The Medicare payment system for SNFs has become increasingly broken, a report states.

Long-term care bucked healthcare industry trends with strong merger and acquisition activity in the second quarter of 2014, according to newly released data from professional services firm PricewaterhouseCoopers.

The number of long-term care deals increased 20% in the first half of this calendar year, compared to the same period in 2013, the PwC report states. In most healthcare sectors, deal volume decreased. The “most notable decreases” were seen in hospitals and behavioral health, with volume dropping by 50% for each sector.

“This sector is still leading the health services market in both deal volume and deal value,” the report authors wrote of long-term care. Volume in the second quarter of 2014 was similar to volume from the second quarter of 2013, but the overall value of the deals increased 70%.

Ventas’ $2.6 billion acquisition of American Realty Capital in June was by far the largest transaction of the quarter in long-term care, PwC noted.

Managed care deals also increased substantially in the first half of 2014, with 13 deals this year compared with five last year.

Dealmaking activity is being driven in large part by Affordable Care Act provisions encouraging care coordination and population health management, the PwC analysts wrote. This applies to the hospital sector as well, where there still are “many active discussions” regarding consolidations and mergers despite the recent decline in deal volume.

Click here to access the complete document, which was released Tuesday.