Dive Brief:
- Hospital and health system dealmaking fell last year as providers weathered persistent financial headwinds and policy uncertainty, according to a report published last week by Kaufman Hall.
- In 2025, the sector recorded 46 announced mergers and acquisitions, with nearly 70% of deals taking place in the second half of the year, according to the consultancy. In comparison, 2024 included 72 deals.
- Financial challenges continued to drive dealmaking last year. The number of transactions involving a financially distressed party rose to a record high of 43.5% in 2025.
Dive Insight:
Hospital and health system M&A was particularly tamped down in the first half of last year, as providers grappled with an onslaught of policy changes in Washington, according to the report.
Early last year, lawmakers debated massive tax and policy legislation for months that included significant impacts to healthcare. By the summer, President Donald Trump signed many of those changes into law with the One Big Beautiful Bill Act, which included historic cuts to federal healthcare spending, especially for the safety-net insurance program Medicaid.
Millions will likely lose insurance due to the law, according to the Congressional Budget Office. And more people could drop coverage after more generous financial assistance for Affordable Care Act plans expired at the end of 2025 — potentially increasing uncompensated care and lowering providers’ revenue.
Plus, Trump’s tariffs created concerns among health systems that supply costs would increase.
But as the year progressed and providers gained more clarity on the Trump administration’s agenda, dealmaking began to pick up. The sector saw 15 transactions announced in the third quarter, and another 17 in the fourth quarter, according to the report.
Still, the small number of deals and a continuing decline in the size of the smaller party resulted in the lowest total transacted revenue since 2018, at $18.5 billion for the year. More than half came from transactions announced in the fourth quarter.
More distressed hospital M&A reflects financial stress
Meanwhile, financial challenges continued to motivate dealmaking in 2025. The size of the smaller party in financially distressed deals stayed high at an average annual revenue of $345 million. Though that’s a smaller figure compared to 2024, it suggests financial strain is affecting mid-sized and large health systems as well as community facilities, according to Kaufman Hall.
And the financial picture for hospitals could be more dire than the report suggests, given closed facilities or those sold through real estate transactions weren’t included in the analysis.
“The exclusion of these transactions means that the full extent of market stress is likely understated, particularly in rural and underserved communities, underscoring the fragility that persists beneath headline stabilization metrics,” the report’s authors wrote.
