The uptick in large-scale healthcare M&A deals in 2025 contrasted sharply with the slowdown in 2024 following the post-pandemic boom years. Transaction values in excess of $1bn-$2bn were not uncommon and this trend is set to continue in 2026. A recently published report by Bank of America and Health Leaders found that 59% of leading healthcare providers expect their M&A activity to increase over the next three years. In addition, favourable regulation anticipated in the US is likely to attract additional private equity interest and investment in healthcare businesses, potentially fuelling this trend further.
While ripe with opportunity, challenges await any investor in a sector that is growing ever more complex. With its unique concentration of regulatory, operational, financial and long-tail hazards not seen in other industries, there are many documented cases of buyers underestimating the risks of acquiring a healthcare business.
Fraud and the regulation paradox
US healthcare has long been one of the most heavily targeted sectors for fraud. Populated by large, complex, often fragmented organisations processing high volumes of payments, the sector remains highly vulnerable to exploitation.
As such, the government’s continued focus on fraud, waste and abuse means that, while anticipated regulatory changes are likely to stimulate further M&A, paradoxically, the potential for regulatory enforcement action remains a critical risk factor. The False Claims Act, for example, is one of the DOJ’s top enforcement priorities. Enforcement actions can be brought up to ten years after a violation, potentially triggering significant, unexpected damages and insurance claims. The fact that regulatory exposure stands as its own risk pillar – and a major one – is not always fully appreciated by acquirers.
Tech complexity
A further challenge is the constant introduction of new technologies – in imaging, pathology, oncology, data exchange and beyond – which can create privacy issues, additional layers of complexity and breach risk. US healthcare breach data shows a clear upward trajectory, with more cyber attacks being attempted and more businesses being affected. According to research by Proofpoint, 93% of healthcare organisations reported cyber attacks in 2025. Understanding the ramifications of how these technologies, often with little to no historic claims data, are deployed within an organisation is an increasingly taxing and time-consuming task for underwriters and due diligence teams. Claims by sellers about AI in particular require close interrogation. Buyers should be aware of the potential for targets to overstate their capabilities to appear more technologically advanced than they are by labelling products ‘AI enabled’ without clarification.
Workforce disputes
Labour and wage‑and‑hour exposure is also one of the most underestimated liabilities in US healthcare M&A. These commonly involve disputes over unpaid breaks, overtime, meal periods, scheduling practices and misclassification. Providers face a steady flow of class actions, discrimination claims and regional labour disputes, driven by overstretched staff, cultural tensions and chronic shortages. These dynamics, similar to those found in the UK’s NHS, are present across the US healthcare market. Employment‑related exposures often emerge alongside other financial and operational issues and are in the same category and severity of risk as tax errors or financial statement inconsistencies. Workforce‑driven liabilities are therefore structural, arising from the fundamental design and operating reality of healthcare businesses, and must be treated with the same seriousness as regulatory, billing and coding risk.
Acquisition and consolidation
Beyond core providers, supporting industries and healthcare verticals are likely to be acquisition targets. These include organisations specialising in revenue cycle outsourcing, clinical research, medical devices and physician services groups such as primary care, ophthalmology and dentistry. This segment is seeing heightened consolidation as the cost of delivering care in the US continues to rise and as access to services outside major metropolitan centres becomes more difficult. Smaller practices and service providers are struggling to remain viable in isolation, which is driving consolidation, acquisitions and increased interest from private equity and strategic buyers.
Treating regulatory exposure, billing integrity, technology and workforce‑related liabilities as primary diligence pillars is critical for any potential acquirer of a primary or auxiliary healthcare business. Specialist healthcare counsel, on both the legal and commercial sides, is essential as most of these exposures sit within billing, coding, documentation and physician compensation rules that generalist advisors routinely miss.
Insurance is a further critical component and transactional risk cover (representations & warranties or warranty & indemnity) is a firmly established, mainstream product. A recent study by broker HWF Partners, which canvassed 24 insurers and 18,563 policies, found a significant majority of claims continue to arise from risks that cannot be captured by due diligence, with more than half arising from seller fraud, non-disclosure and third-party claims.
Acquirers that treat healthcare diligence as a specialised, compliance‑heavy investigation, and have protection structured around billing, coding, documentation quality and employment practices, will be well placed to benefit from the building M&A tailwinds in the US healthcare sector.
