The Federal Trade Commission’s intervention in an Ohio hospital sale is offering health system leaders a clearer look at what regulators may expect when financially challenged hospitals pursue a buyer, particularly when the preferred transaction raises competition concerns.
The FTC said Sept. 2 that its investigation into Columbus-based OhioHealth’s proposed acquisition of Fairfield Medical Center in Lancaster raised “serious competitive concerns,” including risks of higher costs and lower quality. Regulators also questioned how thoroughly Fairfield Medical had searched for other potential buyers and encouraged the hospital to conduct a broader sale process. Fairfield ultimately abandoned the OhioHealth transaction and was acquired Sept. 1 by Chillicothe, Ohio-based Adena Health System, which now has five hospitals.
The case underscores that financial distress alone may not be enough to justify a transaction that regulators believe could diminish competition.
The FTC said staff will look at whether a seller approached a broad pool of potential buyers, gave those parties adequate time and equal access to information, negotiated in good faith and appropriately considered alternatives that posed fewer competitive concerns. Bureau of Competition Director Daniel Guarnera said the agency’s standard for a failing-firm defense is “demanding” and warned that the commission could seek to block a deal if a hospital has not searched broadly for another buyer.
Kaufman Hall M&A leaders told Becker’s the Fairfield case should not necessarily be viewed as evidence of a fundamental shift in hospital antitrust enforcement, though regulatory risk remains one of several factors health systems must weigh when evaluating potential partnerships.
Courtney Midanek, managing director and co-practice leader of mergers and acquisitions at Kaufman Hall, said the broader lesson is that hospitals should preserve multiple strategic options rather than structuring a process around one predetermined partner.
“Systems just need to consider a plurality of options and base that strategic decision on a whole host of factors,” Ms. Midanek said, including “the strategic rationale, financial rationale and best fit for the community and patients.”
That approach could become increasingly important as more hospitals face reimbursement pressure, capital constraints and other financial headwinds while simultaneously considering partnerships or acquisitions. The organizations in the strongest position are assessing their capabilities and financial outlook before circumstances force a transaction.
“The organizations we’re working with — and the ones that we ultimately think are going to be best positioned— are proactively looking internally at their capabilities, financial or otherwise,” Kris Blohm, managing director and co-leader of Kaufman Hall’s mergers and acquisitions practice, told Becker’s.
That includes reforecasting financial performance, improving operations, reprioritizing capital and redesigning care delivery. Partnerships can then be considered as one potential route to close strategic or financial gaps rather than as the only available option.
The scrutiny is arriving as hospital M&A activity continues to build after the pandemic-era slowdown. Ms. Midanek said Kaufman Hall saw deal volume accelerate toward the end of 2025 and continue into 2026, driven not only by financial pressures but also by health systems seeking capabilities in areas such as technology, AI and new models of care.
Those dynamics could produce more large and geographically diverse combinations, even as regulators continue scrutinizing transactions that may reduce competition in individual markets.
Kaufman Hall also expects health systems to become more selective about which assets and service lines they own.
“Systems of all sizes are thinking about and asking themselves whether they need to be in every service line and 100% in every business,” Mr. Blohm said. “And increasingly, the answer may be ‘no,’ even for some of the largest systems.”
That mindset could influence how systems structure deals from the outset: identifying which assets are central to a transaction’s strategic rationale, where partnerships may be preferable to ownership and where alternatives could address competitive concerns.
More broadly, Kaufman Hall expects consolidation to continue. But as transactions grow larger and more complex, Ms. Midanek said health systems need to continually assess their position rather than treating M&A strategy as an exercise conducted once every several years.
“The needle tends to continue to move in the more scaled direction,” she said. “For each organization, they have to look at their own competitive landscape and existing positioning, and juxtapose that with the goals and objectives for how they want to serve their community.”
The Fairfield case adds another consideration to that analysis. A hospital may determine that a transaction is financially necessary, but the FTC has signaled that regulators may also want evidence that the organization seriously explored whether another partner could achieve those goals with less risk to competition.
