After a slow start, hospital merger activity rises

It took some time, but more hospitals and health systems are pursuing mergers and acquisitions.

There were 15 announced hospital deals in the third quarter of 2025, according to data compiled by Kaufman Hall, a healthcare consulting firm.

The number of deals in the third quarter surpassed the 13 hospital mergers that were reported in the first half of 2025. There were five deals in the first quarter, and eight in the second quarter. Kaufman Hall released the data Wednesday.

Beyond the uptick in the number of transactions, the third quarter also saw the year’s first two “mega-mergers,” deals in which both parties have $1 billion in revenue.

Hospital industry analysts have projected that there would be more mergers in the coming months, even with only a smattering of transactions in the first six months of 2025. Analysts suggested that some organizations wanted to get a better sense of federal policies under President Trump’s administration before pursuing deals.

Anu Singh, managing director at Kaufman Hall, said that with the passage of the tax reform package, “Hospitals and health systems have more policy clarity to inform their growth strategies.”

“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,” Singh said in a statement.

The total transacted revenue in the third quarter was $8.9 million, far surpassing the $1.4 billion in the second quarter, Kaufman Hall said.

Among the deals announced in the third quarter, MUSC Health, the health care system of the Medical University of South Carolina, said it is moving to acquire majority ownership of Tidelands Health, a nonprofit system which operates four hospitals. MUSC Health holds a 30% stake in Tidelands currently.

Hartford HealthCare is making a bid to purchase two Connecticut hospitals owned by Prospect Medical Holdings: Manchester Memorial Hospital and Rockville General Hospital. Prospect filed for bankruptcy in January.

Mark Pascaris, a senior director of Fitch Ratings who studies nonprofit hospitals, says he expects that there will be more hospital mergers and acquisitions in the near future.

With the pending cuts in Medicaid in the coming years, some hospitals, including rural hospitals, may be looking to join health systems to remain viable.

“I think, as a result of this, even partly as a result of this, we'll start to see more M&A activity in the sector,” Pascaris told Chief Healthcare Executive® in an August interview.

Eight of the 15 hospital deals announced in the third quarter involved organizations that were financially distressed, according to Kaufman Hall. About one-third of the hospital mergers in 2024 involved hospitals experiencing financial difficulties.

Health systems are also looking at deals beyond acquiring hospitals, and are looking to acquire or partner with other types of healthcare companies or providers.

Kaiser Permanente announced a deal with Renown Health in September to form a joint venture to operate a health plan and deliver more outpatient care services in Nevada. Baylor Scott & White announced a joint venture with Geode Health to increase access to outpatient mental health services. Sanford Health announced a deal to acquire Lewis Drug, a family-owned chain of 60 pharmacies in South Dakota, Iowa, and Minnesota.

Even with the bump in hospital mergers in the third quarter, it’s highly doubtful that the number of deals will match or surpass the 72 transactions reported in 2024.