Is Bigger Better?

“Big is going to be better. Small is not going to survive." 

These are the words of an East Coast healthcare exec earlier this year.  Many analysts agree and apparently, so do some healthcare leaders - given the flurry of M&A activity in June/July and 2015.  Consider:

• Mergers / sale of US hospitals (e.g.: Tenet's sale in St. Louis)
• Acquisition of physician groups and/or HC practices
• Target's pharmacy & clinic business sale
• Nursing facility buys (e.g.: Genesis HealthCare)
• Revenue cycle management services acquisition (i.e.: ROI Companies)
• And, the pieces de resistance --- Aetna's $37B BIG BUY

Time will tell if the trend (probably) and pace continues (Check back in a few..).

Walgreens Shopping List...

No specific targets mentioned but the drugstore's new CEO, Stefano Pessina, is forthright in his intention to grow the firm.  >>Read more

What's your best guess on Walgreens' next acquisition?

Aetna Kicks It Off

As part of an expected wave of consolidation, Aetna's deal to acquire Humana is valued at $37B.  And, it's a big one - the largest health insurance merger to date.

If approved by regulators, the merger will combine Humana's Medicare Advantage business and Aetna's diversified portfolio and commercial capabilities to create the second largest U.S. managed care company.  Some of the anticipated results include:

• Higher quality healthcare at lower cost; enhanced convenience for consumers
• Increased Aetna Medicare Advantage membership (to 4.4M)
• Enhanced Aetna pharmacy business
• Strong care management capabilities by leveraging best-of-breed provider solutions

Current Aetna Chairman and CEO Mark Bertolini will lead the combined company.  According to Aetna, the acquisition is expected to close by the summer of 2016.  >>Read more

MinuteClinic Starts to Roll...

CVS MinuteClinic expansion continues… to meet their goal of 1500 clinics by 2017.  

The growth spike will result from the planned CVS Health acquisition of Target's pharmacy and clinic business (47 pharmacies in 47 states).  Target's 80 walk-in clinics will be rebranded as CVS MinuteClinics. Twenty new clinics are planned to open in Target stores within 3 years. >>Read more

Related:

MinuteClinic…Here to Stay

OneSmile, LLC Debuts as New Dental Platform

Dental industry veterans, Steven Bilt and Bradley Schmidt are on track again with San Francisco-based Gryphon Investors.  The recent partnership will focus on building a new company, OneSmile, into a Dental Services Organization (DSO) platform.  Initial efforts will involve acquiring dental practices in the western U.S.

The parties are well acquainted as Bilt and Schmidt were part of the executive team at Smile Brands, Inc. -- a previous Gryphon portfolio company.  The dental duo successfully built Smile Brands from inception to a company with 400+ locations and revenue of $500M.  >>Read more

NextCare Even Deeper in AZ

NextCare Urgent Care extended its reach in the Grand Canyon State with three recent acquisitions.  As one of the nation's largest urgent care providers, it's 35 Arizona locations offers healthcare services to over 90% of state's population.  These acquisitions continue the company's active expansion over the last 12 months…+23 clinics across the U.S.  >>Read more

FastMed Partners with ABRY - Expansion Expected

Private equity firm, ABRY, is set to acquire FastMed, the second largest independent urgent care organization in the U.S.  The acquisition will include FastMed's 87 clinics and the corporate offices in North Carolina and Arizona.  Currently, FastMed employs more than 1,100 - which include physicians, physician assistants and nurse practitioners.  FastMed CEO, Kevin Blank noted:

"The additional capital and management talent that ABRY provides will allow us to significantly expand our geographic footprint and grow organically as well as through targeted acquisitions…."

The transaction is expected to close in the second quarter, 2015.  >>Read more

Drugstore Giant Partners to Offer Telehealth

Walgreens Boots Alliance, the merged drugstore and health retailer, is rolling out a new mobile app.  The latest app goes beyond facilitating Rx refills and a pharmacist chat to enable shoppers to consult with a doctor virtually via smartphone.  (MDLive, a telehealth provider, is Walgreens' partner.)

