2024 Hospital M&A Activity Indicates Uneven Recovery

CHICAGO - January 9^th, 2025 - Forty-five of the 72 hospital and health systems undergoing a merger or acquisition in 2024 involved a divestiture, or an organization selling off a portion of its assets, according to the latest analysis by Kaufman Hall, a Vizient company. This is the highest percentage the healthcare industry has experienced, and is more than double the percentage recorded in 2023.

Data show that the percentage of announced transactions involving a financially distressed organization also hit a record high in 2024, indicating ongoing distress in the industry. In addition, the average annual revenue of a financially distressed partner reached $401 million, a new high compared to $219 million in 2022.

"Mega-mergers used to be between organizations of similar size, but that changed in 2024 to smaller organizations merging with organizations that are significantly larger," said Anu Singh, Managing Director in the Mergers & Acquisitions Practice at Kaufman Hall. "While these may not all involve financially distressed organizations, it does suggest that large organizations are not immune to financial and operational challenges-a trend to monitor in 2025."

Kaufman Hall experts anticipate that possible changes in the regulatory environment in 2025, ongoing realignment of healthcare markets, and the continued trend of relatively large hospitals and health systems seeking partnerships indicate potential transformative change.

Hospitals Continue to Face Financial Headwinds

Patient volumes decreased in November, according to Kaufman Hall's most recent National Hospital Flash Report. Despite the decrease in patient volume, expenses and workforce continue to challenge hospitals.

"The data indicate that hospitals and health systems may have better opportunities to plan their expenses," said Erik Swanson, Senior Vice President and Data and Analytics Group Leader with Kaufman Hall. "Using predictive analytics and modeling could help organizations optimize their financial planning processes."

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

CONTACT: John Perry-Miller, (214) 533-7202, [email protected]

About Kaufman Hall

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.