Healthcare services M&A could rise in 2026: PwC

Core Insights - The healthcare M&A landscape is facing significant challenges due to an uncertain regulatory and reimbursement environment, which is expected to persist into 2026 [3][4] - Major policy changes, including cuts to Medicaid and potential expiration of financial assistance for the Affordable Care Act, will likely increase the number of uninsured Americans and create financial pressures on healthcare providers [3][4] - The need for healthcare organizations to adapt quickly to these changes is emphasized, with a focus on leveraging technology, particularly artificial intelligence (AI), to gain competitive advantages [5][6] Regulatory and Policy Changes - The recent policy shifts are accelerating, prompting buyers to act swiftly to secure competitive advantages [5] - The finalization of site-neutral pay policies by CMS will require hospitals and ambulatory care operators to potentially adjust their service portfolios [5] Impact of AI on Healthcare - AI is becoming a critical factor in healthcare technology, with organizations implementing tools for revenue cycle management and clinical documentation [6] - Private equity firms are expected to shift their focus towards AI-driven software and services that enhance care delivery, moving away from investments vulnerable to reimbursement pressures [7] M&A Activity and Market Trends - A rebound in health services dealmaking is anticipated for 2026, driven by improvements in quality and the integration of technology, especially AI [8] - The total deal value in health services for 2023 is approximately $46 billion, a decrease from $62 billion in 2024, indicating a slowdown in M&A activity [8] - AI is recognized as a significant differentiator in health services dealmaking, with investors viewing it as a key driver for margin expansion and revenue growth [8]