U.S. health services M&A total deal value rose 152% to $12.3 billion during the first quarter of 2014 compared to the same period in 2013, according to an analysis of M&A trends and outlook for the health services sector issued by PricewaterhouseCoopers U.S.

"While deal activity held steady during the first quarter of this year compared to Q1 2013, having deal value jump 152% is an indication of renewed confidence in the industry as the dust settles from the implementation of the Affordable Care Act," said Brett Hickman, partner and PwC's U.S. healthcare deals leader. "Several indicators that we track point to robust M&A activity for the rest of the year. The impetus for greater alignment and size remains unchanged in the hospital sector—and for managed care deals, an increase is likely as these companies work to meet the required ACA milestones. Combined with positive signs we're seeing in the other health services sectors, we're optimistic that there will be heightened deal activity in 2014."

The total volume of deals remained consistent with the same period in 2013. From a sector perspective, hospital deal volume experienced a decrease when compared to Q1 2013, down from 21 in Q1 2013 to 12 in Q1 2014, a nearly 43% drop. However, deal value increased from $320 million in Q1 2013 to $388 million in Q1 2014.

According to PwC, the softened deal activity during the first three months of 2014 does not necessarily indicate a slowdown. Hospitals continue to assess strategic alternatives, specifically addressing their market position, long-term strategy and the recent large transactions, which have reinforced a "bigger is better" mentality within the hospital sector.

M&A activity in the managed care sector was up slightly in Q1 2014 as deal volume increased 150% relative to Q1 2013. Deal value was not disclosed for any of the deals announced in Q1 2014.

The long-term care sector started Q1 2014 where it left off in 2013, leading the sectors in both volume and value, as well as making gains over Q1 2013. Long-term care deals highlighted in the quarter, in conjunction with positive operating trends, will continue to build confidence in decision makers and help support strong M&A trends in this sector, according to PwC.

Home health and rehabilitation have started at a slower pace, with smaller volumes and values recorded compared to Q1 2013. There were just two deals in the home health and hospice sector and six deals in the rehabilitation sector.

Physician practice announced deal volumes were slightly down from Q1 2013, with limited values announced. Hospitals and health systems, which tend to acquire primary care physician groups in an effort to maintain referral volume, appear to be slowing down their pace of acquisitions. In 2011, hospitals and health systems accounted for 51% of all physician practice volume, but by 2013 accounted for only 14%. During Q1 2014, physician practice management companies accounted for all nine of the reported deals. The current trend of physician practice acquisitions by physician practice management companies is expected to continue in the near term as specialty-based physician groups look for ways to respond to reimbursement changes and higher regulatory costs of maintaining their practices.

In terms of private equity, pure play providers, hospitals and payer deal counts remain sluggish in Q1 2014 as investors focus on niche markets and services. Large funds, however, have been investing internationally in the sector. Continued private equity interest remains strong in the contract research outsourcing markets.

In other services—those falling outside the hospital, managed care, post-acute care, physician practice and private equity sectors—Q1 2014 had 17 transactions announced with total deal value of approximately $730 million. This compares to 21 transactions in Q1 2013 valued at $2.3 billion. Excluding one major $2.1 billion deal, Q1 2014 exhibits growth from Q1 2013.