Ontario, Calif.-based Prime Healthcare’s recent acquisitions in Illinois and Maine underscore a deliberate growth strategy leaders describe as a “market cluster” approach: entering or expanding in a region with multiple hospitals to build scale, stabilize distressed facilities and create operational leverage.
Effective Feb. 16, Prime acquired Lewiston-based Central Maine Healthcare, a three-hospital system with a cancer center, a heart institute and more than 40 physician practices. The deal increased Prime’s footprint to 54 hospitals and marked its entry into its 15th state.
The transaction follows Prime’s March 2025 acquisition of eight Illinois hospitals from St. Louis-based Ascension — a deal that also gave the health system a substantial footprint in a new market.
Prime CFO Steve Aleman told Becker’s the Illinois acquisition stood out because it aligned closely with the system’s operating “playbook” and offered what he called a “market cluster presence.”
“The Ascension [hospitals] checked many of the boxes that align with Prime’s acquisition criteria … [and] had several positive attributes that other opportunities lacked,” Mr. Aleman said during a recent episode of the Becker’s Healthcare Podcast.
“The facilities offer material vertical and horizontal service lines, and all have strong patient volumes throughout the system,” he said. “While they are turnaround facilities, several already demonstrate positive EBITDA and operating performance and offer a material opportunity to reduce costs in a way that’s compatible with Prime’s operating playbook, among other advantages.”
Last month, Prime entered into an asset purchase agreement to acquire its ninth Illinois hospital: Franciscan Health Olympia Fields, a 214-bed facility.
Mr. Aleman said Prime’s acquisition strategy centers on growing in line what the health system does best. That means understanding the types of hospitals it operates, adhering to its operating playbook and evaluating potential acquisition opportunities against that framework.
Fit before scale
Over the past several years, Prime has evaluated numerous acquisition opportunities but passed on many that did not align operationally or financially, according to Mr. Aleman.
An attractive deal must fit Prime’s turnaround expertise and allow for immediate capital investment. For example, the Ascension hospitals in Illinois offered vertical and horizontal service line integration, strong patient volumes and multiple facilities within a single geography — factors that support both cost efficiencies and revenue growth.
“Volume is particularly hard to grow and takes time, if it’s achievable at all,” Mr. Aleman said. “An acquisition needs to fit your operating playbook, and you need to make capital investments right out of the gate.”
He pointed to Lynwood, Calif.-based St. Francis Medical Center — a 354-bed hospital that Prime reopened after bankruptcy — as a case study in upfront investment and rapid integration, including implementation of a new EHR system before reopening.
Prime plans to apply the same disciplined diligence and integration process in Illinois, Maine and any future markets it enters.
Cluster scale in new markets
For Sunny Bhatia, MD, Prime’s president and chief medical officer, cross-market expansion adds complexity, but also opportunity.
“We look for hospitals where we believe we can make a meaningful impact, aligning our strengths with those hospitals’ needs — particularly those serving the underserved, facing financial uncertainty or at risk of closure,” Dr. Bhatia told Becker’s.
Rather than pursuing growth for the sake of growth, Prime’s acquisition playbook targets hospitals that are integral to their communities but require additional leadership, capital or operational support. Entering a market with multiple facilities — rather than a single standalone hospital — allows the system to create what executives describe as cluster scale.
In practical terms, that can mean shared leadership oversight, greater purchasing power and potential negotiating leverage with payers. It can also enable “hub-and-spoke” models for clinical services, with specialized programs centralized at a flagship hospital while surrounding facilities support complementary services.
Radha Savitala, a healthcare attorney who advised Prime’s executive team on hospital transactions for more than 10 years, recently co-founded Tenor Health Foundation with a similar goal in mind: rebuilding financially distressed hospitals through a community-first, nonprofit model that rejects the old formula of top-down expansion and debt-heavy deals.
“The traditional notion of simply putting dots on a map and acquiring hospitals doesn’t make sense anymore,” Ms. Savitala said during an episode of the Becker’s Healthcare Podcast. “You need market focus to achieve the economies of scale required for recruitment, supply chain, labor costs and managed care agreements. That’s why Tenor Health Foundation was created: we have individuals who’ve done this nationally and understand both the pros and cons.”
Tenor Health acquired and reopened Sharon (Pa.) Regional Hospital — a former Steward Health Care facility — last year. This month, it acquired three more Pennsylvania hospitals from Franklin, Tenn.-based Community Health Systems.
Ms. Saviyala said expansion into new markets remains on the table, especially in regions that offer meaningful market presence and the potential to achieve economies of scale — an advantage Dr. Bhatia said cannot be underestimated.
“With a strong market presence, you can potentially realize those benefits and ultimately reduce some of the costs of care through a market approach where there is a cluster of hospitals,” Dr. Bhatia said. “As we face rising costs of care and challenges with revenue, improving the top line through a strategic market approach can be beneficial.”
The model is particularly important in an environment marked by rising labor and supply costs, reimbursement pressure and increasing financial strain on standalone hospitals.
Integration beyond operations
Prime leaders emphasize that successful cross-market expansion is as much about culture as it is about operations.
“Integrating hospitals from different markets into a single system is complex. It’s never just about operations — it’s about our people, our trust, our purpose,” Dr. Bhatia said. “While the integration process is challenging, we’ve identified a few key strategies that have proven especially impactful. It starts with upfront investment and being present, being visible.”
In distressed hospitals, Prime conducts thorough operational evaluations and makes early investments in clinical infrastructure and IT systems. Enterprise-wide platforms and standardized workflows are implemented quickly to establish consistency in quality, efficiency and safety.
Equally important is visible leadership.
“Staff want to know: ‘Are you committed? Are you here to stay? What’s your investment strategy?'” Dr. Bhatia said. “These are fair and important questions. We can talk about our commitment, but it’s our actions that reinforce our message.”
Prime leaders say they aim to empower local leadership while aligning each facility around a shared mission of preserving access to care in underserved communities.
“It’s not about making every hospital the same, but ensuring every facility is equipped to provide the high-quality, compassionate care that defines us,” Dr. Bhatia said.
Disciplined growth amid uncertainty
Looking ahead, Prime expects future acquisitions to focus either on expanding within existing markets or entering new ones through the same cluster-based strategy.
Cross-market deals are likely to continue — at Prime and at other health systems — though their pace may fluctuate with regulatory and economic uncertainty, according to Dr. Bhatia. Financial performance, valuations and policy changes can quickly shift the risk profile of potential transactions.
Still, he believes strong operators with disciplined integration processes and operational flexibility will continue to stabilize struggling hospitals.
“The future belongs to organizations that can adapt and thrive with exceptional, passionate leadership and operational strength,” Dr. Bhatia said. “Growth for its own sake is not the objective. It’s about addressing unmet community needs in a way that aligns with a long-term mission and vision.”
