More hospital mergers expected in 2026, but uncertainty persists

After a drop in hospital mergers a year ago, analysts in the healthcare industry are expecting to see more health systems pursuing deals in 2026.

In 2025, there were 46 announced hospital mergers or acquisitions, and that’s the lowest number in 15 years, according to Kaufman Hall, a healthcare consulting firm. By comparsion, there were 72 mergers in 2024. There were only a handful of deals in the beginning of the year, but merger activity picked up in the second half of the year.

Theoretically, it shouldn’t be hard for the number of deals to eclipse the small number of transactions in 2025. But some analysts say they are enthusiastic about the uptick in hospital mergers and acquisitions in the year ahead.

Anu Singh, managing director at Kaufman Hall, tells Chief Healthcare Executive® that the industry has already seen some momentum. He says now that health systems have a better sense of the Trump administration’s policies and are less reluctant to move ahead with deals after the passage of the HR 1 tax package.

“This was a period of time where momentum was suspended so we could go through this bill, and now we're back on the trajectory we were before,” Singh says.

“I think overall, across all channels, we're going to see increased levels of M&A,” he says. “Going forward, the momentum is going to continue and probably increase, and that's because hospitals themselves, right now, have determinations about their future going forward.”

While other analysts say they expect to see more deals in the coming year, some have differing views on the level of hospital merger activity and say there is uncertainty in the year ahead.

(Check out this video on the hospital merger outlook. The story continues below.)

Talking about deals

KPMG recently surveyed healthcare and life sciences executives about their expectations for deal making in 2026. A majority of healthcare leaders (61%) said that they expected to pursue more deals this year, while nearly 3 in 4 (73%) of life science leaders planned to pursue more deals.

Drew Corrigan, KPMG’s U.S. Sector Leader for Healthcare, told Chief Healthcare Executive® in a recent interview that he was a little surprised to see a majority of hospital leaders say that they expect to pursue more deals.

“With all the crazy headwinds that I see over this last year on the healthcare side, there’s still a pretty good, bullish view on M&A and transactions and opportunities for growth, even among the healthcare entities,” Corrigan says.

But he acknowledges healthcare leaders are “much more measured” in their outlook for mergers than those in life sciences.

Kevin Holloran, a senior director and the sector leader of the nonprofit healthcare group at Fitch Ratings, says there are plenty of people who expect that hospital merger activity is going to “shoot through the roof.” But in a Fitch Ratings webinar on nonprofit hospitals last week, Holloran said, “I am not one of them.”

“My gentle pushback is, I think there are a lot of people talking about M&A activity,” he says. “They want to partner for the dance, so to speak, they want to partner in the periods that's coming up that's going to require a lot of credit strength to help them.”

But he says, “I think you're going to see a lot of talk about M&A, but I don't think you're going to see a whole lot of activity, just over the near term.”

But Holloran also said some larger health systems in recent years have looked at their footprints and moved to divest hospitals in areas where they aren’t leading the market and others are able to provide similar services.

“You're starting to see those organizations publicly announce or do complete exits from markets where they don't have that essentiality, that density, we sometimes refer to it,” he says.

Dan Farrell, PwC’s U.S. health services deals leader, tells Chief Healthcare Executive® that he sees more health systems taking a closer look at their core businesses and divesting some services where they are seeing fewer returns.

“What you see now are corporate strategy departments trying to focus on what they do best and really make the investments in that one particular area,” Farrell says. “And where they see opportunities to shed particular assets that might be either distracting them from their core strategy or just offering lower returns, they're taking the opportunity now with a better exit environment to exit those businesses.”

• Read more: West Virginia health system plans to acquire 5 Pennsylvania hospitals

Driven by distress

Michael Abrams, managing partner at Numerof & Associates, tells Chief Healthcare Executive that some healthcare leaders were taken aback by the number of changes in federal health policy changes implemented by President Trump’s administration, particularly early in the year. Health systems saw “policy missiles coming at them from every direction,” Abrams says.

As a results, hospitals and health systems paused on merger plans - and other major initiatives - as they adjusted to the new landscape.

When it came to merger activity, Abrams says, “I would liken it to one foot on the brake and one foot on the gas.”

Nearly half (43%) of the hospital mergers and acquisitions that took place in 2025 involved an organization in distress, according to Kaufman Hall. With some notable headwinds facing hospitals, and some smaller systems and rural hospitals struggling, they may be looking to partners for a lifeline.

“The remaining organizations that are independent are seeing more distress themselves,” Singh says.

Singh says it’s not necessarily a case of larger health systems looking for vulnerable targets. Rather, with more hospitals seeing financial pressures, they are going to be more open to joining with larger organizations.

“The whole industry is getting more distressed,” Singh says. “Of course you're going to get more distressed transactions. … I think what we're seeing is more distress in the industry as a whole, with a consistent number of transactions.”

Analysts also say that some health systems that are struggling but aren’t yet in a precarious situation may be more apt to look for partners, before they start facing dire circumstances that may make them less appealing.

With more clarity on financial policy and some health systems looking at troubling balance sheets, Abrams says he could see more distressed systems pursuing deals.

“There are institutions that are losing money, and as time goes on and everybody is waiting, they can't wait a whole lot longer. So you're going to see some distressed sales over time,” he says.

Farrell says that he sees growing pressures on some health systems pushing them to consider deals.

“I think the margin pressure for health systems and standalone hospitals, particularly those in more suburban or rural areas, I think that's going to continue into 2026,” Farrell says. “But that's been that's been present for a few years now, and I don't see that stopping anytime soon.”

Looking beyond hospitals

Some systems and hospitals may be looking at deals with other hospitals. But analysts generally agree that health systems may also be looking beyond hospitals for potential mergers and acquisitions.

“There's a significant amount of increase also in hospital and non-hospital partnerships,” Singh says. “So hospitals with urgent care providers, hospitals with physician practices, hospitals with ambulatory surgery centers.”

Those areas could help health systems find more opportunities to grow. Analysts also expect hospitals will look for partners in helping expand telehealth services, particularly in rural areas, and in expanding AI capabilities.

Singh suggests plenty of hospital merger activity will be driven by strategy, as well as those in distress.

“I think there are organizations that are going to be more focused on a flight to safety and security if they’re on the distressed side,” Singh says. “And if they're on the strategic side, I think they're going to be motivated by growth initiatives and tactical opportunities to invest and expand where it's appropriate.”