Kaufman Hall: Hospital M&A Set to Recover by 2025's Second Half

According to Kaufman Hall, hospital M&A activity was slow in early 2025, with only five transactions in the first quarter, a significant decline from previous years. This slowdown is attributed to policy changes under the Trump administration and economic uncertainties. Activity showed signs of revival in the second quarter with eight deals, though the average seller size fell sharply to $175 million, a stark drop from $984 million the previous year. Divestitures of smaller facilities dominated these transactions. The report also notes the absence of mega mergers surpassing $1 billion in revenue during this period. The total transacted revenue for the second quarter stood at $1.4 billion, significantly lower than earlier periods. Clarity provided by the One Big Beautiful Bill Act, including $1 trillion healthcare cuts, may stimulate M&A activities later in the year. It suggests a potential acceleration in strategic partnerships as hospitals navigate new financial challenges, especially rural hospitals hard hit by Medicaid cuts. The emerging Rural Emergency Hospital model is gaining traction slowly, helping rural hospitals sustain service offerings. Notably, some large health systems like Ascension and Cleveland Clinic are redirecting investments towards outpatient services, indicating a shift in healthcare delivery focus.