Fourth Quarter Results Show Continued Strength for Industry Mergers and Acquisitions

Trends in the accounts receivable management and healthcare revenue cycle management sectors to watch include technology advancements and initiatives by regulators.

2/8/2018 1:41 PM

Fourth Quarter Results Show Continued Strength for Industry Mergers and Acquisitions

The outlook for mergers and acquisitions in 2018 is strong, ACA International member Corporate Advisory Solutions LLC reports in its latest newsletter

Merger and acquisition activity in the Outsourced Business Services (OBS) industry was high in 2017, according to the newsletter with data on transactions through the fourth quarter of last year.

In 2017, the accounts receiveable management (ARM) sector saw 40 transactions while 27 occurred in the healthcare revenue cycle management (RCM) sector.

“Deal activity in the RCM sector has remained consistent and we anticipate seeing a high level of activity in 2018,” CAS reports in the newsletter. “Technological advances will dominate the conversation for RCM companies and healthcare providers.”

There were 10 deals in the ARM sector in 2017 with an enterprise value of $913 million.

The change in leadership at the Consumer Financial Protection Bureau, outstanding consumer debt levels and contract awards by the U.S. Department of Education are among the trends that played a key role in shaping ARM transactions last year, according to CAS.

Initiatives by regulators, such as the Federal Trade Commission, to stop illegal robocalls, consumer credit delinquency rates and loosening restrictions on technology are all trends for the ARM industry to watch in 2018.

For the RCM sector, CAS anticipates it will remain a popular area of interest for buyers “given its fundamental growth factors and the lack of correlation to the uncertainty weighing over the economy.”

There were four deals in the RCM sector in the fourth quarter 2017 with an enterprise value of $175 billion.

“As the provider/payer driven system is transformed into a consumerism and technology driven system, there is greater interest in tech-enabled RCM companies among financial buyers. Healthcare companies and investors are looking to capitalize on business intelligence and advanced analytical tools to drive their performance in this changing market,” CAS reports.

CAS is watching activity among hospital and physician practices that are outsourcing more “non-core RCM services” and the advance of cloud-based technologies in the marketplace.

“We expect M&A activity and growth in the RCM space to increase as healthcare providers continue to adjust to the changing industry landscape, and vendors seek to partner/join forces to better compete for client business and market diversification.

Overall, CAS reports that continued growth in M&A activity throughout industry sectors is expected in 2018.

Read more insights from CAS in the fourth quarter newsletter here.

Related Content from ACA International:

Third Quarter Results Show Continued Strength in Mergers and Acquisitions

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