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Becker’s Healthcare Podcast
Healthcare M&A, Market Shifts, and Policy Trends to Watch in 2026 with Alan Condon & Laura Dyrda
00:14:31
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- [00:02]
A
The most important healthcare decisions don't happen in isolation. They happen when leaders come together. Becker's 16th annual meeting brings together more than 3,500 hospital and health system executives this April in Chicago. With 800 speakers from Ascension, Cleveland Clinic, Common Spirit and more, the conversations get real. Leaders will share how they're scenario planning for policy shifts, briefly breaking through value based care barriers and building clinical teams that translate new ideas into real world care. Join top decision makers in the room April 13th through the 16th. For the agenda and event details, visit BeckersHospitalReview.com and click on the Events tab in the upper right.
- [00:46]
B
This is Laura Dearda from the Beckers Healthcare Podcast Today. I am here with Alan Condon who's our editor in chief and we're going to talk a little bit about some of the interesting things are happening in healthcare today. Some of the big timely, irrelevant changes as well as, you know, a few of the stories that we're watching closely and we'll be continuing to report on over the next several months and through April, especially for our annual meeting. I know it's coming up here, we have about 3,500 attendees planned, more than 800 hospital health system leaders speaking. And so it's really going to be a great time to connect and convene with peers from across the healthcare spectrum really to kind of talk about and troubleshoot some of these issues. But with that, I think, Alan, I want to turn over to you. I wanted to ask, what are some of the stories you're following most closely right now? How are you seeing some of the biggest players in the field really react and start off by 2026?
- [01:38]
C
Yeah, absolutely. And allies on April Annual meeting. Laura know, really looking forward to moderating a few panels with myself, yourself and a few of our top editorial team members as well in April. So I think 2026, huge, huge year. I think there's a lot to kind of focus in. But just to narrow in on a couple of key stories that we're paying close attention to, namely just to start off with a couple key mergers and acquisitions that just got over the line on the first of the year. There's a couple interesting deals that I'd like to kind of just shine a light on here. I think first and foremost Mercy Health. That's the Mercy Health headquartered in Rockford, Illinois as opposed to the St. Louis, Missouri Mercy Health, but eight hospital system just acquired an independent hospital, 100 bed hospital in Freeport, Illinois on the 1st of January. I think this is an interesting deal that kind of came about rather quickly. When we think about the usual length of time that a merger and acquisition gets over the line. Mercy Health resell potential to grow its market share with this acquisition, but also to grow fhn. That's the independent hospital they acquired to grow its services, its workforce, really invest in its own market share there as well. So I think what's interesting here is as the integration progresses over the couple of months, the hospital has really entered it pretty significant period of leadership transition. It can be usual to see a few leaders in and out when transactions like this get over the line. But four really key top members of FHN C Suite have left the hospital as the hospital joins Mercy Health and new leaders have yet to be announced to come in at the moment. So those departures include the CEO, the cfo, the Chief Human Resource Director and the Chief Nursing Officer Chief Operating Officer. So key key leadership, real overhaul here. Significant changes at the hospital as it joins Mercy Health and just a quick background there. Mercy Health has now operates seven hospitals in Illinois and Wisconsin. It recently closed one hospital in Illinois last year and this is the first acquisition is made in quite a some time. But just to jump to the second transaction I'd love to quickly call out here just jumping over to Connecticut. A ton of challenges in the Connecticut area due to the bankruptcy filing early last year of Prospect Medical Holdings. So there's a really kind of true the hospital landscape up in the air in Connecticut as the attorney generals, the state officials, regulators really look to work with some of those health systems to make sure that that some of these hospitals owned by Prospect didn't close. They stayed open, maintained services and critical access to care for the community. So one of the key acquisitions that just got over the line as a result of those bankruptcy proceedings, Hartford Healthcare Catholic Academic Health System just completed its acquisition of two of those Prospect hospitals, a 240 bed hospital, 109 bed hospital. Again acquired through those bankruptcy proceedings which was kind of a long complex undertaking but they finally got it over the line as of January 1, 2026. Prospects still working to offload some of its hospitals in certain markets even outside of Connecticut at the moment as it works its way through those restructuring process. But Hartford Healthcare seems to be in the right hands. Agreed with the Connecticut Attorney General to an agreement to limit cost growth at those hospitals working to preserve competition as the state really looks to avoid any potential similar similar challenges as to what they face with those hospitals under the private equity for profit based health system and Prospect Medical. So that acquisition lastly just takes two Acute care hospitals under the Hartford healthcare footprint, taking it to a 9 acute care hospital system overall. So a couple other deals closed over January 1st to start the year, but two interesting ones that we've been following for quite some time I'd just like to call out there.
- [05:37]
B
Laura oh yeah, absolutely. That's fascinating. And Alan, do you anticipate there's going to be more transactions, mergers and acquisitions in the first quarter than we saw over the last few months or do you think the market's going to settle down? What do you foresee for the first quarter, first half of 2026?
- [05:55]
C
Yeah, I think great question. I think something that's definitely on the minds of CEOs, CFOs really across the country and from conversations that I've had recently with House with some touchable leaders is they really expect what we've seen in the in recent quarters, the back end of 2025 to see that trend continue into 2026. A little bit more of a ramp up of hospital mergers and acquisitions. We're seeing multiple types of deals, new strategic partnerships, cross market merger and acquisitions became a little bit more of a prominent trend last year, multi state deals and I think just really driven by when we think about the ACA expired, its subsidies expired December 31st. There may be a House vote on that in January, yet to come. That's still a little bit up in I think the main challenges in terms of a reimbursement environment, arguably one of the most difficult reimbursement environments we've seen across the board, impending Medicaid codes coming down the pipeline at the end of the year, which all hospital leaders will have their eyes on. I think a very, very challenging environment for independent hospitals, safety net hospitals, those community hospitals in particular, along with the rural facilities who are really looking to seek those strategic partners, large health system partners. So I think those are going to be the key drivers that might see some of these deals pick up steam in the coming quarters this year.
