As health system “megamergers” become more prominent, some state officials are calling for closer scrutiny of deals that would create larger regional and cross-market organizations.
Two major proposed combinations — HealthPartners and Essentia Health in Minnesota, and Atrium Health and WakeMed Health & Hospitals in North Carolina — have recently drawn calls for rigorous regulatory review over their potential effects on prices, competition and access.
The increased attention comes as large, cross-market deals become a more prominent part of the hospital M&A market. Health system megamergers are picking up steam across the country as organizations continue to shift toward multi-region operating models. Health systems are also pursuing these types of transactions to gain scale, diversify risk and strengthen payer negotiations, often in lieu of same-market mergers that face heightened antitrust scrutiny.
However, the growing size of transactions is putting some deals squarely in regulators’ crosshairs.
Minnesota Attorney General Keith Ellison is seeking public input as his office reviews Bloomington, Minn.-based HealthPartners’ proposed acquisition of Duluth, Minn.-based Essentia Health under state healthcare, charities and antitrust laws.
“Proposed healthcare consolidation requires close scrutiny,” Mr. Ellison said Sept. 29. “As we have done several times now, we will conduct a thorough review of this potential acquisition to ensure it complies with the law and is in the public interest.”
HealthPartners and Essentia signed a definitive agreement Sept. 29 that would create a 22-hospital nonprofit system with more than 135 clinics and about 45,000 employees. The systems have said the deal would broaden access to specialty care and support investments in areas including digital health, research, data analytics and workforce development.
The Minnesota review comes as the state experiences a broader wave of consolidation. Sioux Falls, S.D.-based Sanford Health acquired Robbinsdale, Minn.-based North Memorial Health Sept. 1, while Sacramento, Calif.-based Sutter Health plans to acquire Minneapolis-based Allina Health in a deal that would create a 39-hospital organization with about $26 billion in revenue.
Regulatory attention is also building around a proposed North Carolina deal.
North Carolina Treasurer Brad Briner has urged state and federal regulators to examine the proposed combination of Raleigh, N.C.-based WakeMed and Charlotte, N.C.-based Atrium Health, part of Charlotte-based Advocate Health.
“Hospital consolidation leads to less competition and higher prices, and I’m not talking about a rural hospital getting acquired when it desperately needs a lifeline to ensure that rural North Carolinians have access to healthcare,” Mr. Briner said. “I’m referring to when the merger happens as a means of having better market leverage.”
Mr. Briner has called for reviews by North Carolina Attorney General Jeff Jackson and federal regulators, arguing that cross-market transactions warrant particular examination for their potential effects on healthcare costs.
“I’m echoing the call for Attorney General Jeff Jackson to step in and conduct a thorough, independent assessment of this transaction, its effect on prices, competition and access, and I’m hopeful that federal regulators will step in to consider how cross-market mergers like this one harm competition,” he said.
Advocate Health, now a 69-hospital system, has disputed those concerns. The system told Becker’s that three major health systems would continue to compete in Wake County after the transaction and pointed to provisions intended to limit price increases. Advocate also said WakeMed would remain a low-cost provider in the county.
The proposed combination includes a $2 billion investment from Atrium in WakeMed facilities, technology, workforce and care access, along with a $150 million Wake County Whole Health Program and expanded charity care commitments.
The scrutiny reflects a broader tension emerging as systems pursue greater scale. Health systems have cited investments in technology, workforce, specialty care and broader access among the benefits of combinations. On the other hand, state officials and other critics have raised concerns about whether greater market concentration could increase prices or reduce competition.
The issue could become more prominent as larger systems increasingly look for partners.
Kaufman Hall reported that independent health systems seeking partners from positions of strength accounted for two-thirds of second-quarter transactions, suggesting consolidation is not being driven exclusively by financially distressed organizations. Health systems are increasingly evaluating partnerships earlier in their strategic planning cycles rather than waiting until a deal becomes financially necessary, according to Kris Blohm, managing director and co-leader of Kaufman Hall’s mergers and acquisitions practice.
States are also playing a larger role in overseeing healthcare transactions. At least 35 states require notification of certain mergers, affiliations or closures, while several have expanded transaction review requirements. Regulators have at times taken a more flexible approach when financial distress creates a risk of hospital closure.
With megamergers already exceeding last year’s pace through the first half of 2026, the next wave of health system consolidation is likely to bring not only larger organizations, but greater scrutiny of what that scale means for patients, employers and healthcare markets.
