Yale New Haven Health posts $196.8M operating loss as state report signals broader hospital strain

Hartford Business Journal – Wednesday, February 25, 2026
By David Krechevsky

Yale New Haven Health posted a nearly $200 million operating loss for fiscal 2025 as rising expenses and restructuring costs weighed on its results, though strong investment gains helped the system remain in the black overall, according to an audited financial statement completed in December.

The New Haven-based health system, the state’s largest, reported $7.58 billion in total operating revenue for the year ended Sept. 30, 2025, up from $7.24 billion a year earlier. Patient service revenue increased to $6.42 billion from $6.35 billion.

Operating expenses climbed faster than revenue, totaling $7.42 billion. Salaries and benefits rose to $3.65 billion, while supplies and other expenses reached $3.64 billion.

The system also recorded $57.7 million in restructuring expenses related to severance payments and terminated vendor contracts.
The result was a $196.8 million operating loss in fiscal 2025.

The deficit follows a period of financial strain that Yale New Haven Health CEO Christopher O’Connor had signaled late last year.

In a December interview with the Hartford Business Journal, O’Connor described 2025 as a “volatile period,” citing persistent cost pressures, reimbursement constraints and restructuring efforts.

He characterized the year as a transition phase for the system, warning that “the headwinds are strong,” while expressing confidence that recent operational changes would stabilize performance.

Deficit returns

YNHH has reported sizable deficits in three of the last four fiscal years. The lone exception was fiscal 2024, when the system reported a nearly $46.2 million operations surplus — a sharp reversal from operating losses of $234 million in fiscal 2022, and $142 million in fiscal 2023.

The system continued to invest heavily in facilities and equipment, spending $464.1 million on capital projects during fiscal 2025. Construction in progress rose to $659.8 million, including commitments tied to a neuroscience tower and other projects.

YNHH also reached a $45 million settlement to terminate its planned acquisition of three Connecticut hospitals from Prospect Medical Holdings, following litigation and Prospect’s bankruptcy filing. The settlement was accrued during fiscal 2025.

The health system ended the year with $606.6 million in cash and no outstanding borrowings on its revolving line of credit. Total long-term debt stood at about $1.85 billion.

Medicare and Medicaid patients accounted for just over half of patient service revenue, underscoring the system’s continued exposure to government reimbursement rates.

OHS Report

YNHH’s financial update, which was released recently as part of a bond disclosure, comes as the state Office of Health Strategy (OHS) on Wednesday released its annual report on the financial status of the state’s 27 short-term acute-care hospitals.

That report, though, presents results for fiscal year 2024. It found that health systems statewide had larger operating losses in fiscal 2024 than they had in fiscal 23, even as revenues increased slightly more than operating expenses.

According to the OHS report, operating losses for all 27 health systems combined totaled nearly $505 million in fiscal 2024, up from a combined $473 million a year earlier.

Among the state’s health systems, Hartford HealthCare posted a $279.4 million surplus for fiscal 204, up from a surplus of $134.7 million a year earlier. The positive results were a turnaround from fiscal 2022, when the system reported a $36.9 million deficit, according to the OHS report.

The report also noted that HHC’s total operating revenue has increased by nearly $1.5 billion since fiscal 2021. Revenue was $6.5 billion in fiscal 2024, up from $5 billion in fiscal 2021.

OHS reported that the revenue increase is a statewide trend, with total revenues “from all sources for all services” increasing by $3.36 billion statewide since fiscal 2021.

Expenses, though, have also risen dramatically over the same period, increasing from $14.6 billion in fiscal 2021 to $17.9 billion in fiscal 2024, the report states.

It adds that 15 of the state’s 27 acute-care hospitals, or 56%, achieved a positive total margin in fiscal 24, while 17 of the 27, or about 63%, have positive five-year margins.

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