Consolidation in healthcare continues to reshape the nation’s hospital landscape. The deals can strengthen financially challenged hospitals, salvage service lines and boost technology investments. But it all comes at a price that doesn’t always trickle down to better outcomes and patient experience.
Among nonprofit hospitals in particular, mergers have been linked to costlier care without proportional gains in quality. A 2022 RAND Corporation review found that hospital mergers can drive price increases ranging anywhere from 3% to 65%, with little evidence of corresponding improvements in outcomes. Despite the lack of evidence boosting quality performance, more transactions are likely ahead.
“As we approach the cuts outlined in the One Big Beautiful Bill Act for 2028, I believe consolidation will accelerate because organizations may not be prepared to handle these changes, making scale increasingly more important as hospital systems adapt,” Pete November, CEO of Ochsner Health in New Orleans, told Becker’s. “When executed effectively, consolidation has the potential to enhance quality, improve patient experiences and deliver better financial results. However, history is full of examples of poorly executed transactions, highlighting the critical challenge for healthcare organizations to plan and implement consolidations successfully.”
That challenge is becoming increasingly urgent. According to Kaufman Hall, hospital transactions rose in the third quarter of 2025, with more than half involving at least one financially distressed partner. All acquirers were nonprofit entities, including three academic health systems and two government-owned systems.
What does this mean for the broader healthcare industry?
“Having started my career in banking, real estate and private equity, the current state of healthcare reminds me of those industries during turbulent times and a strong outlook of M&A,” said Joseph Carr, RN, vice president of supply chain at Akron Children’s. “Declining reimbursements and rising costs are putting tremendous pressure on hospitals and for many, mergers and acquisitions have become a perceived lifeline. Yet in business schools, M&A is often studied as a ‘what not to do’ case study, especially when leaders fail to consider the long-term community impact.”
Kaufman Hall predicts deal activity will continue to grow as margins tighten and smaller hospitals seek partnerships before reaching financial distress. But a merger isn’t always the only solution and might not be the best one long term.
“As the industry faces mounting fiscal pressure, I urge leaders to resist the easy button of consolidation,” said Mr. Carr. “Protecting independent pediatric systems isn’t just about financial stewardship, it’s about preserving access, quality and the well-being of our future.”
John Couris, president and CEO of Tampa (Fla.) General Hospital, shares a similar view on the shifting dynamics ahead.
“I believe that hospital consolidation will continue, but to what extent will vary region to region across the United States,” he told Becker’s. “The same will be true for health systems and physician groups as they continue to focus not only on cost containment, revenue generation and clinical integration, but work to increase scale, diversify services, enhance payer relationships, expand ambulatory care and invest more heavily in digital health.”
Yet, Mr. Couris cautioned that size alone does not guarantee superior care. The long-held assumption that “bigger is better” is eroding as evidence mounts that consolidation often drives up costs without meaningfully improving quality.
“Instead, value creation for the consumer – defined as the patient, payer and employer – must be the central focus,” he said. “Numerous studies have shown that consolidation tends to increase costs without corresponding quality. In fact, as health systems grow, they often become more expensive, and the anticipated efficiencies or improvements in outcomes rarely materialize.”
Research supports that observation. Studies from the Kaiser Family Foundation and RAND have found little to no improvement in quality metrics after mergers, and in some cases, a decline. Even an American Hospital Association-funded study found only modest quality gains — a small decrease in 30-day readmissions but no change.
“This disconnect suggests we are operating within an antiquated paradigm,” said Mr. Couris. “It’s time to rethink the status quo and embrace innovative models that prioritize affordability, access and measurable improvements in patient outcomes. Health systems and health system leaders must ask: how can we deliver higher quality care at lower cost and share the value with the consumer?”
