By the Numbers: The Cost of Caring

March 12, 2026

The American Hospital Association’s (AHA) latest “Cost of Caring” report showcases how hospitals are delivering exceptional care amid significant financial challenges.

The report, released this week, lists the various factors putting pressure on hospitals, including rising costs for labor, supplies, drugs, and administrative and regulatory burdens. This is in addition to caring for patients who are sicker and require more complex care.

 “These strains are jeopardizing hospitals’ ability to provide around-the-clock care and services that patients and communities need,” AHA President and CEO Rick Pollack said in a statement.

Here are five key takeaways from the report:

1. Investing in the workforce:  Hospital spending on the workforce accounts for 60 percent of spending. Other key factors include supplies (18%) and drugs (9%).
2. Expenses outpace price increases:  Hospitals expenses (+7.5%) grew at more than twice the rate of growth in hospital prices (+3.3%) during 2025. 
3. Administrative costs:  Hospitals spent nearly $18 billion on overturning claims denials and $43 billion working to collect payments owed for care already delivered.
4. Care over costs:  About 56 percent of hospital costs are associated with service lines reimbursed at rates that are less than or below the cost of care, such as behavioral health, obstetrics, infectious disease, and burns and wounds.
5. Cost mix:  About 36 percent of hospital expense growth related to treating a larger volume of patients. Another 19 percent related to caring for patients who were sicker and required more complex care. The remainder related to other input costs (labor, drugs and supplies).

“In other words, despite hospitals facing higher labor and input costs, treating more patients with greater clinical complexity, and maintaining essential, always-on services that communities depend on, they have managed to keep price increases below the increases in their input costs,” the report concludes. “However, this mismatch between expenses and revenue leaves hospitals increasingly at risk of being able to maintain the full spectrum of services on which communities rely.”

The report is available to review online.