TeamHealth agreed to buy IPC Healthcare for about $1.6 billion. The all-cash transaction is valued at $80.25 a share, the companies said Tuesday in a statement, reports Bloomberg. That would represent a 37 percent premium to IPC’s closing share price Monday. IPC specializes in providing medical staff for patients who are hospitalized or need additional follow-up care. That will help TeamHealth provide a more diverse set of services as the U.S. government reimburses health-care providers based on the outcomes of treatment rather than individual procedures.
TeamHealth's merger with IPC comes at a time when the U.S. healthcare system is moving toward a value-based reimbursement system through the Medicare bundle payment program, writes Reuters. Traditionally, Medicare makes separate payments to providers for each individual service over the course of treatment. The "bundled payments" initiative aims to link payments for multiple services during an episode of care. TeamHealth is now in a position to bundle up its services and build a full-service presence across the entire care continuum, from emergency care and anesthesia management to specialist services and post-acute care, Leerink Partners analyst Anagha Gupte said.
The healthcare system has seen a major consolidation among hospitals and doctor practices. Kindred Healthcare Inc (KND.N) bought Gentiva Health Services last year, while Skilled Healthcare Group Inc SKH.N bought privately owned Genesis HealthCare. Health insurers have also hopped onto the bandwagon with two big-ticket mergers in July, along with medical device makers and other suppliers, which are also combining rapidly.