Monthly Healthcare Industry Financial Benchmarks

Overview: Q3 Start Marked by Dip in Health System Margins, Escalating Supply and Drug Costs

This report highlights the latest trends in financial performance for U.S. hospitals and physician groups, drawn from monthly data from more than 135,000 physicians and over 1,600 hospitals.  

U.S. healthcare organizations continued to benefit from steady revenue growth in July, but face uncertainties as expense pressures persist. Highlights from the July 2025 data include:

• Health system operating margins dipped to 0.9% at the start of the third quarter in July but remained consistent with levels since January, while hospital operating margins grew. 

• Supply and drug expenses saw sizable increases in July, leading continued outsized growth in non-labor expenses — a trend expected to persist as federal tariffs add to cost pressures. 

• Patient demand was mixed but trended upward overall, with strong growth in outpatient visits as care continues shifting to more convenient, lower-cost settings. 

• Hospitals maintained gross revenue momentum with 27 straight months of year-over-year gains, led by a 12% rise in outpatient revenue driven by the growth in outpatient care. 

• Physician practices faced mounting expenses, with per-physician expenses rising for practices across all regions and reaching a national median of $1.1 million for July annualized.       

Hospital Performance Benchmarks  

The latest benchmarks illustrate the interplay of revenues and expenses on historically tight hospital operating margins.

Operating Margins: Health system operating margins dipped slightly at the start of the third quarter in July but remained close to 1%, consistent with levels since January. The national median year-to-date (YTD) health system operating margin was 0.9% in July, down from 1.2% in June. 

For U.S. hospitals, operating margin changes improved compared to last year but slipped slightly month over month. The median change in hospital operating margin rose 1.4 percentage points between July 2024 and July 2025, and declined 0.2 percentage point from June to July 2025. 

By census region, hospitals in the Northeast recorded the largest year-over-year (YOY) improvement, with a 2.5 percentage point increase in median operating margin change. The South followed at 1.6 percentage points, while the Midwest and West posted gains of 1.3 and 1.0 percentage points, respectively. 

Looking at hospitals by size, the smallest hospitals with 0–25 beds experienced the strongest YOY growth, with a 2.5 percentage point increase in median operating margin change. The largest hospitals, with 500 beds or more, saw a 1.7 percentage point rise. Hospitals with 100–199 beds posted the smallest gain, with the median change in operating margin up just 0.3 percentage point. 

The median change in earnings before interest, taxes, depreciation, and amortization (EBITDA) margin for hospitals nationally rose 0.9 percentage point YOY but decreased 0.3 percentage point from June to July 2025. 

Hospital Expenses: The nation’s hospitals continue to experience significant expense growth compared to 2024, with non-labor expenses rising faster than labor expenses. Total non-labor expense increased 8.7% from July 2024 to July 2025, while labor expense rose 5.3% over the same period. Overall, total expense grew 6.8% YOY. 

Supply and drug costs drove the largest increases, climbing 10.6% and 9.5% versus July 2024, respectively — a trend that likely will continue as the industry feels the impacts of federal tariffs.1 Purchased service expense also rose, up 6.7% YOY. On a month-over-month basis, total expense increased 3.4% from June to July 2025, with total non-labor expense up 2.3% and total labor expense up 3.2%. 

Non-labor expenses grew YOY for hospitals across all regions. Hospitals in the South reported the largest increase at 9.5% YOY, followed by the West at 8.8% and the Midwest at 8.4%. The Northeast recorded the smallest increase at 6.6% YOY. 

Supply expenses were particularly elevated in the Northeast, where they surged 15.8% YOY. The South saw an 11.3% increase, the West 10.4%, and the Midwest 7.6%. For drug expenses, hospitals in the West recorded the steepest rise at 14.1%, followed by the Northeast at 13.8%. Drug expenses increased 7.7% YOY in the South and 5.5% YOY in the Midwest. 

Per-patient expenses also grew across most categories. Total expense per adjusted discharge rose 2.4% YOY, with non-labor expense per adjusted discharge increasing 4.1%. In contrast, labor expense per adjusted discharge declined 1.0% compared to July 2024. 

On a month-over-month basis, hospitals saw some relief in per-patient expenses. From June to July 2025, total expense per adjusted discharge decreased 2.0%, labor expense per adjusted discharge declined 1.3%, and non-labor expense per adjusted discharge was down 4.3%. 

Hospital Revenues: Hospitals reported continued strength in gross revenues, marking the 27th consecutive month of YOY growth in gross operating, inpatient, and outpatient revenues. Outpatient revenue posted the largest YOY gain, rising 12.0% from July 2024 to July 2025. Inpatient revenue increased 7.2%, while gross operating revenue grew 10.6% over the same period. 

