M&A activity remains strong among large health systems amid continued industry transformation
CHICAGO – October 13, 2026 – Health systems continued to pursue strategic partnerships and portfolio repositioning efforts in the third quarter of 2026, according to the latest M&A Report from Kaufman Hall, a Vizient® company.
Sixteen hospital and health system transactions were announced during Q3 2026, matching activity levels during the same period last year. Total transacted revenue reached $8.2 billion, while average seller size approached $586 million, reflecting continued participation by larger organizations.
"Organizations are increasingly pursuing partnerships that support future strategic priorities rather than scale alone," said Courtney Midanek, managing director and M&A Practice co-leader at Kaufman Hall. "Health systems across the industry are expanding networks, pursuing complementary capabilities and investing in expertise that supports long-term transformation."
Two mega mergers, defined as transactions involving organizations with more than $1 billion in annual revenue, were announced, continuing the trend for the third consecutive quarter. The report highlights the significant pace of announced mega mergers year-to-date, noting that 2026 could become a record year for transactions in which the smaller party has annual revenue exceeding $1 billion.
Not-for-profit organizations continued to represent most acquirers in Q3, while divestitures accounted for nearly one-third of announced transactions.
"Year-to-date activity suggests 2026 is on track to become the most active year for hospital and health system transactions since the start of the pandemic," said Kris Blohm, managing director and M&A Practice co-leader at Kaufman Hall. "The continued prevalence of larger transactions demonstrates that many organizations are pursuing strategic partnerships from positions of strength as they prepare for the next phase of healthcare transformation."
Converging financial and operational pressures strain hospital performance
While organizations continued to pursue strategic growth opportunities through partnerships, hospitals faced mounting financial and operational challenges in August, according to Kaufman Hall's latest National Hospital Flash Report.
Year-to-date operating margin declined to 2.5% when including allocations, while nearly 43% of hospitals are operating at a loss.
Non-labor expenses continue to pressure performance, increasing 6% year-to-date per adjusted discharge compared with 2025. Supply and drug expenses remain key drivers of non-labor expense growth, rising 5% and 6% year-to-date, respectively, as inflation in food and energy costs compounds these pressures.
"Hospitals are facing increasingly difficult decisions around resource allocation, expense management and long-term sustainability," said Erik Swanson, managing director and Data and Analytics group leader at Kaufman Hall. "Growing uncompensated care, rising expenses and ongoing payer mix challenges are creating significant strain, particularly for organizations operating on already thin margins. As these pressures persist, leaders will continue evaluating opportunities to strengthen their organizations for the future."
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.
Media Contact:
Nancy Matocha: Nancy.Matocha@vizientinc.com