Mergers and acquisitions (M&A) in the healthcare sector have seen a noticeable decline recently. According to a report by Kaufman Hall, only eight transactions were announced in the second quarter of 2025. This is the fewest deals in any second quarter since at least 2017.
What’s striking is that about half of those transactions were divestitures, meaning hospitals are selling parts of their operations rather than merging. The report suggests that while M&A activity is expected to pick up again, it might do so slowly. This is largely due to shifts in federal healthcare policies, including significant cuts to Medicaid.
In comparison, the previous year showed much higher activity levels. For instance, 2018 recorded $3 billion in total transacted revenue, while this year’s second quarter only reached $1.4 billion—the lowest since 2017.
Experts believe the lack of mega-mergers—transactions where the smaller entity has over $1 billion in annual revenue—has pushed the average size of sellers down to $175 million. Anu Singh, a managing director at Kaufman Hall, noted that the current uncertainty around federal and state policies has been a major factor in this slowdown. Businesses are struggling to navigate market volatility and new tariffs, which adds to the challenging environment.
A Twitter trend reflected feelings of concern among healthcare professionals and investors about the future of M&A. Many are sharing their experiences and worries about how these changes may impact patient care and hospital funding.
Looking back, during the Trump administration, the introduction of various tariffs and potential cuts to Medicaid created a chilling effect on M&A activity. After President Trump signed legislation in July 2025 implementing over $1 trillion in cuts to healthcare spending, many providers were left apprehensive about their revenues and future deals.
Despite these setbacks, some experts posit that as policies stabilize, healthcare providers may pivot back to strategic growth and transformation initiatives. This could entice more activity in future quarters, setting the stage for a potential rebound in merger and acquisition activity.
For more detailed insights, you can explore Kaufman Hall’s report, which analyzes healthcare transactions and offers a deeper look at trends in the industry.
