Spending on home health care and hospice mergers and acquisitions skyrocketed 1,872% to nearly $5.72 billion in 2012 compared to the previous year, according to Irving Levin Associates, Inc., far outpacing the rest of the healthcare industry.

Dealmakers committed $143.3 billion to finance healthcare M&A activity last year, down 38% from the $231 billion spent in 2011 and the lowest amount on record since 2003. However, the home health and  hospice sector bucked the trend of less spending and only minimally higher deal volume.

While the overall number of recorded deals in the healthcare industry rose less than 6% to 1,063, deal volume for home health and hospice rose nearly 21% to 35 in 2012 compared to 29 recorded deals in 2011 for a total of just under $290 million.

“Typically deals in [the home health and hospice] sector are small, and conducted between private companies, so many deals, terms and prices are not made public,” says Irving Levin. “The question of Medicare reimbursement continues to hover, but with the Affordable Care Act beginning to take effect and more and more Baby Boomers expecting home health care services, this sector is poised for even higher growth.”

The biotechnology and eHealth sectors  also saw positive change in deal volume, both increasing more than 30%, even though the dollar amount going into those deals decreased.

In the long-term care industry, M&A activity increased nearly 10% on the deal volume side but fell more than 44% to just under $9.2 billion in 2012.

“Health care M&A activity will stay strong through 2013 as the services sector particularly looks forward to welcoming many more insured patients once the Affordable Care Act fully takes effect on January 1, 2014,” said Lisa E. Phillips, editor of The Health Care M&A Report.

Written by Alyssa Gerace

Alyssa Gerace