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Published on : Aug 05, 2015

TeamHealth Holdings Inc has decided to buy IPC healthcare Inc for a sum of US$1.4 billion so as to gain more exposure to the market of Medicare bundling and take on more medical employees for supplying to nursing homes in the U.S.

TeamHealth is a company that provides medical employees on contract basis to hospitals and emergency rooms. The deal will allow the company to penetrate in the area IPC specializes, such as assisted living facilities and post acute care.

On Tuesday, IPC’s shares were at a record high while those of TeamHealth were down by 3 percent. The merger of these two companies comes at a time when the healthcare system in the U.S. is making a move towards a more value based reimbursement structure through the adoption of Medicare bundled payment scheme.

Earlier, Medicare made separate payments to medical healthcare providers for all the individual services provided during a certain course of treatment period. The new initiative of bundled payments aims at linking payment for many services together over the period of care.

With the deal, TeamHealth will now be able to bundle its services and come in the market with a new set of services spanning the entire healthcare sector, from post acute care, to specialist services, to anesthesia management to emergency care.

The healthcare system in the U.S. has seen a huge rate of consolidation amongst doctor practices and hospitals. Only last year, Skilled Healthcare Group Inc had taken over Genesis Health Care while Kindred Healthcare Inc. had taken over Gentiva Health Services.

Health insurers have also jumped the bandwagon of the ongoing mergers, along with the mergers between medical device makers and other suppliers. IPC is getting US$80.25 for every share from TeamHealth. In terms of equity portion, the deal is valued at US$1.4 billion. The deal has an enterprise value of nearly US$1.6 billion.