4 charts on the razor-thin improvement in hospital finances

Modern Healthcare – Tuesday, June 10, 2025
By Tim Broderick

Healthcare system finances in the past year have walked a tightrope that’s resulted in small but positive median operating margins, but that balance may wobble in the face of the economic challenges.

In the past year, median operating margins have been mostly below 1% but have trended upward since November, according to data from Strata Decision Technology.

“Even as revenue growth remains strong, persistent increases in labor and non-labor expenses continue to weigh heavily on health system finances,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology, in an email.

For its analysis, the company analyzed monthly financial and operational data for as many as 175 healthcare systems through April from its Market Insights unit.

Changes in non-labor expenses largely paralleled labor expenses in the last 12 months.

Median gross patient revenue rose in April after remaining steady for most of the previous 11 months.

Median operating revenue has showed recent signs of improvement.

While median operating margins stayed positive for most of the past year, they remained within a very narrow range. In 10 of the past 12 months, systems recorded median operating margins of less than 1%, including -0.52% in November.

“With operating margins holding well below 2% for the past year, organizations are navigating a narrow path — and the potential for rising costs in the months ahead only heightens the urgency for financial discipline,” Wasson said.

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