The high-stakes future of healthcare consolidation and regulation

November 2025  |  SPECIAL REPORT: HEALTHCARE & LIFE SCIENCES

Financier Worldwide Magazine

November 2025 Issue

The healthcare sector stands at a pivotal inflection point in 2025. Across the US and in Europe, providers are grappling with a complex mix of macroeconomic pressures, evolving policy landscapes and transformative technological shifts.

While demand for healthcare remains robust and driven by ageing populations, chronic disease prevalence and post-pandemic recovery, the sector faces mounting challenges that threaten operational stability and long-term sustainability. Providers are contending with persistent inflation, rising labour and supply costs, and reimbursement pressures.

In recent years, budget cuts, tighter regulatory frameworks and limits on reimbursement for consultations, treatments and pharmaceuticals have forced hospitals, clinics and private practices to operate on reduced margins.

In France, reforms emphasise cost containment and efficiency, with stricter reimbursement caps imposed by the national health insurance system (Caisse Nationale d’Assurance Maladie) and performance-based funding models, which impact providers’ operations, and notably slow innovation and digital transformation to the detriment of patients. Public and private hospitals are facing funding reductions, leading to the closure of emergency rooms and maternity wards.

For its part, the US healthcare sector’s fiscal direction is highly sensitive to legislative funding decisions by the new White House administration and the US Congress, which are collectively controlled by the Republican Party’s policy preferences. On the investment and innovation side, the implementation of artificial intelligence (AI) technologies is accelerating for purposes of enhancing clinical data analysis, on the one hand, and operational cost reduction on the other.

According to the Organisation for Economic Co-operation and Development, Europe faces a shortfall of 1.2 million healthcare professionals, with over one-third of doctors aged 55 and older. As retirements accelerate and younger cohorts fail to keep pace, labour costs rise, productivity falls and reliance on temporary staffing grows, deepening financial challenges.

The US, where the federal government’s policy impacts on the economic health of the industry, is in the early stages of making operational and investment adjustments as a result of significant realignment of federal funding priorities led by the new White House administration.

These priority changes include legislatively enacted pullback of federal funding investment in revenue-generating sectors beginning in federal fiscal year 2026 for providers (e.g., investment in research and development of new therapeutic technologies), funding for the Medicaid insurance programme for the substantial financially indigent population in the US and clinical research in previously high priority disease states, such as cancers.

As a result, the US healthcare provider sector is experiencing labour cost reduction strategies in larger integrated hospital systems and some hospital closures in patient markets that do not have robust financial support. Investment transactions in private equity markets, however, remain attractive in numerous healthcare subsectors, where value opportunities are still being identified and acted upon.

Consolidation of hospital system assets can be seen in numerous situations, including where hospital system bankruptcies in US markets, such as Connecticut, are creating opportunities for more solidly positioned enterprises to acquire new assets and single hospital health networks are combining in markets such as Oklahoma.

Across Europe, as outlined below, providers navigate far-reaching reforms that seek to contain costs, enhance data interoperability, and reinforce safety and compliance standards, while indirectly reshaping market access and financing models.

EU Artificial Intelligence Act (AI Act). Adopted in 2024, phased in from 2025, the AI Act classifies most healthcare AI tools as high-risk, imposing strict requirements on transparency, data quality, algorithm explainability and monitoring. Providers now face overlapping audits and certification with the Medical Device Regulation (MDR) and the In Vitro Diagnostic Medical Device Regulation (IVDR). Strategically, providers that integrate compliance early will be better positioned to deploy AI at scale.

Health Technology Assessment (HTA) Regulation. Adopted in 2021 and phased in from 2025 to 2030, the HTA regulation introduces joint clinical assessments (JCAs) for new medicines and high-risk technologies. While reimbursement decisions remain national, JCAs harmonise clinical evaluation standards across Europe and accelerate product launches. For providers, this creates pressure to adopt therapies more rapidly, even before full national cost-effectiveness analyses are complete. The regulation also intensifies challenges around pricing: external reference pricing, where national authorities benchmark a drug’s price against those charged in selected reference countries, magnifies cross-market budgetary risks and narrows providers’ room for manoeuvre in negotiations. Providers will need to anticipate price domino effects earlier in their market strategies.

European Health Data Space (EHDS) Regulation. Adopted in 2025, phased in through 2034, the EHDS Regulation mandates standards for electronic health records and controlled secondary use of data. This increases compliance costs for providers, especially in IT and privacy.

MDR & IVDR. Despite transition extensions, steep compliance costs and unpredictable approval timelines persist, slowing innovation and causing device shortages. The impact has been particularly visible in radiology AI tools, where the number of new CE-marked radiology AI devices fell from 48 in 2020 to just five in 2024. For providers, this underscores the importance of diversifying supply chains and planning for regulatory-driven delays in technology adoption.

In France, the 2025 Social Security Financing Bill reflects a delicate political compromise. Initial plans to cut reimbursement for consultations and pharmaceuticals by 10 percent were reduced to a 5 percent cut under political pressure. Negotiations are ongoing between the National Health Insurance Fund and practitioners’ syndicates, notably for the reimbursement of certain acts and technical lumpsum payments in the imaging sector. Should no agreement be reached prior to the end of September, the Caisse Nationale d’Assurance Maladie may impose cost reductions to providers.

