Healthcare RCM M&A activity expected to rise in 2017: 9 things to know

Merger and acquisition activity in outsourced business services has remained fairly robust this year, and that level of activity is expected to continue into 2017, according to ACA International affiliate member company Corporate Advisory Solutions in its latest newsletter.

The newsletter offers insights into market trends for the OBS sector, as well as for the specific accounts receivable management, customer relationship management and healthcare revenue cycle management industries.

Here are nine findings from the newsletter.

1. As of Sept. 30, deal value for the OBS sector in 2016 totaled $12.03 billion and comprised 70 announced deals.

2. OBS sector deal value in the third quarter of 2016 totaled $4.37 billion and consisted of 25 announced deals.

3. Total deal values in the OBS sector through the third quarter of 2016 exceeded the total amount from fiscal year 2015 by approximately 72 percent.

4. In the accounts receivable management industry, there were 10 deals in the third quarter of 2016, comprising an estimated $679 million in enterprise value. "An uptick in M&A activity is driven by motivated buyers seeking market and asset class diversification," according to CAS.

5. CAS notes that newly proposed rules by the Consumer Financial Protection Bureau for debt collection are expected to continue to push smaller agencies to sell to larger companies with more compliance resources.

6. Growth has continued in the healthcare RCM sector. In the third quarter of 2016, six deals with an estimated enterprise value of t $499 million were completed in the healthcare RCM sector, according to CAS. "The RCM sector will continue to grow as healthcare costs are expected to increase under the ACA," CAS notes.

7. CAS said healthcare providers are depending on additional RCM support from external vendors as a result of rising healthcare costs. "Therefore, hospitals and physician practices are outsourcing more non-core RCM services to reduce costs and improve operational efficiencies," CAS reports. "This trend will become even more widespread in 2017 as costs continue to rise."

8. CAS also predicts hospitals and healthcare providers will consolidate their RCM vendors when making acquisitions.

9. Overall, "we expect M&A activity in the RCM space to increase as healthcare providers continue to adjust to the changing industry landscape, and vendors seek to partner/join forces in order to better compete for client business," CAS said.

 

© Copyright ASC COMMUNICATIONS 2021. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.