MACRA Is Spooking Physician Medical Groups

With a full quarter left to go in 2016, mergers and acquisitions in the Physician Medical Group sector have caught up to last year’s total number of transactions. In 2015, 89 deals were announced. Through September 26, 2016, the sector’s deal volume has reached 88.

One factor contributing to the increase in activity is the Medicare Access and CHIP Reauthorization Act (MACRA) passed in April 2015. The bipartisan bill took aim at physician practices treating Medicare Part B patients, and awarded those that went with a value-based reimbursement schedule versus those that stayed with the fee-for-service model.

The true impetus, however, came from the aggressive implementation schedule announced by the Center for Medicare and Medicaid Services earlier this year. January 1, 2017 was the target date for all physician practices, large and small, to begin gathering the required data for CMS. In June, that deadline was pushed out to January 2018.

The MACRA effect kicked in earlier this year, as M&A activity built from January through April. Of course, the deal pipelines of the major acquirers, including AmSurg‘s (NASDAQ: AMSG) Sheridan division, Envision Health (NYSE: EVHC), MEDNAX (NYSE: MD) and TeamHealth (NYSE: TMH), were stocked well in advance.

But it is telling that activity is hitting new highs in 2016. It’s anyone’s guess if this year will surpass the most recent high-water mark of 2011, when 115 physician groups were acquired. Stay tuned.