Health System M&A and Margin Trends with Alan Condon

Summary

Podcast Summary

Podcast: Becker’s Healthcare Podcast
Episode: Health System M&A and Margin Trends with Alan Condon
Date: September 4, 2025
Guest: Alan Condon (Editor in Chief, Becker's Healthcare)
Host: Scott Becker

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Overview

This episode dives into the latest trends in U.S. health system mergers & acquisitions (M&A) and health system financial margins. Alan Condon, Editor in Chief at Becker’s Healthcare, shares fresh updates on hospital consolidations, recently closed health system deals across the country, and the shifting landscape of operating margins at major health organizations. The episode also addresses the real-time impact of changing payer mixes and service cuts at hospitals serving vulnerable populations.

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Key Discussion Points & Insights

Recent Health System M&A Activity

Timestamps: 00:59 – 04:05

• September M&A Closures:

  • 31 hospital and emergency acquisitions completed in 2025 so far, with three major deals closing at the start of September.

  • TriHealth (Ohio):

    • Acquired a 140-bed hospital in Wilmington, Ohio, expanding to six acute care hospitals.
    • The deal was initiated in June and closed within three months.
    • The acquisition will serve as a hub for specialized services like cancer care, cardiovascular, neurosciences, and women’s health.
    • "TriHealth essentially sees this hospital, Clinton Memorial, serve as a hub for its specialized services..." — Alan Condon [01:44]

  • UnityPoint Health (Iowa):

    • Acquired MercyOne Siouxland Medical Center (Sioux City, Iowa), bringing UnityPoint’s total to 37 hospitals.
    • "Significant acquisition... expands UnityPoint’s footprint..." — Alan Condon [02:18]

  • University Merger in Texas:

    • University of Texas at San Antonio merged with UT Health Science Center, forming a $7 billion academic health system.
    • The new institution manages 2.5 million annual patient visits, over 1,400 medical staff, and trains about 1,000 residents/fellows per year.
    • Strategic goal: To become a comprehensive global public research institution, comparable to Michigan, North Carolina, and UCLA.
    • "UT Health really saw this merger as a way for it to become a sort of a global public research institution..." — Alan Condon [03:25]

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Health System Margin Trends

Timestamps: 04:05 – 06:11

• Advocate Health:

  • Positive movement in operating margin, rising to 4.4% for the first half of 2025 (about $820 million operating income).
  • Revenue growth is outpacing expense increase.
  • "Advocate Health really seeing a positive jump... margin operating margin rising to about 4.4%... positive trends there." — Alan Condon [04:22]

• Montefiore (New York):

  • Experiencing a dip, with operating losses due to challenging payer mixes (heavy Medicaid/Medicare reliance).
  • Represents broader issues faced by safety-net hospitals in major cities.
  • "Montefiore... saw a bit of a dip in its operating income... health system pivoting in the wake of the one big beautiful bill..." — Alan Condon [04:54]

• Upcoming Data:

  • Anticipation for Q2 reports from other large nonprofit health systems like Trinity Health and CommonSpirit for a broader industry view.
  • "We'll kind of get a bigger look at how those large non-profits are doing in Q2 of this year." — Alan Condon [05:38]

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Impact of Payer Mix and Service Reductions

Timestamps: 06:11 – 07:34

• National Implications:

  • Safety-net hospitals (e.g., Montefiore) and those with high Medicaid patient populations are disproportionately affected by policy changes and potential reductions in Medicaid coverage.
  • "Some of the safety-net hospitals are already feeling the effects or potential effects of trimming Medicaid..." — Scott Becker [06:34]

• Workforce Reductions:

  • Notable layoffs at Children’s Hospital of Los Angeles, affecting about 5.8% of its workforce.
  • Indicates a trend of increased layoffs and service cuts, especially in hospitals serving higher proportions of Medicaid patients.
  • "Children's Hospital of Los Angeles, significant workforce reduction... just over the last couple of weeks we have seen a little bit of an uptick... in some layoffs, some service cuts across the board..." — Alan Condon [07:01]

