In the last 12 months, healthcare has seen seven megamergers, with two taking place in the first six months of 2022.

UnitedHealthcare announced in March 2022 its intention to acquire home health group LHC Group in Louisiana for $5.4 billion. The month before, Healthcare Realty Trust Incorporated and Healthcare Trust of America announced that they were merging, combining two of the largest holders of medical office buildings.

While the total number over the past year is below beginning 2021 levels, they still outpaced those for 2019 and 2020. Health services deal volume overall dropped 9% from Q4 2021 but is expected to rebound in the coming months, according to a new survey by consulting firm PricewaterhouseCoopers (PwC).

Deal volume across all health service subsectors rose 5%, compared to the previous 12 months, even though their value was down 17%, to about $176 billion. Driving the increase are roll-up consolidation of fragmented subsectors of the healthcare industry. Other drivers are demands for capital efficiency; uncertainty due to supply chain shortages, labor shortages and rising inflation; more technology and retail companies joining the healthcare space; and cyber and data security.

“M&A processes continue to be ultra-competitive and, coupled with rising interest rates and other macroeconomic headwinds, increase the need for post-deal value capture from enhanced capabilities and operating leverage,” said Nick Donkar, U.S. health services deals leader, in a statement.

Long-term care saw 498 deals over the last year, compared to 446 in 2021. Deal value increased 2% to $19.6 billion, despite staffing shortages, vaccine mandate issues and COVID interruptions at skilled nursing facilities. This was attributed to populations living longer.

Physician medical groups saw 482 deals in 2022, at a total value of $5.7 billion. M&A nearly doubled in Q1 2021, as private equity and health systems competed. PE firms say these groups expand them regionally and nationally, while health systems say they grow their market presence.

Additionally, demands for more accessible, alternative care models have bolstered M&A activity. There were 142 home health and hospital deals in the last year, a 19% increase in value from 2021. The UnitedHealthcare-LHC acquisition was a big part of the increase in value.

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