Financial challenges for the health systems and pushback from detractors of the deal contributed to its demise.
One of the largest proposed hospital mergers in Oregon's history is dead.
Oregon Health & Science University (OHSU) and Legacy Health mutually called off their deal to integrate, ending plans to form a 12-hospital health system with over 100 locations and more than 30,000 employees.
Though the organizations didn't provide details in their announcement as to why the transaction was abandoned, it's likely that the decision was influenced by both health systems' financial troubles, as well as by public opposition.
"After careful consideration of the evolving operating environment, the organizations have determined that the best way to meet the needs of the communities they serve is to move forward as individual organizations," OHSU and Legacy Health said in the news release. "OHSU and Legacy will remain focused on each health system’s individual strategic objectives, with the goal of remaining well-positioned to continue supporting their people, patients and communities."
The two sides announced their pursuit of a merger in August 2023, which would have seen OHSU invest $1 billion over 10 years to boost Legacy's infrastructure. A definitive agreement was signed in May 2024 to put the hospital operators on the verge of combining.
However, the deal faced scrutiny from its critics, who stated concerns over the impact of OHSU's increased market power on consumers.
A community advisory board, convened by the Oregon Health Authority, echoed those worries in April by saying that the merger would lead to increased prices and recommended that state regulators deny the deal.
Meanwhile, OHSU, dealing with its own financial headwinds, would have been tasked with supporting Legacy, which has struggled to reach profitability in recent years.
Legacy reported an operating loss of $171.7 million and a net loss of $245.8 million in fiscal year 2023. Through cost containment efforts, the system improved its bottom line in fiscal year 2024, recording operating incoming of $16.5 million and a net gain of $229.8 million.
In OHSU's case, the system cut 500 positions last year and had an operating loss of $71 million through the first nine months of its current fiscal year. As an academic medical center, OHSU is at risk of losing federal funding that the current administration is working to eliminate, in addition to facing potential Medicaid cuts.
Delivering care was less expensive in March, Kaufman Hall's National Hospital Flash Report shows.
With flu season winding down, hospitals are treating fewer patients with respiratory illnesses.
In March, hospitals and health systems across the U.S. experienced a drop in volume stemming from fewer flu cases, which led to a decline in the cost of delivering care while revenue remained flat, according to the latest National Hospital Flash Report by Kaufman Hall.
Dischargers per calendar day and adjusted daily discharges were down 5% and 4% month-over-month, respectively, with equivalent patient days per calendar day also dropping by 4%. Operating room minutes per calendar day fell by 4% and average length of stay was flat.
As a result, total expense per calendar day dipped by 4% compared to February, driven by non-labor expense per calendar day plunging by 7%. Labor expense per calendar day, meanwhile, saw a modest drop by 1%.
Despite the monthly decline in total daily expenses, costs are still up 7% compared to March 2024, due in large part to supply and drugs expenses per calendar day each being up 11% year-over-year.
On the revenue side, net patient services revenue per adjusted discharged and per adjusted patient day were flat month-over-month. Net operating revenue per calendar day declined by 4%, with daily inpatient revenue falling by 5% and daily outpatient revenue dropping by 3%.
Overall, hospitals' median operating margin, inclusive of all allocations for the cost of shared services that they receive from their health system, was 3.1% in March, compared to 2.7% in February. Without allocations, March hit 6.7%, following February's mark of 6.3%.
The year-to-date median operating margin with allocations ticked up from 3.2% in February to 3.3% in March. Without allocations, that figure also saw a slight bump from 6.8% in February to 6.9% in March.
Going forward for the rest of the year, hospitals should continue to look for ways to capitalize on efficiencies in a challenging financial climate, Kaufman Hall noted.
"Hospitals need to remain vigilant about their expenses, especially as the United States enters a period of economic and policy uncertainty," Erik Swanson, managing director and data and analytics group leader with Kaufman Hall, said in a statement. "With revenue largely flat, finding efficiencies that can reduce expenses is mission critical."
Economic uncertainty is likely causing companies across all sectors to hold off on making seismic leadership changes.
CEO turnover in the U.S. is trending downward and hospitals are feeling the effects.
