Hospital dealmaking remained hot during the second quarter of 2026, extending a merger and acquisition rebound that has lately seen more mid-to-large independent systems in pursuit of financial security and growth, according to a new report.
Healthcare advisory firm Kaufman Hall, in its latest quarterly M&A report, tallied 18 new hospital transaction announcements from April through June. That’s well ahead of the eight logged in the same window last year and comfortably above the average posted by the sector across the 2020s.
Total transacted revenue was $7.7 billion for the most recent quarter, which the firm noted was a major rebound from the $1.4 billion a year prior but falls well short of most prior years.
Among the announcements were three “mega merger” transactions, or deals in which the smaller party exceeds $1 billion annual revenue. These brought average transacted revenue up to $428 million for the quarter—again an increase from last year’s Q2 ($401 million on average) but this time below the averages of prior years.
Proactive strategic positioning was the common thread among the deals, Kaufman Hall wrote in the report, as “organizations are increasingly making strategic decisions over a longer time frame and making near-term structural changes now to support future goals.”
For instance, 11-hospital Quorum Health said it plans to undergo a first-of-its-kind deal transition into a nonprofit via acquisition by a newly formed entity, which it said will help support sustainable operations. Elsewhere, North Memorial Health and WakeMed Health shared plans to join, respectively, Sanford Health and Atrium Health in pursuit of future capabilities and complementing strengths.
In Q2, six of the 18 deals were divestitures, seven involved an independent nonprofit seller and just three involved a financially distressed seller, per the report.
Further, the six mega mergers so far announced this year already outpace the tally across 2025 in full, as “the organizations entering these partnerships are significantly larger than those seen in prior transaction cycles,” the report reads.” More scaled organizations in the $500 million to $3 billion range are proactively pursuing partnerships to accelerate capabilities and advance long-term strategy, rather than waiting until they have no other choice.”
Hospital margins dip in May, outpatient shift continues
Joining the M&A report was new hospital operating data from May suggesting a slight downturn in margins both month-to-month and compared to last year.
Among the 1,300 hospitals Kaufman Hall taps for its monthly sector benchmarks, the firm reported a calendar year-to-date operating margin index of 2.9%, and a single-month operating margin index of 2.7% (both including health system allocations for the cost of shared services).
The former of those reflects a 6% pullback from April’s data, and a 4% dip from May a year prior. The latter year-to-date margin is a 5% decline from the preceding year as of the same point.
Compared to last year, May’s daily net operating revenue was up 5% while its gross rose 6%. Daily revenue from both inpatient and outpatient activities also increased by 6% year over year.
Total expenses, meanwhile, rose 5% compared to last year’s May. That was split about evenly between labor and non-labor expenses, though Kaufman Hall highlighted room for improvement among hospitals’ purchased services spending (4% higher year over year). And on a per adjusted discharge basis, total expense rose faster year over year than net patient service revenue (5% versus 4%).
Year over year, 2026’s daily discharges have been flat while adjusted discharges have increased by 2%. These trends, Kaufman Hall wrote, point to the ongoing shift of care delivery to outpatient settings, and should prompt organizations to proactively review their spending and strategy to meet the change.
“Health systems must adapt their portfolios and operations to support the future of care delivery,” said Erik Swanson, managing director and leader of the Data and Analytics Group at Kaufman Hall. “Reevaluation of organizational strategies and resource allocation may also unlock new opportunities to maximize effectiveness going forward.”