What's Happening?
In 2025, the number of hospital and health system transactions in the U.S. fell to 46, the lowest since 2011, according to a report by Kaufman Hall. The total transacted revenue was $18.5 billion, significantly lower than the $39.7 billion recorded in 2024. Despite a late-year increase in dealmaking, driven by four mega mergers, the overall activity was subdued due to financial distress and economic uncertainty. The report highlights a growing trend of financially distressed parties involved in mergers, with 43.5% of deals in 2025 involving such entities. Additionally, there was notable activity outside traditional hospital transactions, with significant deals in ambulatory care, lab services, and behavioral health.
Why It's Important?
The decline in hospital mergers
and acquisitions in 2025 underscores the financial challenges facing the healthcare sector. The increase in financially distressed parties involved in deals reflects broader economic pressures and uncertainties in healthcare policies. This trend could lead to further consolidation in the industry as hospitals seek to stabilize their finances. The involvement of state governments in facilitating and funding hospital deals indicates a growing recognition of the need for strategic interventions to support the healthcare infrastructure. The shift towards acquiring ambulatory care and behavioral health services suggests a diversification strategy to address changing healthcare demands.
What's Next?
Looking ahead, Kaufman Hall anticipates continued activity among financially distressed systems in 2026. The firm also expects the trend of acquiring non-hospital services, such as ambulatory care and behavioral health, to persist. Hospital leaders will need to navigate ongoing financial challenges, including rising expenses and fluctuating patient volumes. The involvement of state governments in hospital transactions may increase, potentially leading to new policies and funding mechanisms to support the sector. As the healthcare landscape evolves, hospitals will likely continue to explore strategic partnerships and mergers to enhance their service offerings and financial stability.
