The number of merger & acquisition deals in the third quarter of 2017 in the Outsourced Business Services category, which includes collection agencies and revenue cycle management firms, was lower in the third quarter, compared with the second quarter of 2017 and the third quarter of last year, according to data released by Corporate Advisory Solutions.
There were seven deals worth $368 million in the ARM sector and the same number of deals worth $465 million in the RCM sector in the third quarter, according to CAS.
Rising debt levels and stable delinquency rates continue to make collection agencies an attractive takeover target, according to CAS. Wrote CAS: Several investors that were involved in the ARM market in the past 10-15 years believe timing is appropriate to re-enter the market. We are also seeing significant interest from fundless/independent sponsors, who are interesting in running a platform in the ARM industry.
On the RCM side of the industry, constant change and uncertainty in the healthcare industry is causing a lot of activity among RCM providers. Rising healthcare costs are putting pressure on medical facilities to keep expenses down and maximize revenues, which is leading to an uptick in the amount of business that is being outsourced to RCM firms. Wrote CAS: This escalation of out-of-pocket costs represents a major revenue cycle challenge for healthcare providers and is the driver of their interest in front-end and tech enabled revenue cycle management. This has driven RCM vendor consolidation, as companies look to develop comprehensive front-end systems that meet the clients’ needs and provide more efficient financial processes and real-time analytics.
The full report from CAS can be accessed here
