Hospitals Face Margin Pressure as Volume Slips While Costs Climb
The latest National Hospital Flash Report reveals that hospital margins tightened in August, suggesting continued financial pressure heading into the final quarter of 2025.
Hospitals continued to feel financial strain in August as margins declined and expenses climbed, according to Kaufman Hall’s latest National Hospital Flash Report.
The findings indicate a challenging environment for hospitals heading into the final months of the year, with depressed patient volumes, rising non-labor costs, and increasing uncompensated care weighing on performance.
The median hospital operating margin for the month, including all allocations for the cost of shared services that they receive from their health system, fell to 0.1% in August, down from 2.3% in July.
The median calendar year-to-date operating margin, inclusive of allocations, dropped from 2.4% in July to 1.
Analysis by Jay Asser, October 27, 2025
Author's summary: Hospitals face financial pressure due to declining margins.