Deal volume and size surged in the third quarter as hospitals regained confidence following the passage of the One Big Beautiful Bill Act.
Hospital and health system merger-and-acquisition activity rebounded in the third quarter of 2025, marking a shift in momentum after a sluggish start to the year.
Transactions climbed to 15 over that span, an increase from the eight announced in the previous quarter and the five tallied in the first quarter, according to Kaufman Hall’s latest M&A Quarterly Activity Report.
The surge was accompanied by a jump in deal size and total transacted revenue. The average seller size reached approximately $591 million, while total revenue tied to announced transactions rose to $8.9 billion, which was more than six times higher than the $1.4 billion recorded in the second quarter. The uptick suggests that health systems are regaining confidence in pursuing larger partnerships after months of economic and policy uncertainty.
“Now that the One Big Beautiful Bill has passed, hospitals and health systems have more policy clarity to inform their growth strategies,” Anu Singh, managing director at Kaufman Hall, said in a statement. “We expect that organizations will continue to seek resilience and growth by investing beyond the hospital and building their capabilities in areas like outpatient care, labs, and health plan management.”
The passage of the landmark legislation appears to have been a key catalyst, giving executives greater confidence to move forward with transactions. After several years marked by economic uncertainty and policy flux, hospitals are increasingly pursuing partnerships that align with long-term transformation strategies rather than short-term survival.
Even with renewed energy in the market, the underlying motivations behind deals remain complex. Kaufman Hall noted that eight of the 15 announced transactions in the quarter involved divestitures, and an equal number included financially distressed sellers. That pattern is illustrative of the duality that some organizations are strategically expanding while others are retrenching or restructuring under pressure.
The third quarter also saw the year’s first “mega-mergers,” helping drive average deal size closer to the levels of the past two years. Yet the report highlighted that growth strategies are increasingly extending beyond traditional hospital-to-hospital combinations. Many systems are focusing instead on portfolio realignment and expanding into areas such as outpatient services, labs, urgent care, and health plan management.
However, Kaufman Hall cautioned that volatility remains. Financially distressed hospitals continue to weigh heavily on the sector, and strategic buyers are likely to remain selective in evaluating opportunities.
Still, the third-quarter uptick offers a sign that hospital M&A may be entering a new phase in which the focus is more on building integrated, diversified organizations positioned for a changing landscape.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Hospital M&A activity jumped to 15 announced deals in third quarter, up from each of the previous two quarters this year, Kaufman Hall’s analysis found.
Total transacted revenue hit $8.9 billion, more than six times higher than the prior quarter, as the year’s first two mega-mergers were recorded.
With new policy stability, hospitals are pursuing diversification in outpatient services, labs, urgent care, and health plan management.