The volume of physician group mergers surpassed hospital transactions in 1996 as healthcare dealmaking continued its feverish pace.
Irving Levin and Associates' latest Health Care Merger & Acquisition Report showed 997 healthcare deals announced in 1996, up 58% from 633 deals in the previous year. The highest volume of transactions came from physician groups, which grew 73% to 218 deals in 1996 from 126 in 1995, according to the New Canaan, Conn.-based firm.
"There was a big surge in physician group practice acquisitions, and there's no letting up in the near term," said Sanford Steever, editor of the report.
In 1996, the number of hospital deals announced was 169, up 27% from 133 in 1995.
Hospitals continued to change hands, but there weren't as many acquisitions of not-for-profit hospitals by Nashville-based Columbia/HCA Healthcare Corp. to keep hospital activity atop Levin's list.
Columbia completed an acquisition or joint venture with 17 not-for-profit hospitals in 1996. By comparison, the chain completed the acquisition of 33 not-for-profit hospitals in 1995.
"Columbia is slowing down a little bit, but we can't count them out," Steever said. "Not-for-profits have taken over in terms of percentage of people doing deals and remain a very big presence."
Levin doesn't break down the number of acquisitions by for-profits and not-for-profit systems, but he estimated "80% of deals" were not-for-profits acquiring or merging with other not-for-profits.
Although hospitals and physician groups led the way in the volume of transactions, other sectors saw triple-digit percentage increases.
HMOs were involved in 62 deals, up 121% from 28 in 1995, while home healthcare transactions jumped 108% to 129 from 62 in 1995.
In other sectors, laboratories/imaging/dialysis centers announced 78 deals, up 53% from 51 in 1995; long-term-care facilities, 120 deals, up 79% from 67 in 1995; and "other" healthcare centers, which announced 125 deals, up 136% from 53 in 1995.
Only two areas saw declines. Psychiatric hospitals announced 35 deals in 1996, a drop of 26% from 47 in 1995, while rehabilitation centers announced 61 deals, an 8% drop from 66 deals in 1995.