Health systems are looking beyond hospitals for mergers

After seeing only a small number of hospital deals in the first half of 2025, industry analysts expect health systems to pursue more mergers and acquisitions in the coming months.

In the coming months, health systems may be looking to add hospitals, perhaps seeing opportunities in appealing markets or acquiring hospitals or systems in financial difficulty, analysts say.

But hospitals are also looking at acquiring other types of facilities, including outpatient facilities and more home-based services, says Anu Singh, a managing director at Kaufman Hall.

“There are certain health systems right now who may feel and have a point of view that when they look at their strategy, further investment in inpatient capacity may not be where they want to go,” Singh tells Chief Healthcare Executive®.

“They like their geography. They like their sites of care. They like where the hospitals are aligned. They believe they're very valuable assets to their community. They may instead say, ‘We should add more services to what we're doing. Let’s look at at-home services. Let's look at digital services. Let's look at skilled and senior living and patient rehab.’”

Health systems may also be looking to pick up more ambulatory surgery centers and more urgent care facilities.

“Most certainly, we're going to continue to see that,” Singh says. “I think that is without question. Does it mean it's unilaterally right for every organization? No, but I think the movement to diversify revenue streams and to maybe more closely influence links from your community to your health system that don't involve an inpatient episode … I think that has been the trend and will continue to be forward.”

(Analysts from Fitch Ratings talk about the outlook for mergers in this video. The story continues below.)

‘A natural evolution’

During the first half of the year, there were only 13 announced hospital mergers, down from 31 deals in the first six months of 2024.

But Singh cautions that deals involving hospitals merging or acquiring other hospitals are easier to track than systems that may be making deals to build other services, such as digital health or outpatient capacity.

“While we have an easy reference point to look at hospital M&A because of the public nature of their announcement, attorney general reviews, and everything else, it's very easy to track this activity,” he says.

But Singh adds, “There are hospitals undertaking a lot of other types of transactions as well that are not inpatient to inpatient hospital, and those are not as easily tracked. So when we say activity is down … that's partially true, but it doesn't mean the path for transformation is not real.”

“There isn't one type of transaction that's going to direct how industry transformation is going to go. It's going to be multivariate. It's going to be multimodal,” Singh says.

Kevin Holloran, senior director and lead of the U.S. nonprofit health sector for Fitch Ratings, said patient preferences for outpatient services have been going on for more than two decades. So he says it’s logical that health systems would be looking to build or acquire additional outpatient facilities and services.

“It is a hedge bet against uncertainty, but it's also a natural evolution that's been taking place. If you've been in healthcare at all, you've seen it, you've dealt with it,” he says.

Regardless of whether hospitals build more outpatient facilities or look to acquire them, Holloran says, “We're going to do more and more on an outpatient basis.”

Some large health systems have made ambitious moves to acquire more outpatient centers.

Ascension, the Catholic health system, recently announced an agreement to acquire AMSURG and its 250 ambulatory surgery centers. With the deal, Ascension is looking to offer more healthcare options for patients without a hospital stay.

Ardent Health, the for-profit system based just outside Nashville, has acquired more than two dozen urgent care centers in the past couple of years.

‘Improving access points’

Health systems are seeking to give patients more ways to get the care they want, and they need new avenues to connect with patients, says Mark Pascaris, a senior director at Fitch Ratings who studies the hospital industry.

“With most health systems we talk with, increasing and improving access points, is absolutely fundamental to the strategy of just about every health system in America,” he says.

Health systems are looking at adding urgent care centers and other ambulatory facilities for another reason, Pascaris suggests. They’re more appealing to younger adults.

“People under 40, certainly, people in their 20s and 30s who have a different relationship with the doctor and with their hospital than maybe their parents and grandparents did, and they're looking for convenience,” he says. “And a lot of folks in their 20s, maybe even 30s, don't have a primary care physician. They just go to the urgent care center once a year. It's basically in effect, treating immediate care as their primary care.”

Younger adults want to be able to schedule appointments on their phones, or with AI, and go to an ambulatory center nearby with easy access.

“I think the generational dynamic is driving a lot of this,” Pascaris says.

Health systems may be looking to utilize urgent care centers and other outpatient facilities more in the future, as Medicaid cuts take effect in the next few years. Health system leaders expect to see more people without insurance going to hospital emergency departments for basic care. Health systems could seek to develop additional urgent care capacity to ease the demand on strained emergency departments.

“I think one directing patients to where they should go for their care episode, it's something we as a society, we as an industry, could stand to improve on,” Singh says.

Some emergency department volume “could be moved into an urgent care, immediate care setting,” Singh says. “And so that does a lot of things. It alleviates burden and fixed cost infrastructure investment.”