TeamHealth plans to pay $1.6 billion for IPC Healthcare

CAL/AAEM News Service calaaem.news.service1 at gmail.com
Sun Aug 9 12:26:38 PDT 2015



 

August 4, 2015

 

TeamHealth plans to pay $1.6 billion for IPC Healthcare 

 

 

 
<http://www.modernhealthcare.com/article/20150804/NEWS/150809978?utm_source=
modernhealthcare&utm_medium=email&utm_content=20150804-NEWS-150809978&utm_ca
mpaign=financedaily> Modern Healthcare

 

 

By Steven Ross Johnson

 

Healthcare staffing firm TeamHealth Holdings on Tuesday squashed rumors that
it is buying IPC Healthcare to stave off its own acquisition. The company
says it's purchasing the hospitalist services provider to broaden a
footprint in both acute and post-acute physician services.

 

The deal to buy the North Hollywood, Calif.-based firm would increase the
number of TeamHealth healthcare professionals to 15,000, and expand
post-acute care offerings to as many as 2,000 facilities across 28 states. 

 

According to TeamHealth Senior Vice President Patricia Ball, the more
diverse network of services will put the company in a better position to
work under a value-based payment model.

 

TeamHealth recently began participating in phase II of Medicare's Bundled
Payment for Care Improvement Initiative, which rewards providers for
outcomes rather than volume. 

 

"(This acquisition) creates a really wonderful physician-focused
organization now," Ball said during a phone interview with Modern Healthcare
on Tuesday. "We already had a hospital medicine service line, and this lets
us grow that." 

 

Some analysts feel there might be more to TeamHealth's acquisition of IPC
than mere growth strategy.

 

"Our gut says something else is going on, and we truly wonder if TMH
(TeamHealth) didn't receive a bid and respond with this deal," said Baird
Equity Research Senior Research Analyst Whit Mayo in an investment note sent
Tuesday. 

 

When asked about that possibility, Ball vehemently denied the suggestion.
"We were not in play," Ball said.

 

The company has been making bids of its own. In 2014, TeamHealth acquired
physician scribe services provider PhysAssist, of Fort Worth, Texas, for an
undisclosed amount. 

 

The financial success of that acquisitions, among others, was cited as the
main driver for a reported 30% increase in total net revenue for the second
quarter, TeamHealth announced Tuesday morning. 

 

Net revenue reached $878 million compared to $675 million for the same
period in 2014, with acquisitions accounting for more than 20% of that
growth.

 

Despite its revenue bump, the company saw net earnings for the quarter fall
to $28.9 million compared to $30.2 million in the second quarter of 2014.

 

According to Greg Charleston, senior managing director for the management
consulting firm Conway MacKenzie, acquisitions like that of IPC follow a
trend of health staffing firms looking to gain leverage with hospitals.

 

"The merger between TeamHealth and IPC may represent a huge change in the
relationship between doctors and hospitals," Charleston said in a statement.

 

A flood of mergers and acquisitions have been led by dealmakers who say they
want to improve quality and reduce costs through greater standardization of
care, more negotiating leverage with suppliers, and bigger investments to
bolster providers' ability to communicate and coordinate care.

 

 

 

Jeff Wells
Deputy Editor, CAL/AAEM News Service

 

Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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