The merger and acquisition pace continued to accelerate in the first quarter of 1996, according to figures compiled by Irving Levin Associates, a New Canaan, Conn.-based financial services firm.
There were 223 transactions in the first quarter ended March 31, up 34% from the previous quarter, according to Levin's Health Care Merger & Acquisition Report.
"For the second time in half a year, healthcare mergers and acquisitions have reached record volume," said Stephen Monroe, a Levin partner. "The number of transactions in the first quarter of 1996 represents a 24% increase over the previous record of 180 in the third quarter of 1995."
The biggest single niche that showed growth was long-term care, which generated 28 deals, up 86.6% from the previous quarter. The largest deal in that segment was Forum Group's acquisition by the senior-care division of Marriott International, Bethesda, Md., for $605 million. Fairfax, Va.-based Forum owns 42 assisted-living facilities in 42 states.
The hospital industry posted the most transactions, although its growth rate was more modest than other segments. The number of hospital deals in the quarter increased 4.2% to 49, Levin reported.
Other activity and the percentage increases: 48 physician medical group deals, up 29.7%; 25 home health deals, up 36%; 16 HMO deals, up 50%; 16 laboratories/MRI/dialysis, up 23%; 12 rehabilitation, no increase; five psychiatric, down 58.3%; and 24 other, up 200%.
The largest hospital deal in terms of dollar value was OrNda HealthCorp's proposed acquisition of Saint Vincent Healthcare System, Worcester, Mass. Nashville, Tenn.-based OrNda also intends to buy a minority stake in Fallon Clinic, a 280-member physician group.
The deal is valued at more than $300 million because the investor-owned chain has agreed to finance a $215 million replacement hospital for Saint Vincent. In addition, Saint Vincent has about $80 million in debt (March 4, p. 12).
Other deals in which prices were disclosed:
The $70 million acquisition of FHP Hospital in Salt Lake City by Paracelsus Healthcare Corp., Pasadena, Calif. That deal was announced in the first quarter, but was completed last week. The hospital is the third Paracelsus purchased in Utah this month.
The $28 million acquisition of Memorial Health Services, Adel, Ga., by Community Care of America, based in Naples, Fla.
The $20 million acquisition of Warren (Ohio) General Health System by HM Health System, Lorain, Ohio.
The $6.1 million acquisition of Smith Hospital, Hahira, Ga., by Community Care of America.