11.09.2011: Physician practice purchases already surpass 2010 levels

Hospitals are the most interested buyers, largely because of health system reform, according to a report.

By Pamela Lewis Dolan, amednews staff. Posted Nov. 2, 2011.

The number of physician practices involved in mergers and acquisitions in 2011 already has beat the number consummated in all of 2010, according to an industry survey.

Sixty deals involving physician practices were reported for 2010. By the end of the third quarter of 2011, however, a total of 70 deals were made, according to quarterly reports by Irving Levin Associates, a health care finance market research firm in Norwalk, Conn.

A majority of the deals involved hospitals buying medical practices. Only large, publicly announced deals were included in the report.

Physician practice mergers and acquisitions fell slightly from 27 deals reported in the second quarter of 2011 to 25 in the third quarter.

However, the number of third-quarter deals are nearly double those made during the corresponding quarter of 2010.

Health system reform has been the driving force behind a lot of the merger-and-acquisition activity.

Irving Levin said physician practices were the third-most active segment of health care mergers and acquisitions in the third quarter of 2011. It did not report cash values for those deals.

The individual sector of medical devices posted the highest number of deals at 47. Long-term care took second, with 25 deals.

Biotech and pharmaceutical companies generally rank among the top three sectors, but were down in the third quarter of 2011.

Overall, health care was one of the few industries that hasn’t experienced a slip in merger and acquisition activity this year, said Sanford Steever, editor of Irving Levin Associates’ publication, The Health Care M&A Monthly.

“With an average of $62 billion committed to health care M&A each quarter, and only $19.4 billion needed to equal the $205.3 billion spent in 2010, 2011 is poised to surpass last year’s results by about 20%,” Steever wrote in his report.

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