Already tested in California and Michigan, the app will go live for Illinois Walgreens' shoppers at the end of May.  The virtual doctor app is expected to roll out to 25 states by the end of 2015.  >>Read more

MinuteClinic…Here to Stay

The retail arm of CVS Health - MinuteClinic - reached an impressive milestone.  Since opening its first retail clinics in 2000, MinuteClinic locations have served 25 million patients.  The retail clinic began as an experiment in Nebraska, New Mexico, Rhode Island and Wisconsin and has steadily evolved not only in size but service.  Today, Minute Clinic locations number approximately 1000 with the goal of over 1500 clinics by 2017.  Currently, the clinics offer 65 services and vaccinations (up from treating just 7 illnesses in the beginning).   >>Read more

New Growth Platform for MEDNAX

Virtual Radiologic Corporation (vRad), a leading radiology physician services and telemedicine company will soon provide MEDNAX with another revenue stream.  With the vRad acquisition, expected to be complete in Q2, MEDNAX adds radiology to its current specialty list which includes neonatal, anesthesia, maternal-fetal, pediatric cardiology.  

MEDNAX CEO, Roger Medel, M.D. noted that...

"…vRad is an excellent platform for growth in teleradiology and the broader telemedicine market…“Radiology is a large, fragmented industry… and it is evolving rapidly to include teleradiology as an economic and clinical necessity for customers.” 

>>Read more

✔ FACT:  The market size for Radiology is estimated at roughly $18B annually

Millennials Driving Healthcare Change

Millennials will change the course of healthcare, according to a PNC Healthcare survey conducted in January, 2015.  Note the trends among this demographic group (age 21-32) poised to overtake boomers in buying power...

• Desire for speedy delivery of care (preference for retail clinics)
• Greater reliance on word-of-mouth marketing (e.g. Yelp, Healthgrades)
• More online review of insurance options prior to selection
• Preference for upfront treatment estimates
• Kicking care down the road (due to high medical costs)

>>Read more

PE Partnership to Spur Vet Growth

VetCor, an operator of U.S. veterinary hospitals, now enjoys backing by two private equity firms (Harvest Partners and Cressey & Company) as it continues its growth spurt.  VetCor, one of the few platforms in the veterinary services space, currently manages 137 veterinary hospitals across 19 states.  Dan Adams, CEO & President, will continue to lead the company.   >>Read more

2015 Kicks Off with Home Healthcare Buys

The Ensign Group, a company that provides a variety of home healthcare and rehabilitative services acquired Scottsdale, Ariz.-based, Alarys Home Health.  Alarys has offered home care and home health services since 2003.  The Ensign Group operates in eleven states and over 100 facilities, primarily in the Western U.S.
 

Addus HomeCare Corporation is a long-standing provider (since 1979) of personal and adult day care services.  The company is headquartered in suburban Chicago and operates in 19 states.  Their January 1 acquisition of Priority Home Health Care, Inc. expands their footprint in Ohio with six offices in the Cleveland, Akron and Columbus areas.  >>Read more

And Then There Were Two...

The Chicago metro area is home to roughly 9.5 million people who deal with their share of weekend warrior pains, weather aches or chronic health issues.  Fortunately, there’s an abundance of physical therapists and clinics to address such health concerns.  Interestingly, three of the country’s largest PT platforms also call Chicago home – Athletico, Accelerated and ATI.  While each platform is well entrenched in the area, they have all successfully expanded their footprint beyond the Windy City.

Recent news comes that Athletico and Accelerated Rehabilitation Centers are combining efforts...  An enhanced service level to patients is expected along with a bump up in status among the industy’s top companies.  The larger organization will be led by Mark Kaufman from the Oak Brook, IL headquarters.  >>Read more

Shore Sits Pretty with Vet Platform

Chicago's Shore Capital recently acquired three Southeast animal hospitals to create the animal hospital platform, Southern Veterinary Partners (SVP).  Jay Price, owner of the merged clinics, will lead the general veterinary services practice as CEO from its Birmingham, AL headquarters.   Shore and Dr. Price look forward to building a "best-in-class regional platform" through partnerships with like minded veterinarians.  >>Read more  Mike Cooper, Shore Capital partner and Southern Veterinary Partners Chairman noted: 

"As part of our sector-focused investment approach, we’ve spent significant time studying the veterinary services industry and we are confident that the sector benefits from a number of attractive industry dynamics and is ripe for continued consolidation.” 

Let's Connect in Colorado...

We're headed to Colorado Springs…    
to exhibit at the American Physical Therapy Association's annual meeting for practice owners - 2014 Private Practice Section (PPS). 

