Is healthcare ripe for a new M&A boom?

by Anne Zieger on October 28, 2010

With a well defined need in the air– in this case, integration of clinical systems  and personnel — and uncertainty as to how the job will get done,  expect to see waves of self-protective healthcare merger and acquisition activity in the near term.

According to Mark Reibolt, CPA, managing partner and chief executive officer of Coker Capital Advisors of Alpharetta, GA, M&A activity in the healthcare space is starting to pick  up after three years of flatline growth.

While there were only 48 transactions overall in 2009, at a modest median value of $15 million, things have picked up this year, said Reibolt, who spoke at this year’s Medical Group Management Association conference.

In coming months, the need for integration between hospitals, health systems and medical groups is likely to speed up the M&A process further.   Providers need to move quickly in building common clinical systems, figuring out how to share money and streamlining the system of care.

All that being said, only two medical networks have gone public in 2010, Reibolt notes.   And the truth is, as your editor would like to note, IPOs are unlikely to prove much of an engine for healthcare industry consolidation.

As a recent Bloomberg report details, most of the investor money pouring into IPOs is headed elsewhere than the United States.  In fact, during this year, only 11 percent of the IPO deal flow has originated in the United States, the news agency concluded in a recent study.

Where is the money going?  All over the world, of course, but particularly into the Asian markets, Bloomberg said. Perhaps some of the consolidation in the U.S. will be fueled by Chinese or Malaysian IPOs?  Just a thought.

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