Dive Brief:

• Western Pennsylvania-based Independence Health System plans to join West Virginia University Health System in the fall of next year, the systems announced Wednesday.
• Under the proposed merger, which is subject to regulator reviews and approvals, Independence Health’s five hospitals as well as its affiliated physician groups will operate under WVU Medicine’s brand. 
• The systems say the deal will offer operational and financial efficiencies through resource sharing and allow the providers to expand clinical services and access to specialty care.

Dive Insight:

Partnering with WVU Health could be a financial lifeline. Independence is a young health system, having just formed in 2023 through the merger of Butler Health System and Excela Health. It entered the year attempting to halve its operating losses after running an operating loss in its first year in operations. It has already laid off workers this year. 

WVU Health has committed to investing $800 million over five years to building out Independence’s clinical services and upgrading its facilities. The health systems have zeroed in on upgrading emergency departments at Butler Memorial Hospital and Westmoreland Hospital.

WVU Health System operates 25 hospitals and a network of outpatient facilities in West Virginia, Ohio, Pennsylvania and Maryland. Independence operates just five hospitals, with a combined 925 beds, all located in Pennsylvania. 

For the past several years, health systems have been more frequently turning to mergers and acquisitions in the face of uncertain finances. Consultancy Kaufman Hall flagged the trend at the close of 2023, noting more than a third of hospital transactions involved a financially distressed system.

Since then, M&A has remained a popular option for financially distressed health systems that see operational efficiencies in partnerships with larger organizations. Mergers can offer smaller systems access to increased technology budgets and shared resources, including administrative functions and help with payer denials.

While 2025 saw some early softness in hospital M&A due to market uncertainty surrounding President Donald Trump’s trade and healthcare policies, deal volume has rebounded. Kaufman Hall tracked 15 announced transactions during the third quarter, eight of which involved financially distressed parties.