Only six CEO exits occurred at hospitals in March, a 60% decrease from 15 in February and a 25% decline from eight in March 2024, according to a report by Challenger, Gray & Christmas.
Factoring in the 10 CEO departures from January, hospitals experienced 31 exits in the first quarter of 2025, compared to 34 during the same period last year.
Overall, 646 CEOs left their organizations across all sectors through the first three months, setting a record for first-quarter turnover, the executive coaching firm found. The previous record was the 622 exits during the first three months of last year.
Despite record-breaking numbers for the quarter, CEO turnover headed in the opposite direction in March, which had 177 total exits, down 28% from 247 in February and a tick under the 180 from March 2024.
Unpredictability around potential policy changes in Washington that could impact organizations' financial health may be creating hesitation for companies in switching up leadership at the top of the C-suite.
"After a record-breaking start to the year, companies have slowed a bit on changing their top leader, though historically, it remains a high number," Andrew Challenger, senior vice president and labor expert for Challenger, Gray & Christmas, said in a statement.
"We certainly continue to face economic uncertainty as tariffs, federal job and funding cuts, new regulation, and falling consumer confidence hit companies nationally," he added.
New data from the Bureau of Labor Statistics shows that the industry's job market is holding strong for now.
Healthcare continues to add jobs at a consistent pace, even in the face of economic uncertainty and market volatility.
The industry created 50,600 jobs in April, a slight step down from the 53,600 jobs added in March but right around the monthly average of 52,000 jobs gained over the past 12 months, according to a report by the Bureau of Labor Statistics.
Much of the growth for the month came from hospitals and ambulatory healthcare services, which contributed 22,100 and 21,400 jobs, respectively.
Growth in ambulatory healthcare services was largely driven by jobs added in physician offices (8,000) and outpatient care centers (5,400).
Meanwhile, 7,100 jobs were created in nursing and residential care facilities, with a large chunk coming in skilled nursing care facilities (2,900).
Overall, healthcare had 18.14 million workers in April, representing a 3.5% increase from the 17.53 million workers recorded in April 2024.
Across all sectors, the U.S. added 177,000 jobs in April, roughly in line with the average monthly gain of 152,000 over the prior 12 months. The unemployment rate was unchanged at 4.2% and has remained between 4% and 4.2% since May 2024.
Though the consistent job growth in healthcare serves as evidence for the idea that the industry is "recession proof," many hospitals and health systems have implemented jobs cuts to offset rising costs and potential slashes to funding.
Mass General Brigham announced in February that it would conduct the largest layoffs in its history to close a projected $250 million budget gap over the next two years.
Providence, on the other hand, froze nonclinical hiring in April to alleviate financial strain from issues like low reimbursement from payers.
Hospitals big and small, rural and urban, are feeling financial pressure that could be worsened by policy decisions in Washington in the coming months, possibly leading to a bit of a slowdown in the industry's job growth.
The for-profit giant posted solid first quarter results, though leadership highlighted uncertainty around policy reform.
HCA Healthcare remained on track with its earnings in the first quarter, but it's unclear how potential policy changes in Washington could impact the health system going forward.
Along with reporting revenue growth and strong profits for the first quarter, HCA reaffirmed its 2025 guidance range of $5.85 billion to $6.29 billion.
Leadership, meanwhile, stayed away from providing details on how policies like tariffs and Medicaid reform could affect finances in an earnings call with investors.
"We are in a very fluid situation," CEO Sam Hazen said on the call. "While we have a general sense for the new administration's stated priorities, we do not have any specifics. It is unclear how these efforts might be carried out and what effects they may have on our business."
For the first quarter, HCA recorded revenue of $18.32 billion and net income of $1.61 billion, improvements over the $17.34 billion and $1.59 billion, respectively, reported during the same period last year.
Revenue growth was driven by an increase in patient volume, with the health system seeing same facility admissions rise 2.6% year over year, same facility equivalent admissions jump 2.8%, and emergency room visits swell by 4%.
One area of volume that continued to decline was outpatient surgeries, which fell by 2.1% year over year. Hazen attributed to dip in part to 2024 being a leap year with an added day for services.
When asked by investors about policy developments, Hazen stated that HCA is engaged in advocacy efforts.
