News and results from the Hospital M&A market have been mixed in 2025 so far. Deal activity has been slow, with 11 transactions on the books at the time of writing, according to data captured in the LevinPro HC platform. Those numbers trail what we saw in Q1:24, which had 15 deal announcements.
There are some likely explanations for this slowdown. Health systems and hospitals are undoubtedly lobbying and fighting the suspected Medicaid cuts from the Republican legislature and Trump Administration. Speaker of the House Mike Johnson and the President have said Medicaid is safe, but to reach their desired cuts and budget, there’s no way around the numbers.
The advocacy group America’s Essential Hospitals was not happy with the recent budget resolution either, saying it “will open the door to devastating Medicaid cuts that will impact millions of Americans, especially those middle-to-low-income working Americans in both rural and urban communities.”
According to the American Hospital Association, 96% of hospitals have 50% of their inpatient days paid by Medicare and Medicaid, and more than 82% of hospitals have 67% Medicare and Medicaid inpatient days.
These changes in reimbursement could have a dramatic effect on Hospital M&A; more hospitals could end up in financial distress, driving those organizations to find larger partners or financial backers. Not to mention the number of bankruptcies we could see.
The recent budget resolution is only a seven-month extension, so nothing is permanent yet, but we’ll be following how this shakes out in Washington and how it shapes the healthcare market.
Nonetheless, there have been some notable activity and events in the hospital M&A market from the past three months worth highlighting.
Top Hospital M&A News of Q1
- There was a huge deal announcement in Europe in late January. PureHealth, one of the largest health systems in the Middle East, purchased Hellenic Healthcare Group (HHG) for $2.3 billion. HHG, which was 90% owned by CVC Capital Partners, operates 10 hospitals totaling 1,600 beds and serves 1.4 million patients annually. On completion of the transaction, CVC Capital Partners VI and HHG management will retain a 40% stake in the health system. PureHealth aims to integrate HHG’s infrastructure into its existing network, boosting its international operations and targeting 50% of its revenue from outside the Gulf region.
- HCA Healthcare sold the Regional Medical Center of San Jose, a short-term acute care hospital in California, to the county government of Santa Clara. The asset purchase agreement signed by both parties, valued at $150 million, will integrate the 258-bed hospital into the Santa Clara Valley Healthcare system. The county plans to restore level 2 trauma care immediately and will add comprehensive stroke and STEMI services after, with labor and delivery to be restored in the future.
- Prime Healthcare Services, Inc. finalized its acquisition of Central Maine Healthcare, an integrated healthcare delivery system serving 400,000 people living in central, western, and mid-coast Maine. The system generates more than $500 million in revenue across three hospitals and several outpatient care centers. The acquisition is expected to close by the end of 2025, subject to regulatory approvals.
Hospital Market News & Updates
- California-based Prospect Medical Holdings filed for Chapter 11 bankruptcy in the United States Bankruptcy Court in Northern Texas. The health system declared $1 billion to $10 billion in both assets and liabilities and said it had more than 100,000 creditors in its initial court filing. Prospect operates 16 hospitals across the East Coast and California and plans to use the bankruptcy process to realign its portfolio. The filing from Prospect feels eerily similar to the situation surrounding Steward Health Care’s bankruptcy filing in May 2024. Two health systems, both backed by private equity firms for more than a decade, suddenly file for bankruptcy once the firm exits their investment. The timing seems to be more than a coincidence. A recent report from the Senate Budget Committee found that Prospect, under the ownership of Leonard Green & Partners, took on massive debt loads while paying the private equity firm nearly $500 million in dividends and preferred stock redemption. We’re still in the early days of this bankruptcy proceeding, but we suspect it will bring even more attention to private equity’s role in healthcare.
- Even health systems are developing AI solutions. Mount Sinai announced it launched the Center for Artificial Intelligence (AI) in Children’s Health, the first dedicated center of its kind in New York City. According to the press release, “the Center will develop AI-powered solutions to enhance diagnostics, personalize treatments, and optimize health care delivery for youth and adolescents.”
- A flurry of executive orders from President Trump has created a lot of upheaval in the hospital market, including the reversal of Biden-era policies that scale back ACA provisions and rescind CMS’ drug-price initiatives. The United States even withdrew from the World Health Organization on January 20.
- In larger market news, the Federal Reserve kept interest rates unchanged in their March 2025 meeting. Jerome Powell, in his post-meeting news conference, acknowledged some of the chaos brought on by the shifting tariff policies from the Trump Administration and said that “it remains seen how these developments affect future spending and investment.”