Consolidation and financialisation are accelerating, powered by stricter quality standards, higher capital requirements and demographic shifts. Large groups with deep financial capacity are now shaping the trajectory of the sector. This enables investments of best in class technologies, considerably improving healthcare supply (such as acquisition and maintenance of the latest innovative tools, enabling faster acts and sensitive improvement of patients’ chance. In France, private medical biology is already highly concentrated, with six groups dominating more than 60 percent of the private market, while the imaging sector has entered a consolidation cycle that will redefine healthcare.

The US healthcare sector is embracing AI technologies for a variety of purposes to enhance operational efficiencies and improve clinical outcomes through predictive analytics workflow optimisation through speedier data sharing within patient care teams. Advancement in the clinical use of AI technologies was prominently on display in Paris, France in March 2025 at the Healthcare Business International 2025 conference.

At the conference, prominent US hospital systems, such as Mount Sinai Health System, presented on the use of AI in its ‘clinical data science portfolio’ that includes data analysis of key clinical patient metrics such as falls, delirium, pressure injuries and malnutrition. From a risk management and data governance standpoint, Mount Sinai also reported on its efforts to assess and mitigate ‘dataset and algorithmic bias’ in the implementation of AI.

The integration of AI tools into legacy systems requires robust data governance policies and procedures to address data privacy and security obligations in a rapidly evolving US regulatory environment marked by bifurcated oversight by both federal and state-level regulators. For the purposes of its own implementation of AI within US federal agencies, the US Office of Budget and Management issued a memorandum across all federal agencies mandating that all relevant agencies identify and mitigate risk for all ‘high impact’ uses of AI in the healthcare sector.

Additionally, consolidation is no longer optional, with recent transactions showing that providers are using it as a core lever to preserve growth in a constrained policy environment. In June 2024, Ramsay Santé acquired 11 Cosem multidisciplinary centres in France. These sites serve over 1 million patients annually across general practice, diagnostics, dentistry and imaging, employing nearly 1000 professionals including 660 physicians.

At the pan-European level, Affidea has expanded through cross-border acquisitions. In late 2024, it integrated Nu-Med Group in Poland, adding cancer care and radiotherapy centres, and in 2025 it acquired Switzerland’s Uroviva Group with 16 urology clinics, diversifying beyond imaging into oncology-adjacent specialties.

In France, a new regulatory focus on ownership and governance is set to shape the next phase of healthcare consolidation.

In July 2023, the French Administrative Supreme Court (Conseil d’État) issued four rulings in the veterinary sector, affirming that professional shareholders in Sociétés d’Exercice Libéral (SEL), the corporate structure widely used by French practitioners, must retain effective control. The Ministry of Agriculture followed with a 25-point doctrine, developed with sector stakeholders, to ensure that SELs remain effectively controlled by their majority veterinarian shareholders.

While veterinary in scope, these principles are already influencing the medical field.

An upcoming Conseil d’État ruling in the Imapôle case, concerning a radiology group backed by non-medical investors, will further test the boundaries of professional independence and investor influence. This dispute originated with the French Medical Council’s attempt to strike the company from the professional register, arguing that financial investors undermined the “effective control” that must remain with practitioners.

Imapôle secured four consecutive victories before the Conseil d’État, which granted interim relief each time suspending enforcement measures that would have forced the group to cease operations. The forthcoming decision on the merits is widely expected to become a cornerstone precedent. It will clarify how the principle of effective control by practitioners can be preserved while allowing financial participation, setting the framework for the future of healthcare consolidation in France and beyond.

Several large, consolidated groups are now seen as ‘systemic’ players, whose failure could significantly affect access to care. Regulators are increasingly factoring the scale of these actors into price negotiations. While consolidation and financialisation raise both risks and opportunities, a government review by the Ministry of Health found positive effects in several sectors, including improved efficiency, access and modernisation.

Under mounting financial, regulatory and demographic strains, consolidation is widely acknowledged as unavoidable and, in areas such as medical biology and the imaging sector, already beneficial. It is therefore key to ensure its best structuring in compliance with applicable rules, without neglecting the minimum rights to be given to financial partners, under the risk of losing their financial contributions, to patients’ detriment.

Healthcare providers are navigating a landscape shaped by economic realities and technological opportunity. Consolidation and implementation of AI tools are now structural responses to macroeconomic pressure and innovations that can demonstrate therapeutic advances for patients in the clinical space.

In healthcare, adaptability is no longer optional; it is the foundation of resilience and growth. Anticipating regulatory shifts and embedding compliance into strategy allows providers to withstand pressure and turn limitations into opportunities. Maintaining regulatory vigilance in tandem with the evolution of business development goals is key to successful enterprise risk management.

 

Gilles Bigot, Reed Stephens and Julie Vern Cesano-Gouffrant are partners at Winston & Strawn. Mr Bigot can be contacted on +33 (1) 5364 8227 or by email: gbigot@winston.com. Mr Stephens can be contacted on +1 (202) 282 5795 or by email: rstephens@winston.com. Ms Cesano-Gouffrant can be contacted on +33 (1) 5364 8179 or by email: jvern@winston.com.

© Financier Worldwide

BY

Gilles Bigot, Reed Stephens and Julie Vern Cesano-Gouffrant

Winston & Strawn

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