"Our general approach is to support reasonable reforms," Hazen said. "However, we do not support reforms that harm coverage for families or individuals, nor do we support policies that compromise the ability for hospitals across the country to care for people in their times of utmost need."
On the issue of tariffs, CFO Mike Marks called HCA's level of risk for the year "manageable." The health system has 70% of its supply expense contracted with firm pricing for 2025, and 75% of its supply expense coming from either the United States, Canada, or Mexico, or from products that currently have broad exemption from tariffs, according to Marks.
Still, Hazen again touted the wait-and-see approach he offered following the release of the health system's fourth quarter earnings.
"I know you would like us to size the potential impacts of health policy risks and now tariff risks, but we are not comfortable with providing estimates at this time," Hazen said. "We just do not have enough insight into what might happen."
President and CEO R. Lawrence Moss is striving to create health, not just deliver medical care for children.
As healthcare grapples with a wide array of challenges that pose a threat to the industry's future, improving children's health looms as a potential answer to drive sustainability for the system.
At Nemours Children's Health, president and CEO R. Lawrence Moss, MD, FACS, FAAP, is focused on advocating for the value of investing in childhood prevention, while strategizing for where children's health is heading.
The United States has a massive burden of chronic disease, one that could be significantly lessened by addressing health trajectories in children, according to Moss. That burden is creating problems in several areas, from the $4.5 trillion in annual costs, to the strain on providers' resources to care for patients.
"The biggest issue for me continues to be our opportunity to do a better job demonstrating that children's health is not just about treating sick kids," Moss told HealthLeaders. "Children's health is about the health of our entire country, it's about the health of our economy, and it's about our future.
"One of the things that that I always try to do, that I think the whole children's hospital industry can do a better job of, is demonstrating that children's health is the lever we have to power our society and our economy. I just get out of bed every day thinking about that because if we could do a better job of that, the shiny object challenges of the day would tend to fade away."
For Moss and Nemours, the priority is advancing whole child health models that promote health, development, and wellbeing over the course of a child's life. Those models are influencing how children's health is trending and the type of medical care children's hospitals are emphasizing.
With higher acuity in inpatient settings and more care being administered at home and in outpatient settings, Moss believes the children's hospital of the future will be a giant ICU with only acute care beds. Meanwhile, most of the care that is delivered in the medical-surgical unit today will be delivered at home.
"At Nemours, we're investing very heavily in something that we call advanced pediatric care at home, which is essentially hospital-level care at home, which we are actively testing and moving very rapidly towards becoming a part of the way that we deliver care here," Moss said. "I hope that we're able to demonstrate to other children's health systems around the country that that's the way to go."
Pictured: R. Lawrence Moss, MD, FACS, FAAP, president and CEO, Nemours Children's Health.
Moss is also bullish on new technology allowing for more innovation in children's health.
By leveraging AI to improve care management and care coordination at a sophisticated level, children's hospitals can scale a major hurdle that currently places limitations on providers.
"In the children's healthcare world, our biggest challenge is the subset of kids we call children with medical complexity," Moss said. "Those are the kids with multiple congenital anomalies, complicated cancer, other types of birth defects, the kind of things that that require what only a children's hospital can do. Yet coordinating that care requires multiple specialists in a variety of procedures and it's the thing we do poorly in healthcare, is deliver that in a coordinated, efficient fashion."
Nemours is partnering with a startup company that's looking at ways to create a virtual care coordinator and care manager to give the health system "essentially an unlimited workforce of roles that are really, really hard to fill," according to Moss. That partnership has yet to be officially announced, but Moss is excited by the opportunity and expects it to greatly benefit children's families.
Additionally, Nemours has been active with capital investments in its home states of Delaware and Florida to strengthen care delivery efforts. While Nemours is interested in delivering population health and elevating children's health outside the hospital, it also wants to care for the sickest of kids, Moss pointed out.
"An emphasis on health outside of the hospital and keeping kids out of the hospital is not a de-emphasis on high-end tertiary quaternary care for kids who need that," Moss said.
In December, the health system announced it would spend $130 million in 2025 on projects in Delaware, including a new Maternal and Fetal Health Program and expansion of its neonatology, cancer and cardiology programs.