- [07:11]
B
Laura and that makes a ton of sense. Thank you for the overview there, Alan. Now I wanted to ask you too about some of the biggest players in the field, especially HCA healthcare. I know there's been a lot of movement with them recently and so I wanted to get your perspective what's going on there and what are you hearing from the healthcare leaders you speak with on a daily basis?
- [07:30]
C
Yeah, I think everyone has always got their eyes on the big for profit giants, your HCAs, your tenant, you know, fantastic huge large house systems operating in multi markets. I think both HCA and Tenet really rounded off 2025 with I believe record stock prices in terms of up in the mid to $500 a share. It's focusing in on HCA here. It's really focusing this year on expansion efforts in multiple states in which it operates. So namely Tennessee, North Carolina, Virginia, three to states where it's really pumping money into outpatient growth, potentially some hospitals and ambulatory surgery centers, freestanding emergency departments, urgent care centers, but really being met with significant pushback by some of its nonprofit competitors who operate and hold a significant market share in those areas. So I think in Tennessee we've seen Vitruvian Health, which is a newly branded health system which formed out of an acquisition last year. They operate in Georgia and Tennessee. They're pushing back quite substantially on HCA's plan to open freestanding emergency department in their markets. I think jumping down to Virginia where HCA is a pretty prominent market share in Central and West Virginia. Big, big health system competitor rival in Bonsecourt Mercy Health. There's been an ongoing turf war in that, in that high rapid growth population kind of area of the country. Significant pushback on turf war from Bonsecare Emergency Health as HCA looks to invest more money in urgent care centers, freestanding emergency rooms and potentially a $21 million ambulatory surgery center really which is signaled a little bit of concern for Bonsecur Mercy Health when they think about a big for profit giant coming in to potentially take away from some of its market share. And then lastly, Laura, I think just North Carolina, it's been a space with HCA's mission help in Asheville specifically, huge, huge back and forth. HCA and Asden Health have been challenging certificate of need applications by one another over the recent years, really. And that's for hospitals, for freestanding emergency departments, for urgent care centers, ASCs really both system looking to curtail the other systems growth in a really high population, rapid growth part of the country as well in western North Carolina, I think just really intensifying turf wars. And some of these key key markets probably underscore a broader industry trend as we see health systems expanding across state lines, battles over certificate of need of applications and really becoming what looks like kind of flashpoints for debates around market cost share, market control, competition and indeed patient access as well. So a couple of kind of key markets that will be interesting to watch this year as it relates to HCA and for profit giants looking to kind of drive up some of their market share against some of these competitors on the Nonprofit side. But over to you I think I know on the other side of the spectrum, I know you've been following quite closely a lot of, a lot of key issues as it relates to rural hospitals, namely the Rural Health Transformation Program. Anything kind of top of mind for you? You can. Have you been talking to leaders this year, Laura?
- [10:43]
B
Yeah, absolutely. Well, thank you so much, Alan. And you know, definitely 2026 hitting the ground running with some of these policy updates and especially looking at that R Health Transformation fund, that's the $50 billion allocation from the federal government which established that five year initiative that would go to states. And so we saw at the very end of the year, December 29, CMS issued the awards how much each state would be getting. And so we've been following through on that. And now the states have the amount of their awards. And so across the board it'll vary by state, how they decide to allocate those funds and how much each institution gets. I think, you know, we've been in contact with several rural hospital leaders and healthcare leaders from a variety of states and our responses to how they're going to allocate it run from, you know, we have not decided that yet. We have not gotten, you know, final approval for our plan to, you know, some very specific ideas and approvals from the federal government on how different states can begin to start that process. And so a few things that I can mention here. For example, New York said that they are still in negotiations CMS on the budget. So most hospitals there in a holding pattern that potentially could benefit, but the state hospital association is keeping them updated. Similarly in South Carolina, I heard from a hospital CEO that Medicaid will administer the funds. They got approval for their state Medicaid to do that since they had experience doing so in really being able to provide that information. This particular hospital CEO said he hadn't decided or the state hadn't decided how they were going to allocate the funds, but has been in contact with hospital leaders and share more information about what their plans to doing that would be. This particular leader said he was hoping that some of those funds would be able to help them bridge the gap in maternal and OB care and some of the communities that don't have access to it currently, which would definitely be a relief, I am sure to some of those folks who really need that type of care. In Oregon, facilities have been working to apply for the funds and surveying the needs of rural hospital and health system leaders to move that forward. And then interestingly we heard from a leader in Illinois that talked about, you know, not exactly sure how all the funds would be allocated, but they did know that the Illinois Critical Access Network would be able to administer a portion of those funds because, again, the association had experience administering grants and funding and so already had infrastructure in place to be able to take applications and decide what would make the most sense. And so I think from my perspective, you know, it's a lot out there that really has yet to be decided, but we'll definitely make sure that we are following the story, continue to stay posted and share ideas and how different role leaders in states are making these decisions and then getting the funds out to the right people as quickly as possible. Several folks reminded me that these funds didn't necessarily have to go to hospitals and health systems. And so it's important for executives and leaders to stay in touch with their legislators and their state associations and those who are making these decisions so that they can advocate for these funds to be be used in ways that are most beneficial to the rural communities and patients that they were dedicated to. So that's what we're seeing today with the Rural Health Transformation Fund. And thank you so much, Alan, for being here with us. Look forward to staying connected and seeing many, many of the leaders listening here today at our annual meeting in April.
- [14:25]
C
Fantastic. Thank you so much, Laura. Looking forward to it.