Tag: healthcare M&A

Success In Healthcare M&A: The Critical Role of Background Screening  

Valerya Poltorak

By Val Poltorak, head of US Regulated Industries, Sterling

Merger and acquisition (M&A) activity within the healthcare industry has experienced a slow decline over the past couple of years due to the economy’s downturn. However, as we approach 2024, the forecast predicts that M&A activity could rebound. Hospital and health systems are looking for ways to alleviate operational and budget control challenges due to staffing shortages and high wage inflation. In a report by KaufmanHall, hospitals and health systems who underwent M&A in 2023 indicated that financial distress was a key transaction driver.

In this ever-changing environment, healthcare organizations must navigate the challenges, complexities, and risks involved in the M&A process. Some of these risks include omissions of material information, conflicts of interest, verification of credentials, or past criminal activities. To safeguard heath systems’ interests, investments, and reputation, while protecting their patients, an in-depth review and investigation of an organization and its employees should be an integral part of all investment deals.

Mitigate Risk by Introducing Background Screening Providers into the M&A Process

Partnering with a reliable background screening provider early in the M&A process is critical for success. These organizations play a vital role in navigating the complex and often public nature of the process, and can assist healthcare organizations in hitting the reset button on deals and acting as liaisons with the integration teams.

A background screening provider can help hospitals and health systems involved in a M&A by:

The sooner a background screening provider is looped into the developing deal, the better they can position the merging organizations for success.

Digging Deeper: How Due Diligence Can Uncover More Information 

Due diligence is an integral part of all healthcare mergers and acquisitions that go beyond standard background checks. A standard background check is meant to help organizations make an informed selection on job candidates by determining their criminal history and verifying their credentials. Due diligence investigations, on the other hand, seek to take this one step further and uncover information not disclosed by a subject or a business entity. They paint a full picture for your hospital or health system, and can be your first line of defense in protecting your organization from serious financial issues, reputational damage, and even legal repercussions.

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Report: Health IT Sees Nearly $1 Billion in VC Funding in Q3 2014

Mercom Capital Group, a global communications and consulting firm, releases a new report depicting VC funding and mergers and acquisitions activity in the healthcare IT third quarter 2014. According to the report, venture capital funding in the sector came to $956 million raised in 212 deals globally, a decline of 46 percent in terms of dollars compared to the massive $1.8 billion in 161 deals raised in Q2 2014, a rare quarter. Q3 2014 was still the second highest quarter for VC funding since 2010, though, and total VC funding year-to-date is $3.6 billion.

The quarter was dominated by more than 100 funding deals of less than $2 million. There were 252 investors that participated in the quarter including angels, VCs, private equity and corporate VCs. The quarter also included 12 accelerators/incubators.


“Healthcare IT saw another big fundraising quarter in Q3 with almost $1 billion raised. Companies from countries outside of the United States, accounted for a record 21 percent share of the funding. While consumer-centric companies attracted the majority of the funding this quarter, M&A has been a different story with the majority of the deals involving practice-focused companies,” said Raj Prabhu, CEO and co-founder of Mercom Capital Group.

Consumer-focused technologies received 65 percent of all VC investments, with $623 million in 140 deals compared to $678 million in 100 deals in Q2 2014. Areas that received the most funding under this category were mobile health with $345 million in 82 deals followed by telehealth, which had its best quarter, with $101 million in 16 deals; personal health with $85 million in 24 deals; social with $70 million in three deals; and scheduling, rating and shopping with $23 million in 15 deals.

Practice-centric companies received $333 million in 72 deals in the third quarter of 2014, compared to $1.1 billion in 61 deals in Q2. Under this category, the areas that received the most funding were revenue cycle management with $75 million in eight deals, and data analytics with $71 million in 19 deals.

The top five VC funding deals in Q3 2014 were the $70 million raise by DXY (Ting Ting Group), an online healthcare community for medical institutions and healthcare providers in China, from Tencent Holdings Limited, a provider of comprehensive internet services in China, followed by the $52 million raise by Proteus Digital Health, a developer of products and services integrating medicines with ingestible sensors, wearable sensors, mobile and cloud computing.

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PwC’s 2013 Third Quarter Healthcare Mergers and Acquisitions Report Show Small Uptick, but Still Lags Behind 2012

PricewaterhouseCoopersPricewaterhouseCoopers released its 2013 third quarter healthcare mergers and acquisitions report and there a small uptick over the first two quarters in the number of healthcare deals with 138 total transactions so far. The value of the deals announced is $15.8 billion, up 35 percent over the second quarter, but 2013 is still behind 2012 with volume down 4.6 percent and value down a whopping 25 percent.

For-profit deals were up, continuing the serge from the second quarter, marked by Tenet Healthcare Corporation’s proposed acquisition of Vanguard Health Systems for $4.3 billion, and the third quarter opened with the announcement of Community Health System’s $3.9 billion offer to purchase Health Management Associates (HMA).

Hospital Deals

During Q3 2013, deal volume and value were up when compared to Q3 2012 with the total volume of hospital transactions increased 59 percent from 12 in Q3 2012 to 19 in Q3 2013. Overall deal value increased significantly from $38 million in Q3 2012 to $12.3 billion in Q3 2013. This is largely the result of two $1+ billion transactions in Q3 2013.

The two $1+ billion transactions announced in Q3 2013 were responsible for the significant increase in total deal value.

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