At its Central Florida campus, Nemours is investing $300 million over the next four years on expanding the pediatric hospital, building a new surgery center, and building a new administrative building.
"We're finding with the increased visibility we've had in the market and with how responsive communities and families have been through our whole child health model, we've seen a big increase in demand for our high-end tertiary quaternary services, so more kids who maybe were going somewhere else are now coming to us for those services and we need to be there to deliver," Moss said.
Taking care of the sick will always be a core function of hospitals, but bettering the health of communities in a meaningful way requires a comprehensive approach.
"Whether we're leaders in healthcare or we're at the front lines taking care of patients, our job is to create health," Moss said.
The for-profit hospital operator made strides in several areas in the quarter to stabilize its bottom line.
Community Health Systems' (CHS) finances are trending in the right direction, though challenges persist which could be shaped by shifts in Washington.
In its first-quarter earnings report, the Franklin, Tennessee-based health system showed revenue growth on higher volumes and improvement on deleveraging its portfolio through divestitures, while contending with increasing medical specialist fees, payer denials, and policy uncertainties under the new presidential administration.
Overall, CHS trimmed its net loss for the first three months of the calendar year down to $13 million, compared to $41 million in 2024's first quarter.
Encouraging results for the period were headlined by operating revenue increasing 0.6% to $3.16 billion and same store operating revenue jumping 3.1%. CHS saw greater patient from the flu season, which contributed to a 4% increase in same store admissions.
Meanwhile, the system sold several assets that will allow it to reach its goal of hitting over $1 billion in divestiture proceeds, CHS leadership highlighted on an earnings call with investors. Divestitures of Shore Point Health System in Florida and Lake Norman Regional Medical Center in North Carolina were completed in the quarter, along with the sale of 50% ownership interest in Merit Health Biloxi in Mississippi. CHS also recently announced an agreement to sell 80% ownership in Cedar Park Regional Medical Center in Texas, expected to close later this year.
"These transactions will further reduce the company's net leverage, improve our maturity profile, and enhance shareholder value while not meaningfully affecting free cash flow," CHS CFO Kevin Hammons said on the call. "Furthermore, we're getting all of this done despite the recent dislocation in the capital markets."
CHS' operating expenses for the quarter were $2.85 billion, a slight decrease from the $2.9 billion reported over the same period last year. The system reduced contract labor spend by $8 million year-over-year, but dealt with medical specialist fees increasing 9% to $163 million. Hammons stated that the system expects to continue feeling pressure from rising medical specialist fees in 2025, though at more manageable levels than those seen from 2022 to 2023.
Investors asked CHS leadership about their handling of potential policy changes as well. Between tariffs and possible funding cuts to Medicaid, health systems are reckoning with market volatility.
"I want to acknowledge the fact that healthcare providers are currently facing a number of uncertainties," CHS CEO Tim Hingtgen said. "Navigating any potential changes that may come out of Washington in the weeks and months ahead makes planning more challenging. But our team is closely following these developments and advocating for policies that maintain and strengthen our health systems and all health care delivery systems."
Regarding tariffs, Hammons pointed to CHS purchasing over 70% of its supplies through HealthTrust Purchasing Group, a group purchasing organization that comes with fixed pricing. Less than 5% of the system's purchases are from China.
On Medicaid, CHS leadership said they've not included directed payment program reimbursement for Tennessee or New Mexico due to those programs not receiving approval by the administration yet. However, CHS expects those programs to be eventually approved, which would contribute $100 million to $125 million annually to the system's EBITDA.
The academic medical center is the latest health system to eliminate nonclinical jobs in pursuit of efficiency.
The University of New Mexico (UNM) Hospital has restructured its workforce at the leadership level as it contends with financial challenges.
Potential federal funding cuts influenced the academic medical center to drop 53 executive positions, according to a spokesperson for UNM Hospital. Health systems everywhere are taking action in anticipation of the Trump administration reducing spending on medical research funding and Medicaid.
An internal email provided to the Albuquerque Journal revealed that elimination of roles at UNM Hospital include the president, CFO, and chief human resources officer of Sandoval Regional Medical Center in Rio Rancho.
"In order to be sure we are operating as efficiently as possible, and are as prepared as possible for federal funding changes which may lie ahead, we have implemented a number of financial improvement initiatives," the spokesperson said in a statement.
