The healthcare provider industry isn’t collapsing — but it is fragmenting, according to data from healthcare restructuring firm Gibbins Advisors.
The firm published a report last week showing financial strain 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 sector 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, which puts 2026 on track for about 48 total filings if trends continue. Mid-market organizations — those with liabilities between $10 million and $50 million — accounted for about two-thirds of the first quarter’s filings, while bankruptcies among larger companies remained flat quarter-over-quarter.
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—Senior care companies and physician practices are driving the surge in bankruptcies, with four filings each in the first quarter of 2026. The report noted that financial distress is no longer concentrated in hospitals. Many outpatient providers and organizations using long-term care models continue to struggle with thin margins and reimbursement pressures, particularly those that treat more patients on Medicaid and Medicare.
—Finances among hospitals and large health systems are remaining relatively stable. There were only three cases of health system bankruptcies across the fourth quarter of 2025 and the first quarter of 2026.
—Despite some clear distress in the healthcare sector, there is also a significant M&A rebound. The first quarter of 2026 saw 22 M&A deals among hospitals and health systems, which is the most since the first quarter since 2020. These numbers suggest that consolidation is accelerating as a survival strategy, the report noted.
—Policy changes, especially Medicaid cuts, are a looming force that could drive up bankruptcies and consolidation efforts even more. With about $964 billion in Medicaid cuts slated for the next 10 years, the most exposed providers are definitely those with a Medicaid-heavy patient population. Rural providers, in particular, will likely continue to struggle, as experts doubt the $50 billion Rural Health Transformation Program will be able to offset losses.
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—The gap between providers that are doing well financially and those that aren’t is getting wider. Stronger health systems are expanding through acquisitions, and not-so-strong ones are being pushed toward restructuring or exit. Over time, this dynamic might reinforce a more polarized market where scale and payer mix are the main factors determining financial survival, according to the report.
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