Healthcare M&A activity for North American based target companies in the Healthcare sector for Q2 2016 included 122 closed deals, according to data published by industry data tracker FactSet. The average transaction value was $332 million.
A growing number of insurers and health providers are transitioning to value-based reimbursement methods, with the goal of containing costs and improving care. While fee-for-service reimbursements are still the primary mode of payment for US health care providers, insurers are making progress on goals to switch over to value-based contracts. Value-based payment systems include quality incentives, accountable care models, network management, and bundled payments. The US Department of Health and Human Services (HHS) is on track to meet its goal of tying 30% of traditional Medicare payments to value-based payments by the end of 2016, as well as higher targets over the next several years. Commercial insurers are also adopting new payment models; Aetna is aiming for 75% of spending through value-based contracts by 2020. According to a recent survey by McKesson reported by Healthcare Dive, hospitals are about 50% along the continuum towards full value-based reimbursement. However, challenges remain in areas including process automation and payer-provider collaboration. A majority of surveyed hospitals were not yet meeting value-based reimbursement goals including lower costs, better care coordination, and improved patient outcomes.
Industry Indicators
- US consumer prices for medical care commodities, an indicator of healthcare costs, increased 3.2% in June 2016 compared to the same period in 2015.
- US consumer prices for medical care services, an indicator of profitability for healthcare services, rose 3.8% in June 2016 compared to the same month in 2015.
Posted by Peter Heydenrych.