Since 2014, there was a gentle enhance in mergers and acquisitions within the Rehabilitation sector, with a complete of 40 offers introduced in 2016. That is nearly double the variety of offers in 2014 (a complete of 21), and contains offers with each publicly traded companies in addition to privately held acquirers. Equally, after seeing a pointy decline in M&A exercise in 2015, the house well being and hospice sectors noticed a rise of 12% in M&A exercise in 2016 with a complete of 57 offers introduced, together with a number of offers involving non-public fairness buyers.
It’s not shocking that the rehabilitation, dwelling well being and hospice sectors noticed a rise in M&A exercise in 2016. With fee more and more tied to high quality of care and outcomes, versus quantity of providers supplied, there was a rising emphasis on care coordination and collaboration between suppliers. This might clarify the rise in M&A exercise throughout the rehabilitation, long-term care and hospice sectors, which stand to profit considerably from collaborating with one another in that such collaboration could lead to cost-savings, minimized danger, and better high quality of care. Certainly, CMS’s adoption of the Complete Look after Joint Substitute (“CCJR”) program (a compulsory bundled fee mannequin for hip and knee replacements) that started on April 1, 2016, is expressly designed to “encourage hospitals, physicians, and post-acute care suppliers to work collectively to enhance the standard and coordination of care from the preliminary hospitalization by restoration.”[1]
Nonetheless, there stays uncertainty as as to if the Trump Administration will proceed the march in direction of value-based care reimbursement, and what impression the Trump Administration’s method may have on M&A exercise in these sectors. Notably, Tom Worth, Secretary of the Division of Well being & Human Companies, who can be answerable for implementing value-based care initiatives, has been a vocal critic of value-based care initiatives, together with the Complete Look after Joint Substitute bundled fee program, and the bipartisan Medicare Entry and CHIP Reauthorization Act (“MACRA”). Nonetheless, the Republican platform, as set forth within the June 22, 2016 “Higher Approach” coverage paper, signifies general help for value-based funds and care coordination. Furthermore, the non-public medical health insurance market is more and more recognizing value-based care reimbursement as an essential mechanism to scale back wasteful healthcare spending. In that regard, there could also be enough motivation for continued M&A exercise in an effort to accomplish extra environment friendly care coordination throughout suppliers. Regardless, in mild of the uncertainty dealing with the healthcare business at the moment, corporations could select to consolidate in an effort to acquire extra leverage within the market.
Whether or not the impetus is to determine collaborative care fashions, or to easily develop bigger in an effort to higher climate the storm, the rise in M&A exercise within the rehabilitation, dwelling well being and hospice sectors appears well-positioned to proceed in 2017.
[1] See, Healthcare Weblog Submit dated March 29, 2017, “CMS Delays Implementation of New Cost Fashions (Once more)” by Kenneth Yood, Esq. and Rachel Landauer, Esq. for info concerning latest delays within the effectiveness of sure amendments to the CCJR program.
