Industry Voices—How AMCs can prevent healthcare deserts through strategic M&A

The academic medical center (AMC) is becoming an increasingly influential force in regional healthcare delivery. As community and rural hospitals shutter and cut services, patients are losing access to care and AMCs have begun stepping in. Once seen only as hubs for high-complexity referrals, research and training, AMCs are now stabilizing local care and building regional networks by acquiring distressed community hospitals.

This shift reflects both strategic and civic pressure. Market failures at this scale often require public intervention or scaled, mission-aligned institutions—and many AMCs fit that profile, with 21.8% of active AMCs having partial or full public ownership. That mix of scale and community mission positions AMCs to act. Leaders who move quickly and with intention can build regional networks that define the next era of access. 

Pressure on local hospitals

As community hospitals close, cut services or sell under stress, patients are losing access to local care. Rural hospitals are under particular pressure: more than 700—about one-third of all rural facilities—are at risk of closure, including about 300 at immediate risk over the next two to three years. The strain often appears first in service cuts. For example, more than 500 U.S. hospitals stopped delivering babies from 2010 to 2022, and only 41% of rural hospitals still provide labor and delivery services. Research links these closures to reduced access to maternal, surgical, mental health and chronic care.

Shrinking buyer pool for distressed community hospitals

The U.S. hospital market has historically included five U.S. hospital buyers and operator archetypes:  

Not-for-profit (NFP) health systems. Regional and multi-state operators, including large faith-based systems, with broad footprints and integrated care networks.

For-profit health systems. Public or investor-backed operators focused on scale, margins and portfolio enhancement through acquisitions and divestitures.

Safety net hospitals. Public or mission-driven hospitals serving large Medicaid, uninsured and vulnerable populations, often with local or state support.

Specialty and children’s hospitals. Focused providers built around a defined clinical mission, service line or population, typically without broad community networks.

Academic medical centers (AMCs). Teaching hospitals affiliated with medical schools that combine complex care, research and physician training.

Financial and strategic constraints have reduced many buyers’ ability and appetite to acquire distressed community hospital assets: 

• NFP and safety net hospitals are increasingly sellers, divesting non-core assets or seeking mergers to strengthen their balance sheets.
• For-profit operators are optimizing portfolios through divestitures and selective capital deployment rather than acquiring distressed community hospitals.
• Specialty and children's hospitals were never built to run community networks and lack the operating model to do so.

AMCs may be the clearest remaining buyers with the capital and mission to stabilize these hospitals. Through philanthropy, tax-exempt financing, endowments and often state support, they can fund upgrades, preserve local services and connect patients to academic care when needed.

Why AMC expansion may benefit regional healthcare markets and academic medicine

AMCs have compelling civic and strategic reasons to consider a more active role in preserving community hospitals:

1. Transaction data analysis indicates community closures push routine demand onto AMC campuses: admissions and observation stays rose 16% from 2020 to 2024 versus 2% for non-AMCs.
2. Stabilizing community sites preserves flagship capacity for complex care, reduces total cost of care and keeps patients local.
3. Value-based care requires capabilities in population health, care coordination and provider and community engagement, infrastructure that helps academic medicine accelerate the shift from volume to value.
4. A JAMA Network study found that markets with a strong AMC presence have lower mortality and more healthy days at home, even when care occurs elsewhere. Effective integration lets AMCs strengthen regional care delivery and manage costs.
5. A multi-tier network strengthens referrals. High-complexity services need steady referral channels that only a broader community footprint can provide.
6. A broader geographic footprint can expand research and training opportunities, including larger residency and fellowship programs.

Data suggests this shift is already underway. Based on analysis of transaction data, AMC share of community and regional hospital deals rose from 29% in 2021 to 50% in 2025. University-owned systems’ share of total deal volume climbed from 14% in 2019 to 21% in 2025.

For AMC leaders, the implications are significant:

• Treat M&A as a strategic gateway to building a more resilient regional system, not simply opportunistic growth or a response to isolated distress.
• Be selective about which hospitals to acquire, focusing on assets that improve access, strengthen referrals and preserve flagship capacity.
• The transaction is only the entry point; integration determines success.

The figures below show how quickly the market is shifting, with AMCs taking on a larger share of deals as more struggling hospitals come to market.

Source: LevinPro transaction database review of community hospital transactions (2019-2025)

Source: LevinPro transaction database review of community hospital transactions (2019–2025)

Navigating common M&A pitfalls when combining community assets

Many AMCs struggle with execution because they aren't built to run broad systems. Without a clear business model and governance mandate for the combined network, they risk importing flagship cost structures, delaying service-line decisions and missing the value of ownership.

A stronger approach starts with a clear growth thesis, then moves quickly to network design.

AMC leaders need to make deliberate decisions, such as: 

• Which services stay local and which shift to the flagship
• How referrals and transfers will work between the entities
• Where diagnostics, ambulatory surgery and specialty clinics should be placed
• How faculty and community physicians should align
• How the brand should be extended in a way that means something clinically, not just commercially

Without a clear top-down answer, service line strategy, physician alignment and network design remain partial, inconsistent or aspirational.

The window is narrowing for AMCs to act

As community hospital strain accelerates, AMCs must move with speed and discipline: deciding which assets to acquire, which services stay local, and what governance model turns deals into functioning networks. Waiting too long leaves fewer options and a weaker position.

AMCs have an opportunity to stabilize local access—if they can become disciplined buyers, fast integrators and credible stewards of community hospitals.

Mike India is EY-Parthenon Americas Health Sector leader.

Amy Gonzalez, Adam Sorensen, Stephen Wilson, Rohan Chatterjee, Haley Clement, Gordon Wolfe and Sohini Kundu, all from EY-Parthenon, also contributed to this article.