Hospitals Face Array of Financial Challenges

November 19, 2025

U.S. hospitals continued to see rising expenses and patient volumes during September, and the gap between the facilities in the strongest financial position and others on the brink continued to grow.

Released this month, the latest Kaufman Hall National Hospital Flash report indicated relatively stable margins month-over-month, but challenges persist as patient volumes and rising costs continue to contribute to financial strain.

“The gap between strong performers versus struggling hospitals continues to widen,” said Erik Swanson, managing director and data and analytics group leader, Kaufman Hall.

Here’s what you need to know:            

• Margins:  The adjusted year-to-date operating margin was 2.9 percent, up from 2.5 percent a month prior.
• Uneven performance:  Nationwide, hospitals in the top quartile have healthy margins (14.7%) and those in the bottom quartile are at more significant financial risk (-1.7%).
• Volume trends:  Month-over-month, emergency department visits (3%) and operating room minutes (4%) per calendar day were both up.
• Rising costs:  Drug expenses were up 11 percent year-to-date, while supply and non-labor expenses per calendar day were up 8 percent.
• Quotable:  “Patient volumes are increasing while margins hold steady. Hospitals need to think about how to manage increased volumes despite flat margins. There will be more demand for emergency department and inpatient care, and the ability of hospitals to manage patient throughput will be increasingly important,” Swanson said.

The report includes information from 1,300 hospitals nationwide and is available online.