Health systems are bracing for a fiscal tsunami. In addition to an anticipated rise in uninsured patients and rising labor cost inflation, the One Big Beautiful Bill Act (OBBBA) takes effect in 2026, bringing nearly $1 trillion in federal funding cuts and forcing healthcare leaders to make difficult spending decisions.
But despite its financial impact, OBBBA has helped reduce some of the uncertainty the industry has faced in recent years. That clearer outlook has enabled executive teams to make more deliberate growth decisions, which analysts say has contributed to a rebound in hospital and health system merger and acquisition (M&A) activity. Looking ahead, PwC predicts healthcare M&A will continue to gain strength in the coming year—both in value and volume.
All of this raises the stakes of consolidation. Now, more than ever, technology leadership must have a seat at the deal table.
Mergers are known for leaving behind a trail of redundant or underused systems—each carrying hidden costs for maintenance, licensing and support. Managing these systems—what Gartner™ calls “zombie apps”—is one of the most costly challenges in any merger. It touches every operational thread: data, systems, security and the organization’s ability to deliver on the deal’s promises.
Yet IT—the function responsible for reducing that technical debt—has been historically uninvited to the deal table. IT leaders are typically brought in after close—tasked with untangling inherited systems, managing prolonged transition service agreements (TSAs) and finding savings after costs are already embedded.
In today’s environment, that sequencing no longer works. To capture much-needed cost-saving opportunities, health systems must rationalize redundant IT early in the process.
Industry analysts estimate (subscription required) that 20%-30% of IT system resources within merged health systems are redundant or obsolete. These systems often remain operational after closing because they still hold regulated data, support active workflows, or are contractually locked in. But as long as they stay live, they continue to consume capital.
That redundancy is what drives TSAs. These temporary contracts allow a buyer to keep using the acquired organization’s systems until everything is separated. TSAs are designed to ensure business continuity, but they are expensive. And the longer technical debt exists, the more costs compound.
This is where early and ongoing IT involvement has the potential to materially change deal economics—by reducing the number of systems that must remain live post-close and shortening the duration of costly TSAs.
The Gartner case study of one of our clients, “Trinity Health Drives IT Cost Optimization With Legacy Decommissioning,” illustrates the significant savings at stake. Trinity Health, which is the sixth largest private non-profit in the nation with over $25 billion in annual revenue, achieved over $68 million in annual recurring savings through an enterprise-wide application rationalization program. The initiative was initially triggered by an Epic EHR implementation, but in building a repeatable, supply-chain process, Trinity uncovered an unexpected insight.
Roughly 40% of the applications ultimately targeted for decommissioning sat outside the EHR ecosystem and were largely inherited through prior M&A. As Mike Prokic, Chief IT Strategy Officer at Trinity Health, explained, prioritization shifted once the economics became clear. “When you look at the cost of an application, the cost of hosting, infrastructure, support, and how quickly you can archive it, a simple equation quickly shows where the highest return sits. You might move a recently acquired system to the top of the list because it reduces the cost of your TSA,” Prokic said.
Trinity is now on track to save over $100 million in recurring annual operating expenses with M&A as a key thread.
This experience offers several important lessons for healthcare leaders looking to unlock similar value through legacy application decommissioning:
• Make Application Rationalization An Enterprise Priority: Application rationalization cannot succeed as a downstream IT exercise. It must be elevated to an enterprise initiative with executive sponsorship and early involvement from technology leadership. Giving CIOs and CTOs a seat at the deal table during diligence—alongside finance, legal and operations—throughout the deal negotiation and closing allows organizations to surface redundancy early, shape TSA assumptions and prevent unnecessary costs from becoming embedded in the transaction.
• Fund Decommissioning As A Strategic Capital Investment: Once elevated to the enterprise level, the work must be funded appropriately. The most effective programs treat application rationalization as a focused, one-time capital investment rather than an ongoing operating expense. When planned through CapEx, decommissioning can permanently eliminate recurring OpEx tied to redundant licensing, infrastructure, support, and security. The earlier that investment is made, the longer the organization benefits from compounding savings.
• Design For Speed And Repeatability: With the right governance and funding in place, speed becomes the defining differentiator. In M&A, the ability to evaluate, archive, and retire systems quickly is what shortens TSA timelines and determines how fast savings are realized.
As Prokic noted, “Archiving tends to be viewed as a commodity—the least exciting part of IT. But few realize that speed can be a true differentiator in M&A. If organizations understood how much value velocity creates, it would be viewed as one of the most attractive levers in the process.”
In my view, application rationalization and legacy decommissioning are among the most powerful—and underused—levers available to health systems navigating consolidation. When treated as an enterprise priority and executed with discipline, they move from technical cleanup to strategic advantage. In a constrained financial environment, early engagement by technology leaders preserves optionality, protects deal economics, and gives health systems greater control over integration outcomes—before costs harden and value is lost.