While mergers and acquisitions in health care slowed last year, such activity in 1998 was still brisk it was the second-most-volatile year of the decade. Significant increases occurred in the number of dental and medical-specialty practices and institutional pharmacies that traded hands. HMOs are merging steadily, largely because of the industry's realization that it must now generate profits from economies of scale and increased clout, rather than demand further provider discounts. Transactions involving home health care companies, hospitals, and labs dropped off significantly.
Primary care and multispecialty practice sales dropped significantly from 1997 to 1998, while activity involving single-specialty practice management companies picked up; in these cases, pediatric, neonatology, and perinatology practices were most frequently acquired.
SOURCE: HEALTH CARE MERGER & ACQUISITION YEAR IN REVIEW, IRVING LEVIN ASSOCIATES, NEW CANAAN, CONN., 1999