Strategic buyers with cost-cutting ideas will drive healthcare mergers-and-acquisitions activity in 2009, although a down year is expected because of the recession and air-tight credit markets, according to panelists at a mergers-and-acquisitions conference in Nashville.
Only buyers who can expect to wring costs out of their acquisition target will make deals in the current environment, said Buddy Gumina, a partner who oversees the healthcare sector for Apax Partners, a private equity advisory firm. "Right now is a very murky time in the hospital sector," Gumina said at the Investment and M&A Opportunities in Healthcare conference run by the International Institute for Business Information and Growth, or iiBIG. Greater patient responsibility for bills, the need for huge investments in healthcare information technology and payer consolidation are all downside risks for hospitals, he said. The opportunities for investor-owned companies, however, include the likelihood of expanded health coverage, the lack of capital access for tax-exempt systems and the ability to leverage investments in quality into greater volume, Gumina said.