Large Catholic health systems and for-profit operators continued trimming hospital portfolios in the first quarter of 2026.
Of the 22 announced hospital transactions announced in the first three months of 2026, six involved a for-profit seller and three involved a religiously affiliated seller, according to an April 9 report from Kaufman Hall.
In its 2025 year-end report, Kaufman Hall predicted that portfolio rationalization would continue in 2026. In 2025, 45.6% of all announced transactions involved a divestiture. In the first quarter of 2026, 68% of transactions involved divestitures.
On the for-profit side, the divestitures were largely driven by Franklin, Tenn.-based Community Health Systems, continuing a divestiture strategy that began in the late 2010s with the system pivoting toward “building networks of care — markets where we could leverage our scale and footprint, either within a state or a defined region,” CEO Kevin Hammons told Becker’s.
The deals announced by CHS in the first quarter included the sale of Crestwood Medical Center in Huntsville, Ala., to Huntsville (Ala.) Hospital Health System for $450 million. The systems signed a definitive agreement in January and the 180-bed hospital changed hands April 1.
CHS’ divestiture plan has reduced its debt. The system ended 2025 with its lowest debt levels in more than a decade and generated positive adjusted free cash flow on a 12-month basis for the first time since mid-2022.
“Many of the hospitals we’ve divested didn’t fit into our network-of-care strategy,” CHS CEO Kevin Hammons told Becker’s. “Refocusing has allowed us to hone in on our core markets, where we have the full continuum of care and can truly leverage our scale.”
Deals involving large Catholic systems include Chicago-based CommonSpirit’s plans to sell three North Dakota hospitals to Grand Forks, N.D.-based Altru. That deal builds on an existing buyer-seller relationship between CommonSpirit and Altru. In March, Altru completed its acquisition of CHI St. Alexius Health Devils Lake (N.D.) — a 25-bed critical access hospital — from CommonSpirit.
CommonSpirit’s divestiture process revolves around evaluating market position and market potential, said Lisa Zuckerman, the system’s senior vice president of treasury and strategic investing.
“Is a market better served by us? Or do we think that another organization would provide the community with a better future?” she said.
Renton, Wash.-based Providence plans to sell Queen of the Valley Medical Center, a 198-bed hospital in Napa, Calif., to Fairfield, Calif.-based NorthBay Health.
Providence is undertaking a broader strategy to stabilize finances and sharpen its strategic focus. That plan includes exploring the sale of its insurance arm.
“The exploration is part of our broader strategy to ensure we are best positioned to deliver high-quality care and maintain financial strength,” Providence CFO Greg Hoffman said.
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