Hospital acquisitions appeared to be back on track in the first quarter of this year after taking a breather in the fourth quarter of 1996.
Total healthcare deals increased 17.3% to 298 in the quarter ended March 31 from 254 in the fourth quarter of 1996, according to Irving Levin Associates, a New Canaan, Conn.-based financial services firm.
"Hospital (deals) are coming back up after taking a dip in the fourth quarter," said Sanford Steever, editor of Irving Levin's Health Care Merger & Acquisitions Report. "There's been a lot of commentary from attorneys general and others on conversions, but Columbia/HCA (Healthcare Corp.) and Tenet (Healthcare Corp.) are becoming acquirers again."
Compared with the year-ago quarter, deals were up 15% in the first quarter from 221.
Irving Levin tracks publicly announced deals and updates its numbers quarterly in case the firm misses transactions announced, but not documented, in previous quarters.
Compared with last year's fourth quarter, hospitals were among the most active dealmakers during this year's first quarter. Acute-care hospital deals increased 72% to 43 compared with 25 deals in the previous quarter. Psychiatric deals were up 76.9% to 23 compared with 13 in the previous quarter.
"The most striking (example) is the psychiatric growth," Steever said. "Psych hospitals are coming on the block again. Where they used to be focusing on outpatient services, acquisition activity is increasing on the acute-care psychiatric side."
Laboratory/MRI/dialysis led the list, however, with 29 deals, an 81.3% increase from 16 in the previous quarter.
Meanwhile, physician group deals dipped 15.3% to 61 from 72 in the fourth quarter of 1996. Irving Levin analysts viewed the dip in physician group deals as an aberration and believe there will continue to be a flurry of group practice acquisitions in the coming quarters. Dealmaking among physician groups surpassed hospital deals in 1996 in terms of volume of deals (March 10, p. 3).
Other activity and the percentage increases: 40 home-care deals, up 37.9%; 26 long-term care, up 4%; 19 rehabilitation, up 26.7%; 12 HMO deals, down 29.4%; and 45 other deals, up 7.1%.