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What the 2025 numbers show
Kaufman Hall’s annual review, released Jan. 15, tallied 46 announced hospital and health system transactions in 2025, down from 72 in 2024. Transacted revenue dropped to $18.5 billion from $39.7 billion the year before. The first half of the year was nearly frozen as organizations waited to see what federal policy would look like. Activity picked up in the back half, and the fourth quarter alone produced 17 announcements and four mega mergers, in which the smaller party brings more than $1 billion in annual revenue.
The more telling figure is distress. In 43.5% of 2025 deals, at least one party was financially distressed, a record and the third straight annual increase. The firm cautioned that market stress is probably understated, because closures and real estate-only transactions sit outside its count.
Who is buying, who is selling
Nonprofits drove most of the activity. For-profit systems were sellers in 11 transactions and the buyer in only one. Divestitures made up 45.6% of deals as large national systems, including Catholic and for-profit operators, kept trimming assets they no longer consider core. Meanwhile, the growth capital went elsewhere: ambulatory surgery, laboratory and behavioral health businesses drew significant interest, illustrated by Ascension’s agreement to acquire AmSurg and Corewell Health’s lab joint venture with Quest.
Why 2026 will look different
The policy fog that froze early 2025 has not lifted so much as changed shape. Enhanced marketplace subsidies expired on Dec. 31, and Medicaid provisions in last year’s budget reconciliation law begin phasing in from 2027. Both will press hardest on systems with thin margins and high public payer exposure, which are exactly the organizations already showing up as distressed sellers. Kaufman Hall also expects states to be more accommodating of transactions when the alternative is a closure.
For boards, that points to a few practical steps:
- Stress test independence. Model two to three years of coverage erosion and payer mix shift before a crisis forces the conversation.
- Know your role. Decide in advance whether the organization is a likely acquirer, partner or seller, and what conditions would change that answer.
- Look past the hospital. Ambulatory, lab and behavioral assets are where many systems are finding growth, and where partnerships can be built without a full merger.
- Engage regulators early. State attorneys general and health departments are playing a larger role in shaping deals, so relationships matter before a filing.
Archive entry for Jan 21, 2026, added Nov. 11, 2026.