Hospital transactions increased in the third quarter amid policy and funding changes, according to Kaufman Hall’s “M&A Quarterly Activity Report: Q3 2025” released Oct. 14.
“Now that the One Big Beautiful Bill has passed, hospitals and health systems have more policy clarity to inform their growth strategies,” said Anu Singh, managing director at Kaufman Hall. “We expect that organizations will continue to seek resilience and growth by investing beyond the hospital and building their capabilities in areas like outpatient care, labs, and health plan management.”
The market activity will likely stay elevated as hospitals redesign their strategic initiatives and move forward with new deals.
“We expect various forms of partnership exhibited in this quarter to continue,” the report authors noted. “These include larger-scaled organizations seeking capability and competency-based affiliation models; sizeable standalone organizations reassessing their long-term future; and for some distressed organizations, a swift pursuit of long-term sustainable parters/acquirers.”
Five things to know:
1. There were 15 transactions announced in the third quarter, up from eight in the previous quarter. Fifty-three percent of the third quarter transactions were divestitures and another 53% included a financially distressed party, which reflects “ongoing realignment in transitioning or relatively less attractive market models,” the report authors noted.
2. The third quarter included two mega mergers – the first mega merges of the year – as the total transacted revenue and seller size increased. Kaufman Hall predicts larger national and super-regional systems may become more selective about their acquisitions and seek larger targets.
3. Transacted revenue hit $8.9 billion for the third quarter, which was six-times higher than the second quarter. However, 2025 still lags behind 2024, where average transacted revenue was $13.3 billion. The average seller size hit $591 million for the quarter amid “renewing energy in the market.” This is an increase from $559 million in 2024.
4. Every acquirer in the third quarter was a nonprofit, and three were academic systems. Two of the acquirers were government owned. “For-profit systems remain focused on portfolio realignment” and seek partners that optimize offerings beyond their core business areas, according to the report.
5. Eleven of the targeted organizations were nonprofits and four were for-profits. Two of the selling systems were religious and one was academic.
“Transaction activity is regaining momentum, but the real story may lie in a new direction for hospital and health system M&A as organizations seek resilience and growth by investing beyond the hospital. Q3 signals suggest that 2026 could mark the beginning of a more active and refocused era of healthcare transactions as organizations translate strategy into execution,” the report authors concluded.
