Hospital margins grew slightly month over month in April but were still well behind 2025, according to Kaufman Hall’s National Hospital Flash Report.
The report, released June 18, is based on data gathered from more than 1,300 hospitals by Strata Decision Technology. The numbers reflect a familiar tension: revenue and volume trending upward, expenses and uncompensated care rising faster.
Five things to know:
1. Average hospital margins hit 2.5% in April, up from 2.3% in March and 2.1% in February. But the margins still lag behind 3.5% in May 2025 and 3.8% last September. Margins dropped 4 percentage points year to date compared with the same period last year.
“Mixed performance on key volume indicators, staffing challenges and expense growth continue to pressure hospital operations, reinforcing the need for focused prioritization and strategic planning,” according to the report.
2. Net operating revenue per calendar day increased 8% year over year while expenses rose 7%. Inpatient revenue increased 6% year over year and outpatient revenue jumped 9%.
3. Non-labor expenses drove expense growth, increasing 9% compared to April 2025. The expense growth breakdown by category includes:
- Labor expenses: 4%
- supply expenses: 7%
- Drug expenses: 9%
“Expense growth continues to outpace inflation,” the report noted. “Drug and labor expenses remain a key contributor to expense growth, driven by both cost and utilization as the population ages, underscoring the importance of strategic spend management across the board.”
4. Patient discharges per calendar day increased 2% year over year in April and 9% compared to 2023. At the same time, the average length of stay dropped 2% from April of last year. ED visits were down about 2% year over year as well.
5. Bad debt and charity care is on the rise, increasing 22% year over year and 52% since 2023. As a percentage of gross operating revenue, bad debt and charity care increased 13% year over year and 22% over the last three years.
“Year-over-year climbs in bad debt and charity care reflect broader shifts in payer mix, shifts in coverage and growth in uninsured populations, requiring hospitals to proactively adapt and manage long-term revenue risks,” according to the report.
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.
