The sustained momentum in hospital and health system M&A activity has shown that health systems continue to advance active positioning and portfolio management, with 16 hospital and health system transactions announced in Q3 2026. The 16 announced transactions in Q3 2026 (Figure 1) are on par with what we saw in Q3 2025. As deal volume continued, mega mergers also continued to make waves across the industry. For the third consecutive quarter, multiple mega mergers—transactions in which the smaller party had annual revenue exceeding $1 billion—were announced, along with several transactions that fell just shy of the $1 billion threshold.
The size of these transactions kept the average seller size elevated relative to recent year-end figures, continuing to suggest that M&A activity is increasingly involving larger organizations opting to partner with even larger ones.
Divestitures of specific health system assets represented five of the 16 announced transactions in Q3 2026 (Figure 1).
Figure 1: Q3 2026 at a glance
Number of announced transactions
16
Average size of seller/smaller party by annual revenue
$586M
Total transacted revenue
$8.2B
Transactions involving:
Religiously affiliated seller
0
Governmental seller
3
Independent not-for-profit seller
10
For-profit seller
3
Academic seller
0
Financially distressed seller
3
Religiously affiliated buyer
3
Governmental buyer
0
Independent not-for-profit buyer
8
For-profit buyer
3
Academic buyer
2
A divestiture
5
Overview of Q3 activity
The 16 hospital and health system transactions announced in Q3 2026 suggest a consistent level of M&A activity, on par with Q3 2025 (Figure 2).
Two announced mega mergers, including Erlanger Health System and Prisma Health, helped boost Q3 average seller size to nearly $586 million, trending upward in comparison to recent year-end averages (Figure 3).
Total transacted revenue of $8.2 billion across the 16 announced transactions (Figure 4) is comparable to Q3 activity in recent years, and generally higher than pre-pandemic historical averages.
Not-for-profit acquirers continue to represent a large share of M&A transactions in Q3. Not-for-profit health systems, including academic and religious-sponsored organizations, remain focused on strategic growth within existing geographies (Ascension/Williamson Health) and expansion into new markets (UAMS/Jefferson Regional Medical Center).
Q3 highlights
Clear, active repositioning
This year’s Q1 and Q2 reports revealed growing signs of proactive repositioning, as hospitals and health systems prepared to navigate macroeconomic pressures and headwinds. In Q3, organizations continued to pursue growth in support of future strategic priorities, including the deliberate expansion of existing hospital networks. There was also continued momentum among organizations expanding complementary service-line and business-unit partnerships in pursuit of capabilities that enable system transformation. The sustained focus on growing expertise and know-how beyond scale alone is clearly demonstrated.
Intermountain Health’s recent transaction activity is a prime example. In one market, Intermountain Health expanded its presence, acquiring two facilities from Surgery Partners. Surgery Partners’[1] rationale to optimize its portfolio and narrow focus on ambulatory surgery centers “to be better positioned for long-term growth” aligned with Intermountain Health’s interest in enhancing presence in western markets like Southeast Idaho. In Colorado, Intermountain Health contributed assets to a joint venture recently executed with AdventHealth[2] to combine capabilities and expand access to high-quality, affordable care in Denver. Each transaction had a unique rationale for partnership, a differentiated path to value in the geography served, and a clear role in proactively positioning Intermountain for transformation across its markets.
Year-to-date rise in mega mergers
The pace of announced mega mergers year-to-date is significant, pointing to ongoing activity among larger, scaled organizations. At this pace, 2026 could become a record year for transactions in which the smaller party has annual revenue exceeding $1 billion. Organizations of this scale continue to seek partners with a clear strategic rationale, driven by capability growth and access expansion, in anticipation of a changing environment. This activity has also been driven by organizations acting from a position of strength to secure transaction commitments, bolster their competitive position, and gain access to capabilities that enhance their communities long-term.
