The year 2018 was a record one for healthcare M&A.

There were 1,900 deals in the space last year, according to Connecticut-based publisher Irving Levin Associates in its 2019 report “Seniors Housing & Health Care M&A in the 21^st Century.”

For buyers, the cool kids on the block were long-term care facilities and physician medical groups, which led the charge for deal-making and consolidation. Despite long-term care’s problems with declining occupancy and higher labor costs, investors still are salivating over baby boomers reaching their 80s and needing a place to stay.

Globally, long-term care had 426 total transactions in 2018, up from 307 the year before. That was followed by physician medical groups at 252 deals, up from 207, according to Irving Levin’s report “The Health Care Services Acquisition Report.”

Home health and hospice also saw an upswing last year, with 82 transactions from 63 in 2017. Irving Levin attributed the growth to a nationwide trend of seeking less-expensive care alternatives to skilled nursing and hospitals. Deal-making has slowed in the early part of 2019 because of uncertainty around changes in reimbursements from the Centers for Medicare and Medicaid Services.

Investors have been optimistic about healthcare for years now, as thousands of baby boomers turn 65 every day, according to Irving Levin. Thinking growth will continue in the healthcare sector, private equity has driven much of this increased M&A activity.

Consolidation is a popular way in the industry to reduce costs and lift the administrative burden on healthcare providers, not to mention grow market share. Physicians, in particular, are opting to become employees or part-owners of these groups, as there is less interest among younger doctors in owning their own practices than there was in the boomer generation, according to Lisa Phillips, editorial director of HealthcareMandA.com for Irving Levin.

“This generation is more interested in having family time and vacations and being employed takes [some of] the burden off in terms of the administrative work,” Phillips says.

Hospitals, which have suffered from competition with out-patient clinics and ambulatory surgical centers, were less popular targets for deals in 2018 than in previous years. There were only 79 announced deals, but the number of bundled hospitals involved in deals spiked to 257.

The largest hospital deals announced last year were RCCH HealthCare Partners’ combination with LifePoint Health for $5.6 billion and IK Healthcare Investment’s private equity purchase of China’s iKang Healthcare Group and its 33 hospitals for $1.6 billion, according to Irving Levin. M&A is tricky in the hospital sector, as “acquired hospitals, on average, experienced a post-transaction decline in operating margins, revenue, and expenses that typically lasted two years,’’ according to a Deloitte review.

It turns out that for a lot of potential investors, that’s a problem.