Almost 60% of healthcare investors and operators said industry mergers and acquisitions will either stay the same or decrease in the next year, according to a recent survey.
The survey, conducted by Capital One Healthcare, indicates that 48% of respondents said healthcare M&A will stay the same in the coming year as it has been within the past 12 months, while 10% said it will be lower.
Al Aria, a senior managing director with Capital One Healthcare, said he thinks those results reflect respondents' reactions to the current state of geopolitical uncertainty.
“I don't think it's plateauing from an opportunity standpoint, I think it's very robust right now,” he said. “We're seeing record M&A. I think some people might be questioning how much higher it can go, because we're already at such a high level.”
There's “tremendous” opportunity for companies to grow organically, Aria said. On the payer side, Medicare Advantage could provide a huge boost in covered lives. For some providers, M&A deals can help them truly move into the elusive world of value-based care, which has been slow to catch on.
Other healthcare experts were surprised by the survey's M&A findings, arguing they have not seen indications of a slowdown.
Don McDaniel, CEO of Canton & Co., a healthcare consultancy in Baltimore, said he thinks the trend toward consolidation will continue. Some factors that could be slowing the pace: Health plans are getting so big, they could be running out of targets.
“We may see a redirection toward enabling or enhancing assets,” McDaniel said, “because if you're one of the big health plans, how many more targets do you really have?”
McDaniel said he doesn't think the metric is indicative of a plateau in healthcare deals. “It's a redirection or a level setting,” he said. “You do this crazy consolidation for a while, and then you have a level setting.”
Michael Cole, managing director and healthcare industry leader in Alvarez & Marsal's transaction advisory group, also said his firm doesn't see any signs of an M&A plateau on the horizon. “We see a lot of reasons for why the interest in this space is growing,” he said. “Healthcare continues to grow at a mega level.”