RCM Industry: Q2 2012 Overview

August 7th, 2012

The U.S. healthcare revenue cycle management (RCM) industry continues to experience strong growth despite the challenging economic and market trends unfolding in the U.S. and abroad. This is not only driving interest from strategic and financial buyers, but it is also creating new opportunities for RCM companies to achieve organic growth in new markets and services.

According to the U.S. Center for Medicine and Medicaid Services, spending on healthcare in the U.S. will rise to $3.9 trillion by 2015 from $2.1 trillion in 2011, a roughly 85% increase in four years. And, with the U.S. Supreme Court voting 5-4 that the Obama Care program was constitutional, this plan will move forward and ultimately require a portion of the uninsured U.S. population to either get insurance or pay a penalty for not having insurance. While the upcoming Presidential election will have a significant impact on how much of the Obama Care plan is eventually implemented, regardless of the outcome the healthcare RCM industry will continue to grow and attract buyer interest for the foreseeable future.

Due to its attractive growth trend, the healthcare Revenue Cycle Management (RCM) services industry has been a driver of merger and acquisition (M&A) activity in 2012. There were 13 total transactions in Q2, representing $321 million in deal value. For the first half of 2012 there were 23 transactions that generated more than $450 million in deal value. This level of activity exceeds all of 2011, which produced 10 transactions totaling $159 million in deal value.

We expect this level of M&A activity to continue throughout the rest of 2012, and it may increase due to certain interesting trends that are unfolding in the healthcare RCM industry:

  • Healthcare providers are consolidating and/or joining larger networks, resulting in fewer future client prospects – this may lead to a consolidation phase among RCM vendors
  • The transition to ICD-10 coding is motivating some RCM vendors to acquire this capability, and others to be acquired so they can leverage the capabilities of a larger, more established company – MTBC has acquired three RCM companies this year due to this trend
  • Some RCM vendors have had success cross-selling and up-selling new services to their healthcare provider clients, motivating them to pursue acquisitions of companies that offer new services and clients and enable them to vertically integrate these capabilities into their existing client base

While it is difficult to predict with accuracy what the future will hold in the healthcare RCM industry, I am confident that we will continue to see strong interest from buyers and perhaps an increase in seller opportunities as business owners seek to take advantage of this hot market in time to also benefit from the current low capital gains tax rates.

Read more about RCM industry deals and more, download the Kaulkin Ginsberg Q2 Report here.

Comments are closed.

LATEST BLOGS

New York State Now Offers Free College Tuition: The Potential Beginning of a Major Nationwide Trend

April 27, 2017

The Department of Education contract for debt collection services is one of the most lucrative and sought after contracts today by ARM companies. However, state-level legislation like The Excelsior Scholarship could have profound effects on the student loan market.....

» see this post    » all posts


Non-Employment Index: An Alternative Employment Stat

April 26, 2017

The U.S. unemployment rate is a popular measure for looking at the health of the U.S. economy, but alternative measures like the non-employment index may provide even greater insight. In this blog, Kaulkin Ginsberg's analysts examine the strength of the U.S. economy using this alternative measure and its relation to the ARM industry.....

» see this post    » all posts


Healthcare: The Ever-Growing Industry

April 25, 2017

The healthcare industry is one of the most widely analyzed industries in the US due to its seemingly never ending growth. As such, it's no surprise the ARM industry is so focused on the potential impact of a repeal and replace bill for the ACA. ....

» see this post    » all posts


RECENT ANNOUNCEMENTS

ACA of Texas Publishes "Three Critical Healthcare Industry Trends for Outsourced Business Services" in its Winter 2017 Magazine

March 16, 2017

The ACA of Texas Publishes "Three Critical Healthcare Industry Trends for Outsourced Business Services" by Kaulkin Ginsberg in its Winter 2017 Magazine. Kaulkin Ginsberg details its belief that the growth in patient lending and financing programs, clinical integration networks, and physician quality reporting systems for the Centers for Medicare and Medicaid Services (CMS) could have profound effects on companies focused on servicing healthcare providers in 2017 and beyond.....

» see more




ACA of Texas Publishes "M&A Trends in the U.S. ARM Industry" in its Winter 2017 Magazine

March 15, 2017

The ACA of Texas Publishe "M&A Trends in the U.S. ARM Industry" an article by Kaulkin Ginsberg in its Winter 2017 Magazine. This article examines the key trends and developments driving M&A activity in the U.S. ARM industry by market segment.....

» see more




Mike Ginsberg Leading Panel Discussion at DBA International 20th Anniversary Conference

February 1, 2017

Mike Ginsberg, President and CEO of Kaulkin Ginsberg, will be speaking in a panel discussion on Trends in Debt Buying on Wednesday, February 8th at the DBA International 20th Anniversary Conference in Las Vegas, Nevada....

» see more