Hospital and health system merger activity declined sharply in the first quarter of 2025, with only five transactions announced — the lowest number recorded in recent years.

The downturn reflects broader volatility in the healthcare sector and wider M&A markets, amid policy uncertainty and economic headwinds.

Four of the five transactions involved financially distressed organizations, continuing a trend observed in late 2024. According to Kaufman Hall, this reinforces a shift in dealmaking from strategic expansion to financial rescue.
The average annual revenue of acquired organizations fell to $279.3 million — about half the 2024 average of $559 million and well below the 2022 high of $852 million. The absence of mega mergers in Q1 further dragged down total transacted revenue to just under $1.4 billion, a significant drop from $3 billion in Q1 2022.


The acquirers this quarter represented a mix of ownership types: one for-profit, one religiously affiliated, one not-for-profit foundation tied to a for-profit system, and two additional not-for-profit entities, including one government-affiliated provider.

While the drop in U.S. hospital deals is notable, it mirrors trends seen globally. Ion Analytics reported that despite a 15.5% increase in global deal value, the total number of announced M&A deals worldwide—6,995—was the lowest in two decades. In the U.S., deal volume fell 14% year over year.

Much of the uncertainty stems from geopolitical instability and domestic policy shifts. New tariffs from the Trump administration and potential retaliatory measures have raised concerns over a broader trade conflict. Healthcare-specific issues, including changes to Medicaid funding and not-for-profit financing structures, have further complicated the M&A landscape.

Still, collaborative strategies outside of traditional mergers are moving forward. In Q1, UNC Health and Duke Health partnered to develop a new children’s health system, while Kootenai Health and MultiCare Health System are co-developing a multiphase medical campus in the Pacific Northwest.

The path forward for M&A likely hinges on clarity around financial policy, economic direction, and the stability of hospital operating margins, which continue to show significant performance disparities across systems.

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