A report from the American Hospital Association underscores the headwinds and increased expenses hospitals and health systems have faced in recent years in providing high-quality, timely patient care.
“The Cost of Caring: Challenges Facing America’s Hospitals in 2025,” published April 30, illustrates the trends affecting hospital financial stability.
The AHA published the report as Congress considers proposed cuts to Medicaid, Medicare and other programs that support the care and services that hospitals provide.
Here are 10 numbers that illustrate hospitals’ financial burden, according to the most recent edition of the report, which draws from various data sources and is available in full here.
1. Labor dominated expenses last year, accounting for 56% of total hospital costs, according to the AHA’s analysis of industry benchmark data from Strata Decision Technology, LLC.
2. The AHA estimates Medicare and Medicaid underpaid hospitals by $130 billion in 2023, and underpayments grew, on average, 14% annually from 2019 to 2023.
3. Hospitals received an estimated 83 cents from Medicare for every dollar spent caring for patients in 2023, according to an AHA analysis of AHA Annual Survey data. At the same time, according to federal government data, general inflation rose 14.1% from 2022 to 2024, while Medicare inpatient payment rates increased by only 5.1% during that period.
4. Hospital reimbursement from Medicare Advantage plans fell 8.8% on a cost basis between 2019 and 2024, according to industry benchmark data from Strata Decision Technology, LLC.
5. A Black Book Market Research survey of 200 healthcare industry experts in late January found 82% expect tariff-related import expenses to raise hospital costs by 15% or more in the next six months. The same survey found 94% of respondents said they expect to buy less equipment or delay equipment upgrades to mitigate financial strain.
