It’s been an active year for long-term care transactions, and a leading financial publication has taken notice.
Long-term care led all health care segments tracked by investment bankers in deals for the third quarter of 2018 and the entire year to date, Bloomberg News reported.
Out of 287 transactions announced or closed in the quarter, long-term care accounted for 69, bringing the year-to-date total up to 170.
The dealmaking shows ongoing consolidation in the long-term care sector, and the activity is driven by several factors, according to Bloomberg. These include the health industry’s ongoing shift to providing care in the most cost-effective setting; the aging population; pressure to reduce health care costs by limiting hospital readmissions and improving care quality; and significant financing from real estate investment trusts (REITs), private equity firms, and health care systems.
Bloomberg also singled out hospital system ProMedica’s multi-layered acquisition of HCR ManorCare — in conjunction with the Toledo, Ohio-based REIT Welltower Inc. — as a particularly notable transaction for the quarter.
REITs have taken a fairly active role in the skilled nursing sector throughout the year, but the health care space in general has seen brisk activity. For many of the same reasons the long-term care sector has been active, home health has gathered momentum, Bloomberg said, and hospital and health system transactions are moving at a rapid clip.
Experts have predicted that health care will hit 20% of the total U.S. gross domestic product in just a few years, the publication added.
“As a result of these clear factors and trends, the health care industry will continue to attract substantial investment and undergo greater consolidation, all with goal of building forward-thinking organizations with size and scale, that are clinically integrated across the continuum of care, and that cost-effectively manage the health of populations,” the article concluded.
Written by Maggie Flynn