Hospitals operating margins stand at 4.4%, the highest in over a year
Hospitals in the U.S. are seeing a rise in patient volume, and the generated revenue is outweighing rising expenses in the first quarter of 2025. The median monthly operating margin of more facilities stands at 4.4%, according to a recent report from a consultancy firm.
In its analysis, Kaufman Hall found that both inpatient and outpatient services have increased. However, the primary source of growth is inpatient services, meaning care delivered in the hospital and its emergency department.
The Chicago-based consultants release a monthly “Hospital Flash Report” that delivers a snapshot of the financial health of organizations. The 4.4% average operating margin seen in January is a rise from 2.1% in December 2024, which was an increase from the 1.8% calculated for October and November.
In 2024, monthly margins typically fluctuated between 1.3% and 2%, Kaufman Hall’s data shows. December marked the highest number seen last year.
“Hospital performance remains stable at the start of 2025. Inpatient revenue grew more quickly than outpatient revenue in January, and the rate of cost growth has slowed considerably,” Erik Swanson, Managing Director at Kaufman Hall, wrote in his analysis, adding that the cost growth mostly stems from increasing drug prices; however, “the rate of cost growth has slowed considerably.”
Zooming in, some regions of the country are performing better than others, and the number of beds a facility has also causes fluctuations in the data. Those with 500+ beds are operating at the high end, with an average margin in January of 11%. That’s followed by 6.1% for those with 26-99. At the low end, those with 25 beds or fewer are in the red at -3.8% on average.
Overall rises in market inflation this year are still having a negative effect, ultimately pushing prices upward.
“Inflation unexpectedly accelerated in January, with consumer prices rising 0.5% monthly, when prices were expected to increase only 0.3%; the annual rate reached 3.0%, breaking a streak of lower inflation and continuing a four-month upward trend,” the report says.
You can view the full data here.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.