Healthcare is a hot industry for both PE and strategic buyers as they navigate new regulatory issues posed by the Affordable Care Act. According to Reuters, healthcare was the second largest industry in the U.S. by deal value for the third quarter of 2013.
The New York Times reports the number of private exchanges has risen. Employees at such companies as Walgreens and Sears are enrolling. Accenture estimates one million people will enroll in private exchanges in 2013 and expects the number to increase to 40 million in 2014.
Although private exchanges are relatively new, we have already seen some consolidation in the industry. Earlier this month, Towers Watson acquired Liazon for $215 million to expand private benefits exchanges for active employees.
Honestly, I’m not surprised to see consolidation in this new product category. With all the changes in the healthcare industry it makes sense for companies in healthcare to “scale up.” As I mentioned a couple of months ago, healthcare regulations have prompted hospitals and suppliers to combine for increased efficiency as they try to find cost synergies through economies of scale.
In fact, it’s natural to think the entire healthcare industry will shift toward consolidation. In this changing landscape, more companies will pursue creative solutions for maximizing value. It seems like private exchanges have already caught on to the trend.