For years, labor dominated the hospital expense conversation. Staffing shortages, travel nurse premiums and wage competition consumed the attention of CFOs and operations leaders across the country. Recent data from Kaufman Hall shows times have changed.
Labor costs have stabilized into a relatively predictable range while drugs, supplies, purchased services and more have become the harder problem to solve.
Drug and non-labor expenses are now growing faster than labor in nearly every region and at nearly every hospital size, and unlike labor costs, they offer fewer obvious levers for management to pull. Labor expense growth is holding in a relatively tight band across the industry, roughly 3% to 5% year-over-year regardless of geography or bed size.
Non-labor and drug expenses show no such consistency. Double-digit increases represent a structural shift in where financial pressure is originating.
The geographic divergence is also worth noting. Hospitals in the South are managing the most balanced expense profile, with all five major categories growing at roughly the same pace. The West and Midwest face a materially different picture, with non-labor and drug costs accelerating well above the national average. For health system leaders operating across multiple regions, that divergence complicates any systemwide cost management strategy.
What the data cannot capture, but what CFOs understand acutely, is that this expense growth is arriving alongside worsening payer mix. Bad debt and charity care are rising year-over-year across every region and bed size, meaning hospitals are absorbing higher costs while simultaneously collecting less on the revenue side. Expense growth that might be manageable in a stable reimbursement environment becomes significantly more threatening when the payer mix is eroding at the same time.
Here are 60 statistics on hospital expense growth based on Kaufman Hall’s National Hospital Flash Report, which includes data from 1,300-plus hospitals gathered by Strata Decision Technology.
Overall national trends (year-over-year, April 2026 vs. April 2025)
1. Total expense per calendar day: +7%
2. Labor expense per calendar day: +4%
3. Non-labor expense per calendar day: +9%
4. Drug expense per calendar day: +9%
5. Purchased service expense per calendar day: +4%
By region (year-over-year, April 2026 vs. April 2025)
West
6. Total expense per calendar day: +9%
7. Labor expense per calendar day: +5%
6. Non-labor expense per calendar day: +13%
9. Drug expense per calendar day: +17%
10. Purchased service expense per calendar day: +8%
Midwest
11. Total expense per calendar day: +8%
12. Labor expense per calendar day: +3%
13. Non-labor expense per calendar day: +10%
14. Drug expense per calendar day: +9%
15. Purchased service expense per calendar day: +5%
South
16. Total expense per calendar day: +6%
17. Labor expense per calendar day: +6%
18. Non-labor expense per calendar day: +6%
19. Drug expense per calendar day: +9%
20. Purchased service expense per calendar day: +2%
Northeast / Mid-Atlantic
21. Total expense per calendar day: +6%
22. Labor expense per calendar day: +4%
23. Non-labor expense per calendar day: +11%
24. Drug expense per calendar day: +8%
25. Purchased service expense per calendar day: +1%
Great Plains
26. Total expense per calendar day: +5%
27. Labor expense per calendar day: +3%
28. Non-labor expense per calendar day: +9%
29. Drug expense per calendar day: +11%
30. Purchased service expense per calendar day: +5%
By hospital bed size (year-over-year, April 2026 vs. April 2025)
0-25 beds
31. Total expense per calendar day: +6.1%
32. Labor expense per calendar day: +3.0%
33. Non-labor expense per calendar day: +7.7%
34. Drug expense per calendar day: -0.6%
35. Purchased service expense per calendar day: +2.1%
26-99 beds
36. Total expense per calendar day: +7.4%
37. Labor expense per calendar day: +4.2%
38. Non-labor expense per calendar day: +9.8%
39. Drug expense per calendar day: +10.5%
40. Purchased service expense per calendar day: +1.4%
100-199 beds
41. Total expense per calendar day: +8.0%
42. Labor expense per calendar day: +4.3%
43. Non-labor expense per calendar day: +9.4%
44. Drug expense per calendar day: +9.1%
45. Purchased service expense per calendar day: +8.1%
200-299 beds
46. Total expense per calendar day: +5.1%
47. Labor expense per calendar day: +4.5%
48. Non-labor expense per calendar day: +7.7%
49. Drug expense per calendar day: +13.6%
50. Purchased service expense per calendar day: +5.0%
51. Total expense per calendar day: +8.0%
300-499 beds
52. Labor expense per calendar day: +4.8%
53. Non-labor expense per calendar day: +10.4%
54. Drug expense per calendar day: +9.8%
55. Purchased service expense per calendar day: +5.2%
500+ beds
56. Total expense per calendar day: +6.6%
57. Labor expense per calendar day: +4.0%
58. Non-labor expense per calendar day: +9.2%
59. Drug expense per calendar day: +13.5%
60. Purchased service expense per calendar day: +1.1%
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