Hospitals and health systems announced 22 merger and acquisition transactions in the first quarter of 2026, marking the most active start to a year since 2020, according to an analysis from the Chicago-based consulting firm Kaufman Hall, a Vizient company.

Total transacted revenue reached $14.5 billion, the highest first-quarter figure in recent years. The quarter included three transactions involving target organizations with more than $1 billion in annual revenue.

Kaufman Hall pointed to a continued recovery in dealmaking following a slowdown tied to policy and market uncertainty in early 2025. “Health system M&A activity continues to rebound from the policy and market-related uncertainty of early 2025,” said Courtney Midanek, managing director and coleader of the firm’s M&A practice. “Organizations are increasingly aware that partnerships can help them face future challenges and opportunities.”
Divestitures accounted for the majority of activity, representing 15 of the 22 transactions. Only four deals involved financially distressed sellers, a lower share than in recent years. The mix suggests many organizations are pursuing portfolio realignment rather than reacting to financial strain.

“This quarter’s trends reflect an industry undergoing transformation,” said Kris Blohm, managing director and coleader of Kaufman Hall’s M&A practice. “Health systems are repositioning by withdrawing from underperforming or non-core markets, building capital to invest in new capabilities, proactively seeking partners to increase resilience or enhance access to care and services, and placing big bets on new combinations of resources and capabilities.”

At the same time, hospital financial performance remains under pressure. Kaufman Hall’s latest National Hospital Flash Report indicates that expenses continue to run high while revenue growth is constrained by payer mix shifts. Patient volumes have softened early in the year, though average length of stay has held steady.

“Hospitals are off to a relatively soft start in 2026,” said Erik Swanson, managing director and leader of the Data and Analytics Group at Kaufman Hall. “Outpatient care strategies offer a potential path forward, though hospitals must manage both revenue dilution and a greater concentration of high-acuity patients as a result.”

The report draws on data from more than 1,300 hospitals compiled by Strata Decision Technology.

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