In addition to the job cuts, UNM Hospital is undertaking other cost saving initiatives, such as reviewing expenses on contract labor and assessing workflows to improve efficiency.
"By taking these steps now, UNM Hospital is positioning itself to balance its current and future budgets. UNM Hospital remains committed to what is most important — providing health care for New Mexicans, in New Mexico," the spokesperson said.
Growing trend
Several health systems have taken similar approaches to streamlining their workforce in an effort to curb spending and get ahead of funding cuts.
Mass General Brigham announced in February that it would conduct the largest layoffs in its history by slashing hundreds of nonclinical workers to bridge a budget gap of $250 million over the next two years.
One month later, Yale New Haven Health said it would restructure its management and administration teams, with up to 38 people potentially being laid off.
Providence, meanwhile, recently implemented a freeze on nonclinical hires as CEO Erik Wexler cited financial strain from rising costs and reduced reimbursement.
Though there is unpredictability surrounding the current administration, health systems have little choice but to put themselves in a position where they can weather headwinds.
One rural hospital leader shares his multi-pronged approach to replenishing provider talent.
Rural hospitals face their own unique set of challenges when it comes to building and maintaining a sustainable workforce.
When these organizations struggle to attract and keep clinical talent, it can lead to services being reduced or even cut altogether, jeopardizing access to care for patients in these communities.
That makes recruitment and retention of providers the top priority for rural hospital CEOs, Cole Stockton, CEO of Highpoint Health – Riverview and Highpoint Health – Trousdale, told HealthLeaders.
Whether it's strategizing for physician succession planning or alleviating burnout, Stockton's tips for strengthening the workforce can put rural hospitals in better position for long-lasting success.
A new report reveals how digital health companies are attempting to take advantage of market shifts to get ahead of competitors.
Investments in digital health didn’t slow down at the start of the year in the face of volatile market conditions. On the contrary, they picked up pace as companies sought opportunities to "leapfrog" amid uncertainty, according to a report by Rock Health.
The research found that both startups and large players are utilizing various strategies to improve their positioning in the venture capital landscape, resulting in increased funding overall and larger late-stage funding rounds.
Through the first three months of 2025, digital health startups raised $3 billion across 122 deals, compared to $2.7 billion raised across 133 deals over the same period last year and $1.8 billion raised across 118 deals in the fourth quarter of 2024.
The average deal size jumped from $15.5 million in the fourth quarter of last year to $24.4 million in the first quarter, continuing seasonal patterns from previous years of first quarter totals beating fourth quarter numbers, the report stated.
Last year's 'David and Goliath' dynamic remained in the first quarter, with startups contributing to deal volume while large companies fueled deal size.
Dealmaking through the first three months was largely driven by earlier-stage funding. Seed, Series A, and Series B rounds made up 83% of labelled deals in the quarter, just a tick below 2024's 86%.
However, the quarter also featured a boom in late-stage funding rounds. The median Series D+ round size was $105 million, which almost doubled the $55 million across 2024 and marked the first time Rock Health tracked that figure above $100 million since 2021.
Companies of all sizes are pursuing different approaches to leverage market shifts, the report highlighted.
One of those strategies for companies is to add new healthcare features to their offerings through mergers and acquisitions. Of the 46 M&A deals Rock Health tracked in the first quarter, 67% involved digital health startups acquiring other digital health startups, compared to 53% across 2024.
"Tapestry weaving spikes when acquisition targets are cheaper and acquirers have cash on hand," the report's authors wrote.
Another approach companies are turning to is creating modular tech stacks to have more flexibility around their technology, allowing organizations to pivot as solutions like generative AI continue to evolve.
Meanwhile, channel partnerships are providing both smaller digital health startups and larger players a way of reaching consumers. Examples of this in the first quarter included Eli Lilly's LillyDirect adding partners and Amazon's Health Benefits Connector bolstering its network, Rock Health noted.
The final strategy the report called out was large companies engaging with startup competitors that are trying to be disruptors in their space.
"Instead of viewing innovators as outright competitors, these engagements position large enterprises as partners, investors, or future acquirers of potential rivals," the authors wrote.
