The Trump White House could lead to more hospital mergers

President Donald Trump’s return to the White House could spur an increase in the number of hospital mergers and acquisitions.

President Donald Trump's administration is expected to streamline regulations and scrutiny of hospital and healthcare mergers, analysts say.

Analysts expect federal regulators under Trump to exercise less scrutiny on deals than President Joe Biden’s administration. Biden issued an executive order directing federal agencies to look carefully at healthcare mergers, including hospital consolidations, to ensure that the deals won’t lead to higher costs for consumers and lower wages for workers. The Federal Trade Commission moved to block some mergers in recent years.

Most analysts expect less regulatory hurdles in the Trump administration, spurring more hospital and healthcare mergers.

Lisa Kidder Hrobsky, senior vice president of federal relations, advocacy and political affairs for the American Hospital Association, tells Chief Healthcare Executive® that there’s a good chance that the Trump administration may look less skeptically at hospital mergers.

“I think there is a sense that maybe with this new administration and new folks coming in, they will give a fresh approach to looking at mergers and acquisitions, and how hospitals and health systems are able to benefit their communities and their rural hospitals with some of these mergers,” she says.

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Ash Shehata, KPMG’s U.S. sector leader for healthcare, tells Chief Healthcare Executive® that he thinks reduced regulatory scrutiny under Trump will drive more deal-making across the healthcare landscape.

“Deregulation is going to be something that will create a momentum for opportunity, because that'll, I think, open up some areas of innovation, and maybe new technologies in other areas,” he says.

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Mark Pascaris, senior director of Fitch Ratings, also expects to see a healthy number of hospital deals under the Trump administration. Still, Pascaris notes that despite the heightened scrutiny from the Biden administration, more hospital and healthcare mergers took place over the last few years.

“Even under the Biden administration, we saw plenty of M&A activity in healthcare, even though there was from the administration, a state of scrutiny, if you will, or a harsh look on healthcare merger activity, it still happened,” Pascaris said in a recent webinar. “And I think that that will continue into 2025 … regardless of who's controlling the White House.”

There were 72 announced hospital mergers in 2024, up from 65 announced deals in 2023, according to an analysis by Kaufman Hall. For more perspective, there were 53 hospital mergers and acquisitions in 2022.

Trump has chosen Andrew Ferguson to serve as chairman of the Federal Trade Commission, replacing Lina Khan. In a statement released Wednesday, Ferguson said, “We will end the previous administration’s assault on the American way of life, and we will usher in a new Golden Age for American businesses, workers, and consumers.”

Moody’s Ratings is projecting an uptick in mergers and acquisitions, particularly in the pharmaceutical industry, due to expected deregulation. Under the Biden administration, lengthy reviews of proposed mergers delayed deals, Moody’s noted.

“With new leadership at the Federal Trade Commission (FTC) under the Trump Administration, regulators will likely take a more lenient approach to antitrust enforcement involving M&A,” Moody’s Ratings said in a report last week. “A less restrictive stance stands to benefit branded pharmaceutical companies aiming to bolster portfolios and pipelines.”

Moody’s also says the merger climate in the medical device sector “will likely become more favorable for the industry,” with the FTC challenging fewer deals.

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Bipartisan concerns

Even with a more relaxed regulatory environment, members of Congress have criticized the growing consolidation of hospitals across the country, and those sentiments have been shared by Republicans and Democrats.

In the last congressional session, a bipartisan group of lawmakers sponsored a bill that would have called for more scrutiny by the U.S. Department of Health and Human Services on healthcare mergers to protect against anti-competitive practices.

Michael Abrams, managing partner at Numerof & Associates, tells Chief Healthcare Executive® that the conventional wisdom is that Republican administrations typically favor less regulation than Democrats. But Abrams also notes that there are growing concerns among lawmakers about ties between the consolidation of hospital systems and higher prices for patients.

“I think there is bipartisan concern on healthcare consolidation, and some conservative Republicans have been joining up with Democrats behind bills aimed at the market power of conglomerates,” Abrams says. “So it would not surprise me if Trump was sympathetic to this story.”

Abrams has voiced concerns about the impact of mergers on healthcare prices, and he notes that there’s already been a great deal of consolidation in the industry.

“After almost 15 years of continued consolidation, we're getting to the point where every saleable asset has already found a buyer,” Abrams says. “We have a little bit of horse trading here, but what's left would be consolidation among the giants, if you will. And I don't know that he's going to be sympathetic to that.”

Anu Singh, managing director at Kaufman Hall, said the Biden administration's scrutiny of hospital deals didn’t differ too much from Trump’s first term in the White House.

“When it comes to hospital M&A, I can't see a very large distinction between the first Trump presidency and the Biden presidency,” Singh tells Chief Healthcare Executive®.

“You know, from a regulatory standpoint, I think both were very focused on a high level of scrutiny around hospital and health system transactions,” Singh says. “And I think they might have done it in different ways, and they might have had different focal points in terms of the details. But overall, I don't think there was a marked change in the overall enforcement. It probably got a little bit higher degree of focus in the Biden administration, but not by much.”

Analysts have said the Biden administration was more likely to take a closer look at deals involving hospitals within the same region, thus potentially reducing competition for consumers. In some cases, the FTC under Biden would take action to block hospital mergers, citing concerns of higher costs and reduced services with less competition. As a result, some systems pulled the plug on deals.

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Scrutiny at state level

Analysts are seeing increasing regulatory scrutiny of hospital mergers at the state level, and that could have an impact on dealmaking, even if Trump streamlines the process at the federal level.

“I think where we might see some scrutiny, regardless of what Washington says, is at the state level,” says Pascaris of Fitch Ratings.

“Are there state attorney generals that take a particularly harsh look in any kind of m&a activity, particularly if they view the possibility of a local health system within their state being acquired by an out-of-state system? Is that going to mean a loss of jobs within their market? I could see some political pressure points on that one,” he says.

State reviews of hospital and healthcare mergers could be more of an obstacle to some deals, says Shehata of KPMG.

“It's at the state level that we need to kind of watch,” he says.

In some instances, state opposition has scuttled some mergers, Shehata says.

“It's going to be more state and local, and that'll be driven by the local economics,” Shehata says.