During a year of bankruptcies, a volatile stock market and new reimbursement methodologies for Medicare, the health care services M&A market took a beating,” noted Stephen Monroe, a partner and managing editor at Irving Levin.

The services sector drop is attributable to the financial turmoil in the physician medical group, home health and long-term care components of the health care market, according to Sanford Steever, editor of Irving Levin's Health Care M&A Report.

“Three years ago, there were up to 80 transactions in the physician medical group practice market in one quarter, compared to just eight in the fourth quarter of 2000,” Steever said. “Although not as severe, similar declines have occurred in the home health and long-term care segments.” Steever also said that with hospital stocks rising throughout 2000, that market has been relatively active. The hospital segment led all other industry segments in M&As in the quarter with 20.

The home health sector closed only two deals, an 83 percent drop from the 12 deals made in the third quarter. Only the rehabilitation segment, with one, had fewer.