WEEKLY UPDATE: 02/26/26
The Connecticut Office of Health Strategy (OHS) this week released its annual hospital and health system financial health report, which highlights statewide hospital trends and the financial performance of each Connecticut hospital. The Annual Report on the Financial Status of Connecticut’s Short Term Acute Care Hospitals for Fiscal Year 2024 analyzes data documented between October 1, 2023, and September 30, 2024.
“This report confirms what hospitals across the state have long experienced: financial pressures remain intense, structural challenges persist, and margins are fragile. Disappointingly, these realities are buried in a narrative that presents an overly optimistic view, downplaying the serious challenges facing the healthcare delivery system on which Connecticut families and communities depend,” the Connecticut Hospital Association (CHA) responded in a statement.
Operating margin remains one of the clearest indicators of hospital financial health, and a close review of the OHS data shows those margins remain persistently thin. The report shows that hospital operating margins were only 0.2% and health system operating margins were -2.3% in FY 2024. Over the past three years, hospitals’ expenses have risen by billions of dollars, driven by escalating drug and supply costs, workforce pressures, and other operating expenses. Broader data show these cost trends outpace regional and national challenges, and chronic Medicaid and Medicare underpayment (with annual losses totaling $1.46 billion and $1.51 billion, respectively) further compounds financial strain. Non-operating gains from investments do not resolve these underlying operational challenges.
“At the same time, the governor’s proposed state budget provides no meaningful relief from Medicaid underpayment and advances policies, including a ‘Connecticut option’ government-run health plan proposal, that risk further weakening hospital financial stability,” CHA said. “Connecticut hospitals deliver nationally recognized care and essential safety-net services statewide. Without action to address — rather than exacerbate — these challenges, hospitals, patients, and communities face an increasingly uncertain future for access to care.”
Key findings from the OHS report include:
- Health system operating margins remain negative
Health system statewide operating margin remained negative at -2.3% in FY 2024. This represented a very slight improvement from -2.4% in FY 2023. (Figure 5) - Health system operating expenses grew $1.6 billion in one year
Health system operating expenses rose 8% ($1.6 billion) to $22.2 billion from the previous year. - Hospital operating margins remain anemic
Hospital statewide operating margin is barely positive at 0.2%. - Hospital operating expenses grew $1.0 billion from the previous year
Hospital operating expenses rose 6.0% ($1.0 billion) to $17.9 billion from the previous year. - For hospitals, the majority of increased expenses is attributable to three categories:
Supplies and Drugs (38% increase), Salaries and Wages (25% increase), and Other Operating Expenses (23% increase). (Figure 11)
Related News:
CHA Statement on OHS Hospital Financial Status Report for FY 2024
OHS Report Confirms Hospitals Continue To Face Extraordinary Financial Pressures (FY 2023 report)
CHA Response to OHS Hospital Financial Health Reports (FY 2023 report)