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Looking Forward

Timestamps: 07:42 – 08:18

• Ongoing attention to new financial and margin reports from large health systems — especially CommonSpirit and Trinity Health — will provide deeper insights into sector performance.
• Ascension and Providence are also being monitored after recent financial challenges.
• "Fantastic nonprofit health system there. Trinity Health as well... it'll be interesting to take a peek at CommonSpirit and Trinity Health..." — Alan Condon [07:50]

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Notable Quotes

• "31 hospital emergency acquisitions... three deals just closed at the first of September." — Alan Condon [01:12]
• "TriHealth essentially sees this hospital... serve as a hub for its specialized services." — Alan Condon [01:44]
• "UT Health really saw this merger as a way for it to become... a global public research institution." — Alan Condon [03:25]
• "Advocate Health... margin operating margin rising to about 4.4%..." — Alan Condon [04:22]
• "Some of the safety-net hospitals are already feeling... trimming Medicaid and less people on the insurance rolls." — Scott Becker [06:34]
• "Over the last couple of weeks we have seen an uptick, unfortunately, in some layoffs, some service cuts..." — Alan Condon [07:01]

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Summary of Key Segments with Timestamps

• M&A Activity Overview [00:59–04:05]
• Financial Margin Trends (Advocate, Montefiore) [04:05–06:11]
• Impact of Policy Changes & Service Cuts [06:11–07:34]
• Looking Ahead (Upcoming Reports) [07:42–08:18]

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This episode provides an in-depth look at shifting strategies and challenges for U.S. health systems in 2025, offering timely, data-driven insights for leaders, finance professionals, and stakeholders navigating consolidation and margin pressures.

Transcript

[A]

Exciting things are happening at Beckers Healthcare Stay ahead of industry trends with the new Beckers CFO plus Revenue Cycle Podcast your Go to source for insights from top healthcare finance leaders. Tune in wherever you get your podcasts and don't miss the 10th annual Health IT Digital Health RCM Conference happening September 30 to October 3, 2025 in Chicago. Join thousands of executives, engage with industry leaders and explore the future of healthcare Innov. Learn more about our upcoming [e-mail] See you there.

[B]

This is Scott Becker with the Becker's Healthcare Podcast. We're thrilled today to be joined by Alan Condon who is the brilliant Editor in Chief at Becker's Healthcare, who deals a lot with finances of systems and Alan, it seems like there's a lot going on with both financial reporting and mergers and acquisitions. Tell us what you're watching currently in the healthcare and health system area.

[C]

Yeah, I think exactly right Scott. I think first of the month just a couple of days ago here in September we did see multiple mergers and acquisitions close and a few more health system financial reports that we covered recently as well. But I believe so far, per our own reporting for 2025, we reported on 31 hospital emergency acquisitions that have been completed that is closed, including three deals that just closed at the first of September. So just a quick little breakdown of the deals that we recently the line first and foremost would be Tri Health is a health system in Ohio. They've completed their acquisition of 140 bed hospital in Wilmington, Ohio, growing the health system's footprint to six acute care hospitals. This was a deal that really got over the line relatively quickly, I believe announced in early June, about three months or so until it got over the line. Tri Health essentially sees this hospital, Clinton Memorial serve as a hub for its specialized services. So the likes of cancer care, cardiovascular care, neurosciences and women's health among a couple others. Really quick, deal that over the line and try Health growing its footprint in Ohio. Jumping over to Iowa, we saw Unity Point Health large large health system in Iowa. They also acquired Mercy One, Sioux Land Medical center, that's in Sioux City, Iowa. So I believe that's a significant acquisition. Got over the line relatively quickly, similar to the Tri Health deal and that expands Unity Points footprint to I believe 37 hospitals. Now overall. Final one I'll just quickly jump into. It's a little bit different than the other stories we cover, but slightly different than that. It's a university merger with a health system component and that's the University of Texas at San Antonio essentially merged with the University of Texas Health Sciences center to become UT San Antonio. So this is a $7 billion enterprise now after that merger has been completed. Took about a year or so to get over the line. Official as of September 1st. And just a little bit of background on the academic health system side of things here. UT Health San Antonio sees about 2.5 million patient visits a year. It has a team of about more than 1,400 physicians, providers and other clinicians. Also significant training that it trains about a thousand residents, fellows and other trainees a year. So just a sense of the size and the scope of that enterprise. The last the UT Health really saw this merger as a way for it to become a sort of a global public research institution with comprehensive academic and health sciences centers, really hoping to be able to stand up to the likes of University of Michigan, the University of North Carolina and the likes of UCLA as well. So three deals we just saw got over the line. They're very different than in very different pockets of the country, but interesting nonetheless.

