Divestitures at Large Health Systems Fueled Q2 M&A Activity

Mergers and acquisitions for hospitals and health systems in the second quarter of 2025 rose to eight transactions from the previous quarter’s five, according to Kaufman Hall’s latest analysis. Approximately half of the second quarter’s transactions were divestitures, demonstrating a market realignment among large regional and national health systems.

“Hospitals and health systems are currently confronting several significant challenges, including the rural healthcare crisis, an ongoing shift from inpatient to outpatient care, and recently enacted changes to Medicaid. Business challenges and uncertainty about federal and state policies have affected both the divestitures and affiliations we’re seeing in the market,” said Anu Singh, managing director at Kaufman Hall. “Now that some of the policy uncertainty has resolved, we expect providers will refocus their strategy and transformation efforts, which could spark greater activity in future quarters.”

Hospitals’ Performance Remains Stable

Hospitals’ financial and operational performance for May 2025 was marginally less robust than in previous months, but remained stable overall, according to the most recent National Hospital Flash Report from Kaufman Hall, a Vizient company.

“Volumes, margins and expenses are down slightly, yet hospital performance remains largely stable,” said Erik Swanson, managing director and leader of the Data and Analytics Group at Kaufman Hall. “The outlier is prescription drug expenses, which increased notably. Hospitals must carefully consider how to manage their drug spend.”

The National Hospital Flash Report draws on data from more than 1,300 hospitals from Strata Decision Technology, LLC.

About Kaufman Hall, a Vizient Company 

Kaufman Hall, a Vizient company, provides management consulting solutions to help society’s foundational institutions realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods, rigorous analytics, and industry-leading solutions into their strategic planning and financial management processes, with a focus on achieving their most challenging goals.

Kaufman Hall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of Kaufman Hall advisory services are unparalleled, encompassing strategy; financial and capital planning; performance improvement; treasury and capital markets management; mergers, acquisitions, partnerships, and joint ventures; and real estate.