The Conference & Expo (Nov 5-8) will be held at The Broadmoor, an elegant hotel near the southern edge of the Rockies.  Stop by to see us at Booth 706 in the PPS Expo Hall on Nov 6 or 7 (Thurs. / Fri.)!  >>More info

CSM 2015 is coming in February - MT Consulting will be there too!

Winning Year for TEAMHealth

October acquisitions add to a productive year for TEAMHealth, the Knoxville-based provider of outsourced physician staffing solutions for hospitals.  Premier Physician Services, the latest acquisition, adds 700 physicians and advanced practice clinicians to the TEAMHealth roster.  Premier physicians cares for one million Dayton area patients annually by staffing 42 emergency departments, 7 hospital medicine programs, 11 occupational medicine programs and 14 correctional care programs.   >>Read more    
Other 2014 acquisitions include:

TeamHealth Partners	Headquarters	Annual Patient Care
-Salutis Emergency Specialists	Martinsburg, WV	ER – 54,000
-Physician Services of Cleveland	Cleveland, TN	ER – 52,000
-Trident Emergency Physicians	Charleston, SC	ER – 120,000
-Teaneck Emergency Physicians	Teaneck, NJ	ER – 53,000
-Heartland Anesthesia Services	Omaha, NE	Anesth. - 10,000 cases*
-Florida Gulf-to-Bay Anesth.  Associates	Tampa, FL	Anesth. - 160,000 cases*
-Emergency Medicine Specialists	Detroit, MI	ER – 400,000
-Primary Critical Care Medical Grp	Burbank, CA	Hospital – 100,000
-PhysAssist Scribes	Ft. Worth, TX	Scribe svcs - 155 ERs

TEAMHealth's acquisition lineup underscores a recent comment by Jeff Swearingen, Co-founder of Edgemont Capital Partners and company advisor:

“Physician practice consolidation has accelerated in 2014 as the rollout of the Patient Protection and Affordable Care Act drives significant change and increased complexity in healthcare…"  

Consistently, executives of new partner companies recognized TeamHealth's depth of resources and strong infrastructure...and the organization's support in meeting the demands of advanced patient care.

3Q Deals Add Up / DaVita Adds On

Just released…
Axial*'s third quarter, 2014 snapshots of deal activity in key business sectors  (Energy, Manufacturing, Healthcare, Tech). 

Source:  Axial

Third quarter deal flow in Healthcare & Life Sciences reached the highest level this year - an increase of 28% quarter-over-quarter.  Healthcare Services deals topped that of other Healthcare subsegments: Facilities, Equipment, Life Sciences Tools & Services, Supplies.  Industry executive,  Brent Earles, suggested that:  

"Many medical groups, independent practice associations, hospitals, and health systems will merge or be acquired. These transactions will drive systems to gain increased access points, greater critical mass, expanded population health management knowledge, and a stronger presence in geographic areas or regions.”    

*Axial is a largest network for professionals who run, advise & finance private companies. >>Read more

Source:  Axial

In fact…
Today's news from Colorado supports Mr. Earles' premise.  DaVita HealthCare Partners announced its intention to acquire Colorado Springs Health Partners (CSHP).  DaVita is a provider of population health and kidney care services.  The completed acquisition will add another multi-specialty medical group with 100+ physicians at 11 locations to the organization.  The  company already manages medical groups in six other states:  California, Nevada, Florida, Arizona, New Mexico, Pennsylvania.  >>Read more

  

Five Points Moves into Tennessee

Five Points Healthcare, a Fulcrum Equity Partners' portfolio company, added another  company in 2014.  The late August acquisition of Nashville-based Willowbrook Health Systems, a provider of home health and hospice care,  adds seven point of service to the Five Points network.  The Five Points family of companies already includes BestCare Home Care, AAA Home Health and Hospice, Paramount Hospice.  Led by CEO Rob Radics, the Five Points management team is focused on becoming the premier provider of home health and hospice services throughout the southeast.  >>Read more

Tele-health Green-Light

Industry stakeholders are applauding Medicare's step toward expanding tele-health coverage with its proposed update to the Medicare Physician Fee Schedule for 2015.  California politicians have also seen the light…The governor recently signed a bill that purports to make tele-health easier for rural patients to use. 

The fact that there is greater acceptance of the technology and approach is not lost among early stage investors…Teladoc, a provider of 24/7 tele-health consultations, is the beneficiary of $50M more in new venture capital funding.

For more information: 
Telemedicine Interest Surges 
Rx for the Future?