News: Hospitals face financial headwinds going into 2026, analysis shows

Heading into the final stretch of the year, hospitals face “depressed patient volumes, rising non-labor costs, and increasing uncompensated care,” according to HealthLeaders.

A new National Hospital Flash Report conducted by Kaufman Hall forecasts a challenging financial environment for health systems. Detailing some of these challenges, the report observed:           

• Falling operating margins: The median hospital operating margins fell from 2.3% in July to 0.1% in August. Additionally, the median year-to-date margins dropped from 2.4% in July to 1.9% in August.
• Deflating patient volumes: Discharges and patient days per calendar day declined month-over-month by 1% and 2%, respectively.
• Increased non-labor costs: When compared with August 2024, supply costs are up 5%, drug costs are up 4%, and purchased service costs are up 5%.
• Uncompensated care: Bad debt and charity care have increased 1% month-over-month and 2% year-over-year as a share of gross hospital revenue.

“While margins remain positive, they’ve been steadily declining since January 2025. With change to federal policy on the horizon, uncompensated care will likely continue to increase,” the authors noted.

“External forces including rising raw material costs and the uncertainty in global trade,” they continued, “highlight the need for hospitals to maintain a resilient supply chain and explore spend management strategies.”

Editor’s note: To read the HealthLeaders article, click here. To read the Kaufman Flash Report, click here.