Healthcare Reform Likely to Drive M&A

June 28, 2012

The Deal examined the expected impact of the recent Supreme Court healthcare reform law decision upon M&A.

According to Kaye Scholer Senior Corporate Partner Joel Greenberg, “Provisions such as the prohibition on denying coverage for pre-existing conditions, the employer mandate and exchanges that allow individuals to buy coverage more affordably will be drivers of M&A or private equity investment, too.”

"More private money will be flowing into the system but that money comes with a lot of cost pressure because you have to assume the people coming will be looking for lower-cost options. People who can afford rich plans already have them," he added.

"We're going to see a lot of activity surrounding people who specialize in controlling the costs of medical care," Greenberg explained, listing businesses such as radiology providers or even emergency room services at community hospitals as sample targets for investment.

“These kinds of businesses have the classic elements for private equity: identifiable opportunities that can be achieved with good management and cost controls and opportunities for expansion, all of which can produce a lot of value,” Greenberg concluded.

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