Hospital and health system merger and acquisition activity is trending back toward pre-pandemic levels, according to a Dec. 19 report from Kaufman Hall.
Six things to know:
1. Q3 M&A activity picked up. Fifteen hospital and health system transactions were announced in the third quarter of 2025, up from eight in Q2 and five in Q1, according to the report. Kaufman Hall said the increase reflects a return to historical activity levels.
2. 2024 set the stage for recovery. In 2024, 72 hospital and health system transactions were announced, reflecting a post-pandemic rebound with renewed interest in strategic growth and portfolio optimization.
3. More than half of Q3 transactions were divestitures. Eight of the 15 deals in Q3 (53%) involved divestitures, consistent with 2024 trends, according to the report. Many systems are exiting non-core or underperforming markets as part of realignment strategies.
4. Financial distress continues to drive deals. Eight of the 15 Q3 transactions also involved a financially distressed party, highlighting the continued fiscal pressures facing hospitals and health systems.
5. Large-scale mergers are reemerging. Q3 saw the first two mega-mergers of 2025 and a rebound in seller size and total transacted revenue. Kaufman Hall analysts believe this is a sign that bigger, more transformative deals may be returning to the landscape.
6. Policy clarity is boosting confidence. The passage of the One Big Beautiful Bill Act in July helped reduce regulatory uncertainty and appears to be influencing hospitals and health systems to reengage in M&A discussions and execution.
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