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Hospital mergers down in 2009

NEWS IN BRIEF — Posted Feb. 8, 2010

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Fewer hospitals merged last year, and less money was spent on these kinds of deals, according to a report issued by Irving Levin Associates Inc. Jan. 19.

The authors found that 60 hospital corporations merged in 2008, but this decreased 13% to 52 in 2009. The deals in 2008 were worth $2.6 billion; those in 2009, $1.7 billion, a decline of 35%.

The downward trend also was reflected in the health care sector as a whole with only 932 deals in the industry in 2009, down from 1,001 in 2008, although the amount involved increased 3% from $226.8 billion to $232.9 billion. Decreases in hospital mergers were somewhat offset by an increase in mergers of biotechnology, pharmaceutical and e-health companies.

"The national debate over health care reform, which will inevitably impact government reimbursement protocols, has contributed to the slowdown of merger and acquisition activity in the health care services sectors. With service providers unable to predict government reimbursement levels, deal makers cannot easily predict cash flow or establish a ready price for a target business," said Stephen M. Monroe, managing editor at Irving Levin.

Note: This item originally appeared at http://www.ama-assn.org/amednews/2010/02/08/bibf0208.htm.

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