News: Hospitals face uncertain economic stability heading into 2025, AHA report shows
Hospitals continue to face unmitigated financial pressures as 2025 progresses, according to a new American Hospital Association (AHA) report.
Per the report, United States hospitals in 2025 face “a perfect storm of financial pressures: persistent cost growth, inadequate reimbursement, and shifting care patterns driven by both policy changes and an older, sicker population with more complex, chronic conditions.”
Moreover, “[h]ospitals are struggling to maintain access to essential services amid workforce shortages, supply chain disruptions, tariffs and policy decisions that often fail to reflect on-the-ground realities.”
The report outlines six key areas in which U.S. hospital revenue integrity is threatened. One of the more prominent areas affecting hospitals is total compensation and expenses related to labor costs. For instance, according to the report, labor costs accounted for approximately 56% of U.S. hospitals’ operating expenses in 2024.
Critically, salaries for registered nurses have grown 26.6% faster than the rate of inflation over the past four years, a product of maintaining competitive wages in the post-COVID era.
Another source of revenue loss for hospitals has been the lack of Medicare reimbursement. According to the AHA, for example, Medicare covered just “83 cents for every dollar spent in 2023, resulting in over $100 billion in underpayments.” Similarly, from 2022 to 2024, as general inflation rose by 14.1%, Medicare net inpatient payment rates increased by a mere 5.1%.
The report also noted losses in the following areas:
- Increased costs due to inflation
- Chronically ill patients
- Costs due to observation stay in Medicare Advantage patients
- Impact of tariffs on hospital costs
Editor’s note: To read the AHA report, click here.