Hospital mergers and acquisitions hit the brakes last year.
The number of publicly announced deals dropped 27% to 146, compared with 199 in 1997, according to preliminary data from Irving Levin Associates, a New Canaan, Conn.-based firm that tracks healthcare transactions.
"There had been so much in the past three to four years, it really couldn't continue at that pace," said Stephen Monroe, a partner at Levin.
The results mirror the trend found in MODERN HEALTHCARE's annual hospital merger report, which found that the number of transactions dropped to 198 last year from 217 in 1997 (Jan. 11, p. 48).
Overall, publicly announced healthcare transactions, including hospitals, physician groups, HMOs and post-acute-care companies, decreased 11% to 1,131, the firm's numbers show (See chart).
For the quarter ended Dec. 31, 1998, healthcare transactions were down almost 30% to 206, compared with 294 in 1997.
Some sectors saw significant declines in the number of deals.
For example, the number of transactions involving physician groups dropped 17% last year to 256. For the fourth quarter alone, the number of physician deals was down almost 44% compared with the year-ago period.
Contributing to the decline were financial difficulties at some physician practice management companies.
"The physician market went into a tailspin in 1998, as did the home health market," Monroe said.
Home health deals decreased 39% last year to 83 transactions.
While the number of home health deals declined, the number of long-term-care transactions rose 26% to 144.
Monroe attributed the increase to an aging population, which keeps investors interested in buying long-term-care operators.