The trend that all collection agencies who work in the healthcare sector have endured for several years now continued to worsen in 2018, as the number of merger and acquisition deals among hospitals increased 14% from 2017’s totals, according to a report issued by PricewaterhouseCoopers (PwC).
There were 1,182 deals in the healthcare space in 2018, and the average quarterly number of deals has exceeded 250 for the past six quarters.
High costs was just one of the reasons listed in the report among factors that are driving such high volumes of M&A activity.
Deals between physician medical groups accounted for 20% of the deal volume and 63% of the deal value in 2018, according to the report. Deals between hospitals accounted for 7% of all the deal volume in 2018. The number of deals among physician medical groups was 11.6% higher in 2018 than a year earlier.
High deal volume is expected to continue in 2019, according to PwC, as more healthcare companies look to build cross-industry models and “build a more consumer-focused industry.”
Collection agencies that work with healthcare providers have been dealing with consolidation for a number of years. Along with a decreasing number of potential clients, healthcare providers are also cutting back on the number of service providers they are working with, making it even more difficult for collection agencies to find new sources of business in this space.