M&A boosted by Health and Social Care Bill


The Health and Social Care Bill is set to drive mergers and acquisitions (M&A) activity which is on track to beat 2011 figures as providers eye up outsourcing opportunities, according to Andy Moore, Partner and Head of Healthcare, at Clearwater Corporate Finance.

There have already been 49 deals in the UK health and social care sector in the first half of 2012, including eight private equity investments and 41 trade acquisitions. This compares to the 93 deals (11 private equity, 82 trade) that were completed in 2011.

Ramesh Jassal, senior healthcare analyst at Clearwater, commented: “The Health and Social Care Bill is creating greater opportunities for independent sector involvement via Any Qualified Provider (AQP). The formation of Clinical Commissioning Groups (CCGs) that will manage 80% of the NHS budget means they will be looking at alternative healthcare providers that can provide a more cost effective solution.

“The market has a bright future for investors. Those who can develop new models with high quality services whilst at the same time delivering cost savings will be the winners in this changing healthcare market, where the demand still outstrips supply.

“Despite the uncertainty that pervades the economy and the changing landscape of the health and social care market, there is continued appetite from sophisticated investors to put money to work in the healthcare market, which is seen as anti-cyclical. These investors have quickly identified the opportunity presented by long-term growth in demand for specialist residential care, home care and increasing delivery of services in the community.

“The large and medium care providers with a ‘war-chest’ of funds are driving M&A activity as they go on the acquisition trail to take advantage of the increase in demand. They are snapping up smaller firms to expand their regional geographic footprint, plug gaps in services, take market share and benefit from the synergies that centralisation provides.”

The report also points to contracts recently awarded to Circle as examples of the NHS becoming more open to using independent providers. These contracts could be used to turn-around underperforming hospitals, operate GP surgeries, urgent care services or deliver community services.