The long-term care sector continued its domination of health-care deals in February, Bloomberg Law’s transactions advisory board says.
Thirty-two long-term care transactions were announced or closed during the second month of the year, double the number that took place in the next-closest sector, health-care information technology, a list compiled for Bloomberg Law by investment bankers ECG Management Consultants and Provident Healthcare Partners LLC shows.
With 61 total long-term care transactions on the year-to-date list, the sector’s off to a strong start in 2019, Hector M. Torres told Bloomberg Law. Torres is a principal at ECG in Chicago.
Private equity investors played a big role in February’s long-term care sector activity, Torres said. Over one-third of the month’s transactions involved private equity firms.
Genesis Healthcare, for example, partnered up with Next Healthcare Capital to complete the sector’s biggest deal. The company acquired the real estate of 15 skilled nursing facilities from Welltower Inc. for $204 million, ECG senior manager Aaron T. Newman told Bloomberg Law.
But the growth isn’t limited to long-term care, Gary W. Herschman told Bloomberg Law. Deal volume throughout the entire health-care industry will continue upward in 2019, he said. Herschman is a member of Epstein, Becker & Green PC in Newark, N.J.
Overall deal numbers will increase, given continuing trends in consolidation, reimbursement rule changes, and technological developments, Herschman said.
Hospitals & Health Systems
Some big deals fell through in February, Herschman acknowledged. Baylor Scott & White Health and Memorial Hermann Health System, for example, called off their merger, ECG’s Nicholas B. Davis reported.
But two billion-dollar transactions closed at the end of February: HCA Healthcare’s acquisition of North Carolina’s six-hospital Mission Health system for $1.5 million and a merger between Catholic Health Initiatives and Dignity Health, Torres said.
The Catholic-Dignity merger creates a $29 billion health system, to be known as CommonSpirit Health. It will include over 140 hospitals in 21 states, making it one of the largest nonprofit health systems in the country, Newman said.
Consumer-centric software developers are drawing investors’ interest in the health IT sector, Yulian Shtern, of Epstein, Becker and Green, told Bloomberg Law. Programs providing solutions to patient engagement problems and allowing for better electronic patient-provider communications especially were in demand, he said.
Platforms developed for use in particular specialties and clinical settings also made for hot targets in February, Shtern said. Buyers went after electronic medical records and financial solutions software tailored especially for clinical research organizations, inpatient facilities, ambulatory care centers, emergency rooms, and post-acute care facilities, he said.
Larger biopharmaceutical companies showed special interest in programs that capture and analyze data, Provident’s Jon Brown, in Boston, told Bloomberg Law. Navitas Life Sciences’s acquisition of DataCeutics is typical of the industry’s sustained push to use data and analytics tools to develop new compounds and increase clinical trial success, he said.
Private equity is making inroads in the health IT space, as well, Brown said.
Radiology was the hot physician practice specialty in February, Herschman said. Consolidation in this sub-sector is likely to continue because regulatory reimbursement trends favor larger outpatient radiology providers, he said.
Among the sizable deals that took place in February was Asheville Radiology’s affiliation with Strategic Radiology, Provident’s Kyle Daly told Bloomberg Law. Strategic has built a collaborative model that allows physician groups to share data and consolidate some expenses, Daly said.
Dermatology practices are another hot specialty, Herschman said. They offer “unique economic advantages” and are attracting private equity investment, because their revenue sources include both elective cosmetic procedures and medically necessary procedures, he said.
Bloomberg Law’s Health Care Transactions Editorial Committee contributed editorial guidance for this report. Members include Gary W. Herschman, of Epstein, Becker & Green PC, Newark, N.J (firstname.lastname@example.org); Paul D. Gilbert, of Epstein, Becker & Green PC, Nashville (email@example.com); Yulian Shtern, of Epstein, Becker & Green PC, Newark (firstname.lastname@example.org); Jonathan Brown, of Provident Healthcare Partners LLC, Boston (email@example.com); Kyle Daly, of Provident Healthcare Partners LLC, Boston (firstname.lastname@example.org); Hector M. Torres, of ECG Management Consultants, Chicago (email@example.com); Aaron T. Newman, of ECG Management Consultants, Chicago (firstname.lastname@example.org); and Nicholas B. Davis, of ECG Management Consultants, Chicago (email@example.com).
Epstein, Becker & Green PC did not comment on any particular transaction or party discussed or listed in this article.
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