The brakes are on. The number of healthcare mergers and acquisitions plunged almost 42% in the quarter ended June 30, compared with the same period a year ago. The preliminary figures came from Irving Levin Associates, a New Canaan, Conn.-based firm that tracks healthcare transactions.
Irving Levin said 190 healthcare mergers and acquisitions were announced in the second quarter this year, compared with 325 deals in the same quarter last year. The deals included HMOs, hospitals, physician groups and post-acute-care providers.
The decline in the number of deals comes in the wake of the belt-tightening of the Balanced Budget Act of 1997 and other changes in reimbursement.
"People are putting the brakes on deals," said Stephen Monroe, an Irving Levin partner. "They don't have time to worry about deals. They have to worry about their own internal operations as opposed to soon-to-be-acquired operations."
Virtually all healthcare sectors saw a drop in the number of deals.
For hospitals, 41 deals were announced during the second quarter this year, compared with 48 deals in the same year-ago quarter.
The decline in deals by physician groups was more severe. Last year, 78 deals were announced during the second quarter, compared with just 38 deals during this year's second quarter.