Monthly Healthcare Industry Financial Benchmarks

 

Overview: Margins Hold Steady as Hospitals Navigate Rising Costs and Shifting Demand 

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.  

The latest hospital performance data reveal growing cost pressures, changes in patient utilization, and sustained revenue gains. Highlights from the May 2025 data include: 

• Hospital and health system operating margins remained stable in May, as health system margins hovered around 1% for a fifth consecutive month and hospital margins showed minimal change. 

• Hospital drugs showed the biggest expense increase compared to 2024 levels, jumping 8.7% from May 2024 to May 2025 as organizations contend with higher costs.  

• Hospital emergency visits saw the biggest decrease in patient demand, down 4.3% compared to the same time last year, while inpatient and outpatient volumes rose. 

• Gross hospital revenues continued to show consistent growth across both inpatient and outpatient categories, with outpatient revenue seeing the biggest year-over-year increase at 5.9%. 

• Rising physician expenses continued to drive up investment levels needed to support physician practices, with annualized per-physician expenses of about $1.1 million in May. 

Hospital Performance Benchmarks  

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

Operating Margins: Hospital and health system operating margins remained relatively stable in May, with modest year-over-year (YOY) gains and slight month-over-month fluctuations across most segments nationwide. 

Health system operating margins continued to hover around 1% for a fifth consecutive month. The median year-to-date (YTD) operating margin for health systems nationally was 1.1%, essentially unchanged from April but up from 0.9% in March. 

Looking at operating margin trends at the hospital level, the median change in operating margin showed minimal movement. The metric increased 0.6 percentage points from May 2024 to May 2025 for hospitals nationally but declined slightly, down 0.6 percentage point from April to May 2025. 

By census region, median changes in hospital operating margins were mixed. The South saw the largest increase in the metric at 3.6 percentage points, followed by the Northeast with a 1.3 percentage-point gain. The West and Midwest experienced slight declines, with decreases of 0.6 and 0.4 percentage points, respectively. 

By hospital size, hospitals with 300 to 499 beds recorded the largest increase in median change in operating margin at 2.6 percentage points. In contrast, the nation’s largest hospitals (more than 500 beds) saw a decrease of 2.6 percentage points, and the smallest hospitals (0 to 25 beds) experienced the largest decline at 3.3 percentage points. 

Hospital Expenses: Overall expenses continue to increase for hospitals nationwide, with drugs seeing the largest expense increases compared to the prior year.  

From May 2024 to May 2025, total drugs expense jumped 8.7%, contributing to a 5.1% YOY increase in total non-labor expense. Other non-labor categories also saw increases, including a 5.2% rise in supply expense and a 6.1% increase in purchased service expense. Total labor expense increased 5.0% YOY, and total expense rose 5.1% over the same period. 

Month-over-month trends were more varied. Total non-labor expense declined 1.1% from April to May 2025, driven by a 1.4% decrease in supply expense and a 1.3% decrease in purchased service expense. In contrast, total drugs expense rose slightly, up 0.7% month over month. Labor costs continued to climb, with total labor expense increasing 1.6% from April to May. Total expense was nearly flat month over month, rising just 0.4%. 

Regional trends showed the highest drug and non-labor expense growth for hospitals in the South. Drugs expense rose 9.1% YOY and total non-labor expense was up 6.2% YOY for hospitals in the South. Drug expenses also increased for hospitals in the Northeast (9.0%), the Midwest (7.3%), and the West (5.0%). For total non-labor expense, hospitals in the West saw a 5.5% rise, followed by a 4.4% increase in the Midwest and a 3.0% increase in the Northeast. 

Hospital Revenues: Overall hospital revenues continued to rise YOY for a 25th consecutive month across gross operating, inpatient, and outpatient categories. Outpatient revenue saw the largest increase, rising 5.9% from May 2024 to May 2025. Inpatient revenue rose 4.8%, and gross outpatient revenue was up 5.3% over the same period. 

Month-over-month trends were mixed. Outpatient revenue declined 1.3% from April to May 2025, while inpatient revenue rose 0.6%. Gross operating revenue decreased slightly, down 0.6%. 

