The revenue gap between large and small health systems grew starker this year, and will likely continue to widen as HR-1 takes effect in the coming years.
Operating revenue for health systems overall grew 3.1% for January through September of
2025 compared to 2024, according to Strata’s “Performance Trends Report: Market Insights from Q3 2025.” But systems with net operating revenue above $1 billion reported a 5.7% increase in operating revenue while systems with a net operating revenue of below $300 million reported a nearly 7% decline in operating revenue.
“These results underscore a widening financial gap in the sector, as larger systems leverage scale to sustain growth while smaller operations continue to struggle under persistent margin pressure,” according to the report.
Net patient revenue followed a similar trend. Systems with less than $300 million in revenue reported 0.3% decline in net patient year over year compared to 7.1% growth for systems with more than $1 billion net operating revenue.
“As expenses continue to climb and margins remain relatively stagnant, many organizations are running out of room to maneuver,” said Steve Wasson, chief data and intelligence officer at Strata. “The widening performance gap between large and small systems, the potential erosion of access to critical services like maternity care, and the structural imbalances in academic research programs all point to an urgent need for reliable data and predictive analytics as leaders work to navigate these pressures and prepare for what comes next.”
https://www.beckershospitalreview.com/finance/financial-pressures-mount-for-academic-medical-centers/
Hospitals reported a steep increase in non-labor expenses including a 21.6% third quarter jump in drug expenses at academic medical centers and 8.4% increase for hospitals overall. Supply expenses spiked 9.2% year over year in October, making it harder for hospitals to improve margins with the increasing patient demand, according to the report.