By census region, hospitals in the West saw the largest YOY increase in outpatient revenue at 12.8%, followed by hospitals in the South at 12.5%. Hospitals in the Northeast recorded an 11.2% increase, and those in the Midwest were up 10.9%. 

Revenues also improved nationwide month over month. Gross operating revenue rose 5.6%, outpatient revenue increased 6.5%, and inpatient revenue climbed 5.2% from June to July 2025. 

Revenue results were more mixed after adjusting for patient volumes. Net patient service revenue (NPSR) per adjusted discharge rose 3.1% YOY but declined 2.2% month over month. NPSR per adjusted patient day increased 2.4% compared to July 2024 but was down 1.0% from June 2025. 

Hospitals also faced rising levels of uncompensated care. Bad debt and charity care increased 8.2% YOY and 2.5% month over month in July. 

Reference: 

Vogel, S.: “Tariffs Send Healthcare Industry Into ‘Unchartered Waters.’” Healthcare Dive, April 4, 2025. 

  Patient Volume Benchmarks 

Hospital inpatient and outpatient volumes are drawn from analysis of more than 10 million patient visits. 

Patient demand was mixed in July, though hospitals continued to see overall growth in both inpatient and outpatient volumes. Outpatient visits posted the strongest gains, rising 6.6% compared to July 2024 and 4.7% from June to July 2025 as patient care continues to shift to more convenient and lower cost outpatient settings. Inpatient admissions increased 3.8% both YOY and month over month. Observation visits were flat YOY but edged up 1.0% month over month. Emergency visits declined 2.0% from July 2024 to July 2025 and were essentially flat compared to the prior month, up just 0.1%.  

Regional results highlighted notable differences. Hospitals in the South recorded the largest increase in outpatient visits, up 8.0% YOY, followed closely by the Midwest at 7.8%. For inpatient admissions, hospitals in the Northeast saw the strongest growth at 6.1%, followed by the South at 4.7%. Looking at longer-term trends, outpatient visits jumped 21.5% and inpatient admissions increased 11.1% compared to July 2023. 

The latest service line data also showed variation in patient demand. Ophthalmology and hepatology saw the biggest YOY growth, with patient volumes for both service lines up 13.6% from June 2024 to June 2025, followed by cancer care at 11.9%. Ear, nose, and throat (ENT) was the only service line to post a YOY decline, with volumes down slightly at 0.6%. 

Among 15 common procedures, demand increased YOY across 12 and declined across three. Outpatient upper gastrointestinal endoscopy recorded the largest increase, up 21.2% YOY, followed by routine outpatient diagnostic echocardiogram at 20.9%. Service lines that saw declines were inpatient primary knee replacements (down 16.2%), outpatient microbiology lab (down 5.4%), and inpatient primary hip replacements (down 1.1%). 

Children’s hospitals experienced mixed results in July. Outpatient visits rose 4.0% YOY and 4.5% month over month, while inpatient admissions decreased 2.0% YOY but increased 0.9% compared to the prior month. Emergency visits decreased 5.1% YOY and 3.2% month over month, while observation visits saw only slight gains of 0.2% YOY and 0.4% versus June 2025. 

For additional Patient Volume data, please see this supplemental file containing detailed charts and graphs featuring StrataSphere data.

Physician Practice Benchmarks 

A look at last quarter's key performance indicators from more than 10,000 physician practices.

Physician practices across the country continued to require higher levels of investment to support operations as expenses rose. The median investment per physician full-time equivalent (FTE) reached $331,224 on an annualized basis in July, up 5.5% compared to 2024 and 17.8% compared to 2023. Practices in the Northeast saw the largest YOY increase at 14.7%, followed by the South at 5.3%. Practices in the West recorded a 2.0% increase, while those in the Midwest were nearly flat, rising just 0.2% YOY. 

Expenses for physician practices also continued to climb. Total expense per physician FTE was $1.1 million annualized in July, up 6.9% from 2024 and 16.6% compared to 2023. All regions experienced growth in per-physician expenses, with the Midwest seeing the largest increase compared to 2024 at 7.3%, followed by the Northeast at 6.5%. 

Revenues rose as well. The median NPSR per physician FTE was $764,812 annualized in July, an increase of 4.7% over 2024 and 14.3% compared to 2023. 

Physician productivity improved alongside revenue growth, while staffing levels declined. Physician work relative value units (wRVUs) per FTE reached 6,396.89 in July annualized, up 3.9% from 2024 and 8.9% versus 2023. Meanwhile, support staffing levels fell, with median support staff FTEs per 10,000 wRVUs at 3.69 — down 0.3% versus 2024 and 2.4% compared to 2023. 

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