Academic medical centers reported big growth in research expenses and teams in the last year, while research gross operating revenue declined nearly 2%, according to Strata’s “Healthcare performance Trends: Q3 2025” report.
Academic health systems recorded a 7.8% increase in research expenses and 5.3% jump in full time research employees in 2025 through September compared to 2024 over the same time period. Overall, health systems reported a 0.5% increase in research expenses and 0.8% increase in research FTEs.
“These trends suggest that AMCs continued to invest heavily in research infrastructure and personnel despite revenue challenges over the past 12 months,” the report notes. “This is likely due to obligations these institutions made prior to sizable grant reductions that took place in early 2025, including more than $2 billion in federal research grants that were cancelled by the National Institutes of Health.”
This year, 2,100-plus NIH grants worth $12 billion were terminated. AMCs often take months to wind down research already underway, according to the report, but that could be the reality for systems next year.
“The imbalance between expense growth and revenue decline will compound fiscal strain for academic institutions in the year ahead,” the report noted. Executives at academic systems are considering many different options for covering the funding gap, including translating faculty research into intellectual property, developing startups and increasing philanthropic efforts.
The decline is already showing among non-academic institutions. For all health systems, the research gross operating revenue dropped 8.3% this year compared to last year as financial pressure mounts. Overall health system operating margins increased 1.2% in October, but are still narrow while hospital expenses increased 9.2% year over year in October.
Strata gathered data from more than 1,900 hospitals for this report, released Dec. 13.
