Hospital and Health System M&A Trends for 2024
In the latest infographic detailing the trends in mergers and acquisitions (M&A) activity in the hospital and health system sector in 2024, data from Kaufman Hall’s recent report sheds light on the current environment. The data shows that there were 72 announced transactions in 2024, indicating a resurgence in health system mergers close to pre-pandemic levels. Notably, the average size of the smaller entity involved in these transactions was $559M, a value consistent with the previous year but higher compared to pre-pandemic figures.
Financial distress emerged as a significant driver of M&A activity, following its prevalence in 2023. Distressed M&A transactions hit record levels in 2024, with over 30% of all deals involving financially troubled entities. The average revenue of these distressed parties nearly tripled to $401M, highlighting the financial challenges faced by some health systems. Moreover, a substantial proportion (62.5%) of announced transactions in 2024 involved divestitures, reflecting the ongoing restructuring and realignment within the industry.
While there are positive indications for the sector in 2025, with improved outlooks from rating agencies, the M&A landscape in 2024 suggests an uneven recovery. Systems are likely to continue seeking stronger partners to support expansion efforts and achieve financial stability. This trend underscores the importance of strategic alliances and collaborations in navigating the evolving healthcare landscape.
The data presented in Kaufman Hall’s report underscores the complex dynamics at play in the healthcare M&A landscape. The trends observed in 2024 reflect the industry’s response to ongoing challenges, such as financial pressures and the need for scale and operational efficiency. As healthcare organizations seek to strengthen their positions in a competitive market, strategic mergers and partnerships are crucial for driving growth and innovation.
In conclusion, the M&A trends in 2024 highlight the evolving nature of the healthcare landscape and the strategic imperatives driving consolidation and restructuring within the sector. With a focus on building resilience, improving financial performance, and enhancing service delivery, healthcare organizations are leveraging M&A as a strategic tool to navigate uncertainty and position themselves for future success.
