Financial distress was a major driver of healthcare mergers and acquisitions in 2025, according to Kaufman Hall’s end-of-year report. Around 43% of transactions involved a financially distressed party last year — a record high. Tariffs, the overall rising cost of care and uncertainty around Medicare and Medicaid reimbursement were some of the catalysts for M&As among healthcare providers last year.
Regulatory oversight played a significant role in 2025. States are reviewing M&A deals with increasing skepticism.
The State of California passed a law in October giving the state increased oversight over healthcare transactions by private equity, hedge funds and management services organizations.
Kaufman Hall expects financial pressures will continue into 2026, resulting in another year of high percentages of transactions involving financially distressed parties.
Notable M&A activity occurred among healthcare providers in Q4 2025. ChristianaCare and Virtua Health terminated their letter of intent in December, ending an agreement that would have resulted in a combined health system spanning Maryland, Pennsylvania, Delaware and New Jersey.
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“After thoughtful evaluation, both organizations have determined that they can best fulfill their missions to serve their communities by continuing to operate independently. Each health system remains committed to providing high quality, compassionate care and advancing the health and well-being of the patients and communities they serve,” stated a press release about the termination.
Baptist Memorial Healthcare announced that it had completed the $55 million purchase of OCH Regional Medical Center from Oktibbeha County in Starkville, Miss. They plan to invest $96.8 million in the hospital’s technology, infrastructure and other improvements.
The State of Connecticut Office of Health Strategy approved Hartford HealthCare’s purchase of two hospitals owned by Prospect Medical Holdings, which filed bankruptcy in January 2025. The hospitals include Manchester Memorial Hospital and Rockville General. The $86.1 million purchase closed Jan. 1, 2026, and Hartford HealthCare plans to invest over $225 million more in the hospitals over the next three years.
Comanche County Memorial Hospital and Southwestern Medical Center announced in December that they have officially merged under the name Memorial Health System of Southwest Oklahoma.
Healthcare providers will continue to seek partnerships and mergers to stay afloat financially.
This could lead to a more consolidated healthcare market, with larger systems having more resources to invest in technology and patient care.
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Saint Peter’s Healthcare System and Atlantic Health announced in October that they are no longer planning to merge. Saint Peter’s Healthcare System and Atlantic Health signed a definitive agreement in June 2024 but called off the merger after over a year of talks.
Allegheny Health Network and Heritage Valley Health System signed an affiliation agreement that would result in Heritage Valley Beaver and Heritage Valley Sewickley hospitals joining Allegheny’s health system. Both health systems intend to make investments over the next decade to enhance clinical services, IT infrastructure and facilities.
St. Bernards Healthcare has taken over management of Great River Medical Center in Blytheville, Ark., and South Mississippi County Regional Medical Center in Osceola, Miss., from Mississippi County Hospital System, according to a December announcement. As a result of the deal, St. Bernards intends to upgrade the hospitals’ electronic health record and implement other technologies such as smart rooms with virtual monitoring, artificial intelligence and other digital transformation efforts.
York Hospital is in talks with MaineHealth to join the health system, according to an October press release. According to the statement, “unlike many of its peers, York Hospital does not qualify for critical federal safety-net programs, including Critical Access Hospital designation or 340B drug pricing. This exclusion creates a structural disadvantage, limiting access to resources that help many hospitals offset growing financial strain.”
Union Health and Terre Haute Regional Hospital, located in Terre Haute, Ind., finalized their merger in December after a troubled journey. They withdrew their merger application in November 2024 due to opposition by the Federal Trade Commission over competition concerns. The Indiana Department of Health approved the merger despite the opposition. The goal of the merger is to expand access in the Wabash Valley community.
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Samaritan Health Services and MultiCare approved an affiliation in October, a step toward Oregon-based Samaritan Health Services joining Washington-based MultiCare in mid-2026, according to a press release. “Together, we will expand access, invest in the technology and services our communities need, and do so while keeping care nonprofit and locally governed,” said Samaritan President and CEO Marty Cahill in the statement.
Maimonides Health, based in New York City, will join NYC Health + Hospitals, according to a late December announcement. “By joining the public health care system, care provided by Maimonides facilities will be reimbursed at a higher rate by Medicaid, bolstering its financial position,” reads the statement. As a result, Maimonides Health will adopt the Epic electronic health record platform to improve care coordination and revenue collection. The State of New York will support the partnership with a $2.2 billion grant over five years.
Washington Regional Medical Center, located in Fayetteville, Ark., is taking over operations of Physicians’ Specialty Hospital, in the same city. The 20-bed hospital is now known as Washington Regional Physicians’ Specialty Hospital. According to a press release, “This expansion will enable Washington Regional to grow its surgical capacity to provide additional same-day surgical procedures and those that require overnight hospitalization. The new facility will specialize in orthopedic, spine and other outpatient elective surgeries, as well as emergency care.”
Garnet Health and Montefiore Health System announced that they signed a letter of intent in October which states that Garnet Health system is seeking an affiliation with Montefiore Health System. “Joining Montefiore Health System will enable us to bring expanded resources and clinical capabilities to our patients while preserving the community-focused care that has defined Garnet Health for generations,” said Garnet Health President and CEO Jonathan Schiller in the statement.
Sanford Health, of Sioux Falls, S.D., and Prairie Lakes Healthcare System, located in Watertown, S.D., announced their merger in late October. It includes financial investment in the Watertown community to improve care delivery. Prairie Lakes Healthcare System will transition to the Sanford Health name and brand over time.