[B]

No, thank you. We're watching those. I've been reading your coverage on those in the team's coverage in those and talk for a moment about health system margins. I saw a really positive report from Advocate, more challenging report from Monte Fiore. What are you seeing out there in terms of health system margins?

[C]

Yes, I think a couple of the big stories you referenced there, I think Advocate Health really seen a positive jump through the first half of 2025 compared to last year. I believe margin operating margin rising to about 4.4% reported in operating income. Just to give you a sense of the size and scope there, that's about 820 million or so operating income for Advocate Health through the first two quarters of 2025. So really positive trends there. Growing revenue year over year, revenue outpacing the increase in expenses. Montefiore on the other hand, of the spectrum, to your point, seeing it slightly on the other side of the spectrum, saw a bit of a dip in its operating income. Operating loss, excuse me, really down to according to its cfo, the federal courts that we saw impending, the kind of health system pivoting in the wake of the one big beautiful villag Montefiore serves. A significant component of its revenue draws from Medicaid, Medicare. No doubt health systems with similar payer mixes like Montefiore will see similar trends in terms of trying to offset some of those, some of those challenges that we see coming down the line. So Advocate Health there's really moving in the right Direction, huge enterprise, positive trends not opposite side of the coin for Monte Fury. We're looking at a couple down the quarters. I think Trinity Health will be reporting in the next couple of weeks. Common spirit as well. So we'll kind of get a bigger look at how those large nonprofits are doing in Q2 of this year. So that's really interesting. Kind of on the back of the one big beautiful bill. And then how are health systems pivoting as we look at Q3? So interesting to compare those three trends as we see over the coming quarters.

[B]

Scott, thank you. No, fascinating to watch. I mean, good to see some upticks in some of the margins for some of the health systems. It seems like everybody's a little bit concerned about what will be some of the impacts on payer mix and the loss of payers in the one big beautiful act, big beautiful bill. And so it's good to see some positive margins at this point. And then of course you see the concerns. Exactly. New York City, some of the safety net hospitals are already sort of feeling the effects or the potential effects of trimming Medicaid and less people on the insurance roles.

[C]

Yeah, absolutely. I think to your point, Montefiore, some of those safety net systems in large cities serving those big pockets of Medicaid paramixes, to your point, the potential effects really looking to get ahead of those, tackle them upstream. We look on the other side of the country, Children's Hospital of Los Angeles, significant workforce reduction there that we just reported on, about 5.8% of its workforce affected in there. So just over the last couple of weeks we have seen a little bit of an uptick, unfortunately, in some layoffs, some service cuts really across the board, particularly to your point, in some of those higher Medicaid mix components, higher Medicaid areas of the country. No doubt it'll be something we might continue to see in the coming weeks and months as health systems that continue to pivot their strategies to kind of affect their bottom lines.

[B]

Yeah. And anything else you want to share with us today? And as always, thank you for joining us and sharing your thoughts with us. Just always fantastic.

[C]

Yeah. And always a pleasure. I think just keeping a close eye on the next big reports. We'll be paying close attention to hopping on some big investor calls, a common spirit. Fantastic nonprofit health system there. Trinity Health as well, really give us a larger picture of how some of these health systems are performing. The largest health systems in the country. We reported on Ascension not too long ago. Providence still looking to turn around in the wake of some of their financial challenges. But it'll be certainly interesting to take a peek at Common Spirit and Trinity Health once they report as we wait close at the end of our Q2 reports.

[B]

As always, thank you for joining us. We'll keep a close eye. I've been watching so much of the coverage. So interesting. Thank you very much for joining us today on the Beckers Healthcare podcast. And thank you more so for all the leadership you provide at Becker's Healthcare. Thank you very, very much.

[C]

Thank you so much, Scott. Always a pleasure.