Management Companies Big Players in Practice Acquisitions
Physician practice management companies have re-emerged as big players in physician practice acquisition. In 2011, more than half of the purchasers of physician practices were hospitals and health systems. In 2013, that percentage dropped to just 14% according to PwC US. Overall, the total value of US health services merger and acquisition (M&A) activity reached $12.3 billion during the first quarter of 2014, which is 152% higher than the same period in 2013. According to Brett Hickman, partner with PwC’s Health Industries Group, “Several indicators that we track point to robust M&A activity for the rest of the year… Combined with positive signs we’re seeing in the other health services sectors, we’re optimistic that there will be heightened deal activity in 2014.”
The slow-down in acquisitions by hospitals and health systems and the ramp up in activity by physician practice management companies is expected to continue as specialty groups try to cope with reimbursement changes and high regulatory costs that increase the challenge of running a profitable practice.