Revenues metrics also showed YOY growth after adjusting for patient volumes. Net patient service revenue (NPSR) per adjusted discharge increased 2.5%, and NPSR per adjusted patient day rose 3.6% YOY. However, both metrics declined month over month — NPSR per adjusted discharge was down 1.1%, and NPSR per adjusted patient day decreased 0.5%. Bad debt and charity care increased for hospitals across all measures in May, jumping 8.1% YOY and rising 2.3% month over month. 

Regional revenue trends varied. Hospitals in the West posted the largest increase in outpatient revenue, up 7.2% YOY. The Midwest followed at 6.3%, the South was up 5.8%, and the Northeast was up 4.6%. Inpatient revenue growth was strongest in the South, increasing 6.3% YOY. The Midwest saw a 5.3% increase, followed by the West at 2.8% and the Northeast at 2.2% over the same period. 

 

Patient Volume Benchmarks 

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

Patient demand continued to show mixed results in May. Inpatient admissions increased 1.4% YOY nationally, while outpatient visits rose just 0.8%. At the same time, hospitals experienced notable YOY declines in emergency department visits, down 4.3%, and observation visits, down 2.9%. Compared to May 2023, inpatient admissions were up 6.4%, and outpatient visits increased 4.7%. 

Most volume metrics declined month over month. Outpatient visits had the largest drop, down 3.6% from April to May 2025. Emergency visits decreased 0.7%, and observation visits were down 0.4%. Inpatient admissions was the only metric to rise month over month, increasing 2.5%. 

By region, outpatient visits showed varying trends. Hospitals in the South saw the largest YOY increase at 2.1%, followed by the Midwest at 0.8%. The West was nearly flat with a 0.1% increase, while the Northeast experienced a 0.5% decline. 

Volumes rose YOY across most service lines. Genetics saw the largest increase compared to April 2024, up 11.0%, followed by hepatology at 9.1%, based on the latest service line data. Ear, nose, and throat (ENT) was the only service line to experience a YOY decline, down 7.5%. 

Among 15 common procedure types, patient volumes increased for 10 and declined for five. The largest YOY increase was seen in outpatient routine electrocardiogram (ECG) diagnostics, which rose 24.7% from April 2024 to April 2025. This was followed by outpatient upper gastrointestinal endoscopy, which increased 17.9% over the same period. Among the procedures that saw declines, inpatient primary knee replacements had the largest drop, down 14.1% YOY, followed by outpatient microbiology lab tests, which decreased 9.1%. 

Children’s hospitals across the country continued to report YOY declines across most patient volume metrics. Emergency visits were down 7.8% from May 2024 to May 2025, according to the latest available data. Inpatient admissions declined 4.8%, and outpatient visits were down 1.6%. Observation visits were the only category to increase, rising 1.2% YOY.   

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 month’s key performance indicators from more than 10,000 physician practices.

 

The level of investment required to support physician practice operations continued to climb nationwide, driven by growing expenses. In May (annualized), the median investment per physician full-time equivalent (FTE) was $332,512. This marked a 4.7% increase compared to 2024 and a 19.2% increase compared to 2023. Practices in the Midwest reported the largest YOY increase in investment per physician FTE, up 16.8% compared to 2024. The metric also rose 8.8% in the South, 7.0% in the Northeast, and 5.3% in the West. 

Rising expenses contributed to higher investment levels. The median total expense per physician FTE was $1.1 million for May annualized, a 7.6% increase compared to 2024 and an 18.2% increase from 2023. By region, practices in the Northeast had the largest YOY increase in per-physician expenses, up 8.6%. Median total expense per physician FTE also rose 5.2% in the Midwest, 4.3% in the South, and 3.2% in the West from May 2024 to May 2025. 

Physician revenues continued to grow in May, with the annualized median NPSR per physician full-time equivalent (FTE) reaching $767,067. This represents a 5.6% increase compared to 2024 and a 17.8% increase compared to 2023. 

Physician productivity also improved. The annualized median physician work relative value units (wRVUs) per FTE for the month were 6,237.64 — up 4.5% YOY and 11.7% compared to 2023. Meanwhile, staffing levels at physician practices declined slightly. The annualized median support staff FTEs per 10,000 wRVUs were 3.19 in May, a decrease of 1.0% from 2024 and 0.8% from 2023.