Hospitals’ bad debt and charity care costs are climbing sharply, according to Kaufman Hall’s most recent “National Hospital Flash Report,” which draws on data from more than 1,300 hospitals.
Bad debt and charity care per calendar day rose 16% year over year in May and is up 16% year to date compared with the same period in 2025. As a share of gross operating revenue, bad debt and charity care climbed 6% year over year in May and is up 8% year to date compared to 2025.
The pressure is not evenly distributed across the industry. Hospitals with 100 to 199 beds saw the steepest year-over-year increase in bad debt and charity care per day, up 25%, followed by hospitals with 500 or more beds, up 17.4%, and hospitals with 26 to 99 beds, up 16.4%. Hospitals with 200 to 299 beds saw a 15.9% year-over-year rise, and hospitals with 300 to 499 beds saw an 11.6% increase.
Smaller hospitals felt the least of the squeeze. Facilities with 0 to 25 beds saw bad debt and charity care per day essentially flat year over year, up just 0.9%.
Looking at bad debt and charity care as a share of gross operating revenue, hospitals with 100 to 199 beds again led the way, up 14.8% year over year, while the smallest hospitals were the outlier, down 3.4% year over year.
The uptick comes as hospital profitability softened in May. The median operating margin, including corporate allocations, fell to 2.9% for the year to date, down from 3.6% in April, according to the report. Total expenses per calendar day also rose year over year, with both labor and non-labor costs remaining elevated compared with last year.
Kaufman Hall pointed to the broader shift toward outpatient care as a factor health systems should weigh as they plan resource allocation and evaluate purchased service spending.
Read the full report here.
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.