As part of its multi-year growth strategy, Erlanger Health System, a $1.6 billion system in Chattanooga, Tenn., announced a strategic partnership with Prisma Health, a regional not-for-profit, with plans to merge by the end of 2026. The transaction would help expand Prisma’s footprint into East Tennessee, establishing a regional hub and adding the region’s only tertiary care provider and Level 1 trauma center to its portfolio. The merger would also enable Erlanger Health System to “fast track its vision” and achieve “long-term sustainability, growth, innovation, and success” through a capital commitment from Prisma Health that helps “expand access and advance care delivery.”[3] The transaction highlights how organizations are seeking partnerships to accelerate transformation through access to enhanced capabilities, talent, and capital. The merger paves the way for Prisma Health to expand its multi-state regional platform, with a definitive agreement scheduled for the end of the year.[4]
Transactions such as the Erlanger Health System/Prisma Health reflect further evidence of capability-driven, strategic complements among large, regional partners. Often, these alignments center less on local market concentration and more on regional market collaboration. The pace of new and adjacent market entry by regional health systems is increasingly being supported by strategic initiatives aimed at moving toward where the future of care delivery and network models are leading.
Looking forward
Year-to-date activity suggests sustained momentum, and an uptick in market activity, with 2026 currently on track to see the highest number of annual transactions since the start of the pandemic (Figure 5). The Q3 trends reflect a continued wave of partnership activity as organizations seek a path to reposition operations, particularly as financial and regulatory headwinds continue to mount. A significant number of transactions points to larger strategic partnerships between organizations operating from a position of stability and strength. At the same time, a steadily active middle band of mid-sized hospitals and health systems is transacting proactively, before their options narrow.
[1] Surgery Partners, “Surgery Partners completes sale of ownership interests in Idaho Falls facilities to Intermountain Health; Updates guidance to include impact of the transaction,” press release, September 17, 2026.
[2] AdventHealth, "AdventHealth, Intermountain Health plan partnership to enhance healthcare for Denver metro communities," press release, July 21, 2026 (updated August 6, 2026).
[3] Prisma Health, "Erlanger Health System signs letter of intent to partner with Prisma Health," press release, July 22, 2026. Kaufman Hall served as an advisor in this transaction.
[4] Erlanger Foundation, "Erlanger and Prisma Health: a partnership takes shape," newsletter, October 2026. Kaufman Hall served as an advisor in this transaction.
Authors
Kristofer Blohm
Managing Director, Practice Co-Leader, Mergers & Acquisitions
Kris Blohm is a Managing Director and Co-Leader in Kaufman Hall’s Mergers & Acquisitions practice with more than 20 years of healthcare financial and strategic advisory experience. He counsels executives and boards nationwide on a broad range of transactions, including mergers, acquisitions, partnerships, divestitures, joint ventures, strategic investments, as well as other partnership and affiliation structures. Prior to Kaufman Hall,...
Managing Director, Practice Co-Leader, Mergers & Acquisitions
Courtney Midanek is a Managing Director and Co-Leader of Kaufman Hall’s Mergers & Acquisitions practice. With more than 25 years of experience in M&A, capital markets and valuations, she provides partnership and M&A advisory services for a variety of healthcare services clients. Prior to Kaufman Hall, Courtney was in the Business Expansion Group of the Blue Cross and Blue Shield...
Anu Singh is a Managing Director in Kaufman Hall’s Mergers and Acquisitions practice. With 30 years of experience as a trusted advisor to top executives and boards nationwide, he has worked on more than 500 partnership, strategic growth, and other advisory engagements for a broad range of mission-based as well as for-profit organizations. Mr. Singh’s experience includes leading the evaluation,...
Rob Gialessas is a Senior Vice President in Kaufman Hall’s Mergers & Acquisitions practice. Since joining in 2014, he has worked with a variety of healthcare clients, providing merger, acquisition and other strategic and financial advisory services for both sell-side and buy-side transactions, as well as advising on growth strategy engagements. His responsibilities include oversight of transaction execution strategies, transaction...
Chris Peltola is a Senior Vice President with the Mergers and Acquisitions practice of Kaufman Hall. His responsibilities focus on leading healthcare transactions and engagements for clients, including sell-side and buy-side M&A transactions, joint venture evaluation, valuation analyses, strategic and growth options evaluations and other similar engagements. Mr. Peltola works with a broad array of organizations, primarily focused on hospitals,...
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