Nonprofit health systems with more than $20 billion in annual revenue posted an average operating margin of 0.7% in 2025, the lowest of any revenue group, according to McKinsey & Co.’s annual healthcare economics outlook, published Nov. 11.
McKinsey grouped about 190 nonprofit systems by their average operating revenue from 2023 to 2025 and calculated each group’s margin from combined operating income and revenue. The largest group included nine systems and excluded municipal systems. The broader outlook draws on McKinsey’s value pools model, which projects profits across payers, providers, pharmacy services, and healthcare services and technology.
The findings suggest that “scale alone does not guarantee stronger margins,” the report said.
Here are seven things to know from the report:
1. Margins for the nine largest nonprofit systems improved from -1.4% in 2023 and -0.3% in 2024, but still trailed smaller systems. Systems with $10 billion to $20 billion in revenue posted a 4.2% margin in 2025, while those with less than $5 billion posted 3%. For-profit systems with more than $20 billion in revenue posted a 16% margin.
2. General acute care hospital EBITDA margins rose from 6.9% in 2023 to 8.9% in 2025 and are projected to hold at about 8.8% through 2030. ACA subsidy expiration and federal policy changes could reduce hospital margins by about 80 basis points, or 0.8%, through 2027.
3. Hospitals’ share of overall provider profits is expected to fall from 42% in 2019 to about 39% by 2030 as care shifts to lower-cost settings. Ambulatory surgery center EBITDA is projected to grow 6.7% annually from 2025 to 2030, compared with 3.7% for hospitals.
4. Payer EBITDA fell from about $62 billion in 2023 to $9 billion in 2025, when major risk-bearing segments collectively lost money for the first time this decade. McKinsey projects payer EBITDA could reach about $84.5 billion by 2030.
5. Overall healthcare EBITDA is projected to grow 7% annually from 2025 to 2030, but only about 4% annually through 2027 as ACA and Medicaid coverage changes weigh on payers and providers.
6. Healthcare delivery productivity declined about 1% annually from 2019 to 2025, compared with 2% annual growth in the broader private economy.
7. Healthcare services and technology is expected to remain the fastest-growing subsector, with EBITDA projected to exceed $120 billion by 2030.
