More health systems are exploring partnerships with peer organizations that are different from traditional mergers and acquisitions.
In two such announcements Becker’s has covered in July, systems have outright stated that they are not pursuing a change in ownership.
Three of the four deals Becker’s has covered in July, including the aforementioned announcements, cite financial pressure directly, whether from a Medicaid-heavy payer mix or a reimbursement gap. The fourth, in Montana, focuses on limited clinical resources.
The financial backdrop is not abstract. Delayed insurer payments, along with rising workforce and pharmacy costs, are already squeezing hospital and health system margins, set to compound as HR 1 is expected to cut federal Medicaid spending by $90.9 billion in 2029 alone and by a projected $911 billion by 2034.
Amid those pressures, two systems have reached for structures more novel than a standard partnership announcement: an alliance among four organizations and a joint powers authority combining two public health agencies.
St. Christopher’s Hospital for Children in Philadelphia, owned by Tower Health and Drexel University, said July 15 it signed a nonbinding letter of intent to form an alliance with three other health systems: Jacksonville, Fla.-based Nemours Children’s Health, as well as Jefferson Health and Temple Health, both based in Philadelphia. A St. Christopher’s spokesperson said the potential alliance will not be a merger, acquisition or ownership change.
The alliance is intended to strengthen pediatric care across the city. St. Christopher’s serves one of the largest Medicaid populations in the country and is facing significant financial challenges, P. Sue Perrotty, chair of the partners board for the hospital, said in a statement.
“We believe the right time to act is now, by taking proactive steps to build a stronger, more sustainable future from a position of strength,” Ms. Perrotty said. “Our goal is to preserve what makes St. Christopher’s so special while strengthening our operations so our community-focused mission will endure.”
The hospital filed for bankruptcy in June 2019 and was bought out by Tower Health and Drexel University’s partnership for $50 million that same year, a history that helps explain why an alliance, rather than another ownership change, is the path under discussion.
A different kind of partnership was finalized July 1 in California. UC San Diego Health and Escondido-based Palomar Health completed a joint powers authority to form a new system: Palomar UC San Diego Health. It combines Palomar Health’s community-based hospitals with UC San Diego’s academic and specialty resources. A news release described a JPA as a legal entity that allows two public health agencies to jointly run hospitals and clinics.
Palomar Health borrowed $20 million from UC San Diego Health in March 2025 to continue serving patients, and the systems entered into exclusive talks to create the JPA in July 2025.
Two other systems have taken a more conventional route, announcing in July they are exploring partnerships without yet committing to a specific structure.
Minot, N.D.-based Trinity Health said July 9 it is exploring a strategic integration or partnership with a larger health system, citing rising costs as well as reimbursement from Medicare, Medicaid and commercial payers that do not cover them, the same gap squeezing systems nationally.
“The exploration of a strategic integration strategy is about Trinity Health being proactive and visionary,” Trinity Health board Chairman Pat Holien said in the release. “Healthcare is constantly evolving, and the Board wants to ensure Trinity Health can strengthen our services, enhance our resources and position ourselves to continue providing high-quality care for years to come.”
Helena, Mont.-based St. Peter’s Health and Billings (Mont.) Clinic-Logan Health said July 14 they are exploring a partnership to expand local services. They have begun talks on clinical services, workforce development technology, purchasing and other strategic initiatives, but the discussions do not involve a merger or acquisition. Unlike the other three collaborations, neither system cited financial distress as the driver.
“In today’s healthcare environment, partnering is essential for improving access to care when there’s limited clinical resources,” St. Peter’s Health CEO Wade Johnson said in the release. “We believe Montana’s independent health systems can be stronger by working together for our patients.”
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