Hospital mergers have dropped in the first half of the year

Fewer hospital mergers and acquisitions are taking place this year.

There were only eight reported hospital deals in the second quarter of the year, according to data released Thursday by Kaufman Hall, the healthcare consulting firm. It represents a slight uptick over the first quarter, when only five transactions were announced.

So far this year, hospital merger activity trails the previous year. There have been only 13 deals in the first six months of the year, compared to the 31 announced mergers in the first half of 2024, according to data from Kaufman Hall. The eight transactions announced in the second quarter lags the 11 deals reported in the second quarter of 2024.

The size of the deals taking place also falls short of transactions seen a year ago. In the second quarter, there were no “mega mergers,” or transactions where the smaller organization’s annual revenue surpassed $1 billion.

The average size of deals in the second quarter was $175 million, well below the year-end average of $984 million in 2024, which was the highest in years. The total transacted revenue in the second quarter was $1.4 billion, according to Kaufman Hall.

At the beginning of the year, hospital industry analysts said they expected to see a healthy number of mergers and acquisitions in 2025. Some analysts expected to see more opportunities for mergers with some seeing strategic opportunities, and other systems in distress looking for a partner to ensure their long-term viability.

But with only 13 hospital mergers announced so far this year, it seems likely that the number of deals won’t match or surpass the 72 transactions reported in 2024.

Industry analysts have said they see the potential for a reduction in hospital mergers this year. They note ongoing uncertainty in the economy, coupled with changes in federal policy. Hospitals have also braced for higher supply costs due to tariffs put in place by the Trump administration, since many key supplies arrive from other countries.

Hospitals and health systems denounced the tax package for cutting spending on Medicaid, which they said could lead to more hospitals reducing services or shutting their doors.

Hospitals may be more cautious about mergers in the coming months, Mark Pascaris, senior director and analytic lead for nonprofit healthcare at Fitch Ratings, told Chief Healthcare Executive® in an interview in April.

“I think you're going to see plenty of health systems say, ‘There's a lot of uncertainty out there. We need to put the brakes on.’ That is absolutely a conversation,” Pascaris said.

Analysts say it’s possible that there could be a healthy amount of merger activity, due to some hospitals in especially dire circumstances needing to join with another health system to stay afloat.

Even with the slowdown of activity, some noteworthy hospital mergers and acquisitions have occurred in recent months.

The Beacon Health System has completed its acquisition of four Ascension hospitals in Michigan. Beacon and Ascension announced a definitive agreement in April and completed the deal this month.

Ascension has been divesting some of its hospitals in recent years, but the Catholic health system also 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.

The Tri-Health system in Cincinnati has reached an agreement to acquire Clinton Memorial Hospital, a 140-bed hospital in Wilmington, Ohio. UnityPoint Health has reached a letter of intent to acquire MercyOne Siouxland Medical Center, a 464-bed hospital based in Sioux City, Iowa.

Baptist Memorial Health Care, a non-profit system based in Memphis, and Arkansas Methodist Medical Center have signed a letter of intent to merge.