Hospital and health system merger and acquisition activity picked up in the third quarter of 2025, with 15 announced transactions, nearly double the number reported in Q2 and more in line with historical norms.

The uptick, according to the latest Kaufman Hall Quarterly Report, follows the passage of the One Big Beautiful Bill in July, which has provided policy clarity after a stretch of uncertainty that began in late 2024.

More than half of Q3’s deals involved divestitures or financially distressed organizations, continuing trends from late 2024. Eight transactions (53%) involved a distressed party, while eight were divestitures, reflecting ongoing realignment efforts amid sustained financial and operational pressures.
The quarter also saw the first two mega mergers of the year. Those deals pushed average seller size to approximately $591 million, comparable to year-end averages from 2023 and 2024. Total transacted revenue reached $8.9 billion, a sharp rise from $1.4 billion in Q2.

All 15 deals involved not-for-profit acquirers. Among them were five academically affiliated systems and two government-owned organizations. Four of the target organizations were for-profit entities, while the rest included religious, academic, and government-affiliated systems.

Recent policy changes appear to be prompting systems to reassess strategy. Larger organizations are showing interest in partnerships that expand capabilities rather than just scale. At the same time, distressed systems are pursuing deals with long-term sustainability in mind.

Selectivity also appears to be increasing. Only two megamergers were announced through Q3, suggesting large systems may be prioritizing market-focused targets over volume. Midsized regional systems remain active, with dealmaking often tied to specific strategic needs.

Several Q3 partnerships reflect this broader shift, including:

- A planned joint venture between Renown Health and Kaiser Permanente around health plan operations
- A Baylor Scott & White and Geode Health partnership to expand outpatient mental health services
- Corewell Health and Quest Diagnostics’ lab services joint venture in Michigan
- Sanford Health’s planned acquisition of Lewis Drug to enhance access to care

These moves suggest M&A strategies are expanding beyond hospitals to include partnerships aimed at diversification and long-term resilience. Signs point to continued momentum into 2026.

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