Report: Hospitals Face Financial Headwinds

October 16, 2025

U.S. hospitals continue to work to stabilize their finances as they encounter increases in expenses and uncompensated care.

The latest Kaufman Hall National Hospital Flash Report highlights the challenges ahead for hospitals.

“The slight declines in patient volume and the continued rise in uncompensated care indicate some uncertainty ahead, and hospitals should focus on building resilience now,” said Erik Swanson, managing director and leader of the Data and Analytics Group at Kaufman Hall.

Here’s what you need to know:

• Margins:  Kaufman Hall's calendar-year-to-date operating margin index has been steadily declining month over month from January (6.9%) to August (5.5%).
• Expenses:  Hospital expenses have climbed 6 percent year-to-date, with drugs (10%), supplies (8%), and non-labor expenses (8%) seeing significant upticks.
• Revenue:  Net operating revenue per calendar day has increased 8 percent year-over-year; bad debt and charity care per calendar day have increased 10 percent in that time.
• Key insights:  Pressure on supply costs (global trade uncertainty) highlight the need for resilient supply chains, the health care analyst notes.
  • Hospitals are likely to see an increase in uncompensated care stemming from the federal reconciliation bill, H.R.1, passed earlier this year.
• Quotable:  “The increase in expenses continues to pressure organizations. While hospitals can’t influence external forces like the rising costs of raw materials or the uncertainty in global trade, they can explore strategies to contain these costs,” Swanson said.

The report, which uses data from more than 1,300 hospitals, is available to review online.