The healthcare provider industry isn’t collapsing, but it’s fragmenting, data from healthcare restructuring company shows Gibbins Advisors.
The company published a report last week, showing financial difficulties among outpatient and senior care providers, as well as increased consolidation among hospitals. Below are six of the report’s most notable findings.
—Chapter 11 bankruptcy filings in the healthcare industry increased 33% in the first quarter of this year compared to the fourth quarter of 2025. The number of filings increased from nine to 12, putting 2026 on track for around 48 total filings if trends continue. Mid-sized companies – those with liabilities between $10 million and $50 million – accounted for about two-thirds of first-quarter filings, while large-company bankruptcies remained steady quarter-over-quarter.
— Elderly care companies and medical practices are driving the surge in bankruptcies, with four filings each in the first quarter of 2026. The report notes that financial difficulties are no longer concentrated in hospitals. Many outpatient providers and organizations using long-term care models continue to struggle with low margins and reimbursement pressures, particularly those treating more patients under Medicaid and Medicare.
—The finances of hospitals and large health systems remain relatively stable. There were only three cases of health system failure during the fourth quarter of 2025 and the first quarter of 2026.
—Despite some distress in the healthcare sector, there is also a significant rebound in mergers and acquisitions. The first quarter of 2026 saw 22 M&A transactions between hospitals and health systems, representing the largest number in the first quarter since 2020. These numbers suggest that consolidation is accelerating as a survival strategy, the report notes.
— Policy changes, particularly Medicaid cuts, are a looming force that could lead to even more bankruptcies and consolidation efforts. With approximately $964 billion in Medicaid cuts planned over the next 10 years, the providers most at risk are certainly those whose patient populations are heavily covered by Medicaid. Rural providers, in particular, are likely to continue to struggle, as experts doubt The $50 billion Rural Health Transformation Program will be able to offset losses.
— The gap between providers who are financially successful and those who are not is widening. The strongest health systems grow through acquisitions, while less strong systems are pushed toward restructuring or exit. Over time, this dynamic could reinforce a more polarized market where scale and payer mix are the primary factors determining financial survival, according to the report.
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