Private capital investments in health care provision through mergers and acquisitions: from long-term to acute care.

Int J Health Plann Manage

Department of Health Services Research, CAPHRI, Maastricht University Medical Center, Faculty of Health, Medicine and Life Sciences, Maastricht University, Maastricht, the Netherlands.

Published: October 2016

AI Article Synopsis

  • This research investigates how different healthcare segments attract private investment, revealing varied opportunities for investors.
  • Data from 2563 healthcare merger and acquisition deals in Western Europe from 1990 to 2010 were analyzed to identify trends in targets and acquirers.
  • Findings suggest a declining interest in long-term care facilities as M&A targets, attributed to market saturation, regulatory changes favoring small facilities, and the increasing prominence of general hospitals.

Article Abstract

Objectives: This work aims to test whether different segments of healthcare provision differentially attract private capital and thus offer heterogeneous opportunities for private investors' diversification strategies.

Methods: Thomson Reuter's SDC Platinum database provided data on 2563 merger and acquisition (M&A) deals targeting healthcare providers in Western Europe between 1990 and 2010. Longitudinal trends of industrial and geographical characteristics of M&As' targets and acquirers are examined.

Results: Our analyses highlight: (i) a relative decrease of long-term care facilities as targets of M&As, replaced by an increasing prominence of general hospitals, (ii) a shrinking share of long-term care facilities as targets of financial service organizations' acquisitions, in favor of general hospitals, and (iii) an absolute and relative decrease of long-term care facilities' role as target of cross-border M&As.

Conclusions: We explain the decreasing interest of private investors towards long-term care facilities along three lines of reasoning, which take into account the saturation of the long-term care market and the liberalization of acute care provision across Western European countries, regulatory interventions aimed at reducing private ownership to ensure resident outcomes and new cultural developments in favor of small-sized facilities, which strengthen the fragmentation of the sector. These findings advance the literature investigating the effect of private ownership on health outcomes in long-term facilities. Market, policy and cultural forces have emerged over two decades to jointly regulate the presence of privately owned, large-sized long-term care providers, seemingly contributing to safeguard residents' well-being. Copyright © 2016 John Wiley & Sons, Ltd.

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Source
http://dx.doi.org/10.1002/hpm.2327DOI Listing

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