There appears to be no end in sight to healthcare merger and acquisition mania, with a record number of transactions reported in the third quarter.
The latest data come from Irving Levin Associates, a New Canaan, Conn.-based financial services firm. In the quarter ended Sept. 30, there were 271 transactions, up 14.8% from 236 deals in the second quarter ended June 30, according to Levin's Health Care Merger & Acquisition Report.
"It's going to keep on going," said Stephen Monroe, a partner at Levin. "The healthcare merger and acquisition market has broken records for three successive quarters. The volume of transactions reached its highest level ever, up 50% from a year ago."
Monroe cited the recovery of the stock market and the fragmented healthcare industry as reasons in the drive to consolidation.
The hospital sector continued to see the most action, with 62 deals, an increase of 44.2% from the second quarter's 43 mergers and acquisitions. The second-largest number of deals was in the physician group sector, according to Levin's report. There were 50 medical group deals, up 11.1%, in the third quarter.
Other activity and the percentage increases: 35 long-term-care deals, up 29.6%; 31 home healthcare deals, down 24.4%; 24 laboratory/MRI/dialysis deals, up 26.3%; 18 HMO deals, up 38.4%; 14 rehabilitation deals, up 7.7%; nine psychiatric deals, no change; and 28 other deals, up 7.7%.
Levin's report includes some hospital leasing agreements. Among the deals in which a purchase price was disclosed, the biggest hospital transaction was Knoxville, Tenn.-based Fort Sanders Health System's proposed $105 million lease of Cookeville (Tenn.) General Hospital. Fort Sanders also agreed to provide $33 million in capital improvements and $350,000 annually for 40 years in donations to community health project improvements. The Cookeville lease is subject to voter approval in the Nov. 5 election (See story, p. 32).
Houston-based Community Health Systems' purchase of Dynamic Health Corp. of Tampa, Fla., was also notable, although the privately held firms didn't disclose a purchase price. Dynamic has five rural hospitals with a total of 446 beds and annual revenues of about $94 million.
Community became privately held after Forstmann Little & Co., a New York investment firm, bought it for $1.4 billion.