Here are 10 key trends that ASCs should be aware of as consolidation accelerates.
1. Increase in urgent care center acquisitions
As healthcare shifts further toward outpatient settings, hospitals and health systems are acquiring urgent care centers to strengthen market positions and meet the rising demand for accessible, cost-effective care. This trend is driven by financial pressures, increased competition from payer-owned providers and retail clinics such as CVS, Walgreens and Amazon’s One Medical, and the broader move toward value-based care models.
2. Pennsylvania remains hot bed for hospital consolidation
Pennsylvania has become a hot spot for hospital mergers and acquisitions. Large systems such as Pittsburgh-based UPMC and Philadelphia-based Jefferson Health continue expanding, while smaller community hospitals seek alignments for financial survival. The trend underscores a fundamental shift in Pennsylvania’s healthcare environment, with market consolidation reshaping competition and access to care across the state. Six hospital and health system leaders shared their perspectives with Becker’s on the factors driving Pennsylvania’s hospital consolidation surge and what the future holds as the trend continues.
3. Hospitals close maternity services
On the heels of financial pressures and workforce shortages experienced in 2023, many hospitals and health systems are continuing to face maternity service closures in 2024. In rural areas, more than 200 hospitals have shut down delivery services in the past decade, despite these facilities being expected to handle births for nearly 10% of the nation’s babies. The trend raises concerns about maternal health access in underserved communities.
4. Megamergers redefine market dynamics
The profile of megamergers is evolving, according to a report from Kaufman Hall. Historically, such mergers involved organizations of similar size, but in 2024, more cases emerged where smaller hospitals merged with significantly larger health systems. This shift suggests that even large organizations face financial and operational challenges, indicating a trend to watch in 2025.
“Mega-mergers used to be between organizations of similar size, but that changed in 2024 to smaller organizations merging with organizations that are significantly larger,” said Anu Singh, managing director in the mergers and acquisitions practice at Kaufman Hall. “While these may not all involve financially distressed organizations, it does suggest that large organizations are not immune to financial and operational challenges.”
5. Cross-market mergers become more popular
Health systems are increasingly pursuing cross-market mergers — in which systems in separate geographic areas merge — allowing them to spread operational risks, expand academic affiliations and explore innovative care models. While these mergers do not directly eliminate competition, they can influence market dynamics by increasing leverage with payers and employers.
Cross-market deals spread combined organizations’ operating risks across multiple markets while expanding access to an academic medical center or widening the opportunity to experiment with innovative approaches because of more diverse markets resulting.
6. Mergers could be instigated by payer leverage
Health system consolidations are becoming more focused on negotiating leverage with commercial payers rather than just cost savings or increased market share. The recent merger of St. Louis-based BJC HealthCare and Kansas City-based Saint Luke’s Health System exemplifies this trend, as leaders cited improved bargaining power in payer negotiations as a primary motivation.
7. FTC merger policies take effect
The Federal Trade Commission and the Justice Department 2023 merger guidelines are now in effect after being unveiled in December 2023. The updated Hart-Scott-Rodino Act rules aim to enhance antitrust oversight by allowing regulators to scrutinize proposed transactions more effectively within the 30-day waiting period. The U.S. Chamber of Commerce has challenged these rules, arguing they are excessive and unlawful.
8. FTC increases scrutiny of healthcare mergers
The FTC and Justice Department’s antitrust divisions are increasing enforcement against healthcare consolidation. Between 2000 and 2020, the FTC challenged only 13 hospital transactions. Since 2020, however, the agency has blocked or challenged several high-profile mergers, including those involving Walnut Creek, Calif.-based John Muir Health, Dallas-based Tenet Healthcare and West Orange, N.J.-based RWJBarnabas Health. The FTC argues that unchecked consolidation can reduce competition, raise costs and limit access to care.
9. New administration could change this trend
Under Democratic administrations, the FTC has typically taken a tougher stance on M&A, focusing on concerns around market consolidation, increased prices and reduced competition. Under the current FTC leadership, at least seven major healthcare deals have been blocked.
President Donald Trump is likely to take a more permissive view toward major mergers and acquisitions. Mr. Trump’s previous administration approved CVS Health’s $69 billion acquisition of Aetna in 2018, and a Republican administration may favor a more lenient regulatory approach, emphasizing market freedom and potentially easing some of the current restrictions. This could mean a higher likelihood of approval for health system mergers, especially if they can demonstrate potential benefits such as operational efficiency, expanded access to care and improved health outcomes for patients.
10. Health systems exit markets with limited growth potential
The post-pandemic landscape has highlighted stark differences between thriving and struggling hospitals. Nearly 40% of hospitals are still operating in the red, prompting some systems to exit markets with limited growth potential. Large systems with financial stability are acquiring distressed facilities, leveraging economies of scale to spread costs and enhance efficiency. Geographic diversification continues to be a driving factor in consolidation strategies.
