Monthly Healthcare Industry Financial Benchmarks

 

Overview: Health System Margins Down to Start 2025, but Hospitals See Some Gains 

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.  

While health systems had a shaky start to 2025, the nation’s hospitals continued to see margins and revenues strengthen entering the new year. Highlights from the January 2025 data include: 

• Health system operating margins narrowed in January, with the median year-to-date operating margin decreasing to 1.0%, down from a five-month high of 2.1% in December 2024. 

• Growth in overall hospital expenses showed no signs of stopping heading into the new year, with supply expenses again seeing the fastest growth compared to other expense categories. 

• Patient demand remained on the rise for hospitals nationwide, with year-over-year increases in inpatient admissions outpacing outpatient visits in January. 

• Gross revenues showed strong performance to start 2025, with January marking the 21st consecutive month of YOY increases in gross operating, inpatient, and outpatient revenues.  

• Physician practices nationwide continued to see expense increases, with the median per-physician expense up more than 20% versus two years ago.  

Hospital Performance Benchmarks  

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

Operating Margins: The new year was off to a shaky start for the nation’s health systems, which saw a drop in median operating margins in January. The median year-to-date (YTD) operating margin for U.S. health systems was 1.0% for January 2025. That was down from a five-month high of 2.1% to close 2024 in December. 

For U.S. hospitals, however, trends in operating margin changes showed some improvement in January. Looking at the median change in hospital operating margin — which reflects how hospital margins fluctuate over time — the metric increased 1.9 percentage points from January 2024 to January 2025. Month-over-month, the metric was essentially flat, increasing just 0.3 percentage point from December 2024 to January 2025. 

Median changes in hospital operating margin varied widely in different regions. Hospitals in the Northeast/Mid-Atlantic and West regions both saw the lowest year-over-year (YOY) increases of just 0.7 percentage point. Hospitals in the Great Plains had the biggest increase, with the median change in operating margin up 3.0 percentage points YOY. For hospitals nationwide, the median change in operating earnings before interest, taxes, depreciation, and amortization (EBITDA) margin rose 1.7 percentage points YOY but was essentially flat, increasing just 0.1 percentage point month over month. 

Hospital Expenses: Overall hospital expense increases showed no signs of stopping to start 2025. Total non-labor expenses — and supply and drug expenses in particular — continued to show the highest growth rates. Total non-labor expense rose 5.6% YOY in January, while total labor expense was up 4.0%, and total expense increased 5.0% over the period. 

Looking at specific non-labor expenses, supply expense had the biggest increase, jumping 6.8% from January 2024 to January 2025, followed by drugs expense which was up 6.2% YOY. Purchased service expense increased 4.7% YOY. By region, total non-labor expense increases ranged from 1.3% YOY for hospitals in the Great Plains to 8.2% YOY for those in the South. 

Most month-over-month expense increases were minimal. Total expense was up 0.7%, total labor expense increased 2.3%, and total non-labor expense was essentially flat, rising just 0.1% from December 2024 to January 2025. Supply expense increased 0.2% and drugs expense was up 0.7%, while purchase service expense decreased 1.6% month over month. 

Expenses improved on a per-patient basis in January. Total expense per adjusted discharge decreased 3.5% YOY and was down 1.7% month over month. Labor expense per adjusted discharge dropped 4.1% YOY and decreased slightly at 0.3% month over month, and non-labor expense per adjusted discharge decreased 1.8% YOY and 2.5% from December 2024 to January 2025. 

Hospital Revenues: Gross revenues continued to show strong performance to start the year. January marked the 21st consecutive month of YOY increases in gross operating, inpatient and outpatient revenues. Growth in outpatient revenue continued to outpace inpatient revenue increases. Outpatient revenue jumped 9.2% from January 2024 to January 2025, while inpatient revenue increased 6.7% and gross operating revenue was up 8.3% YOY.  

By region, YOY increases in outpatient revenue ranged from 6.8% for hospitals in the Northeast/Mid-Atlantic to a high of 11.7% for hospitals in the West. For December 2024 versus January 2025, outpatient revenue was up 3.2%, inpatient revenue increased 8.3%, and gross operating revenue rose 4.8% for hospitals nationally. 

Hospital revenues were essentially flat after adjusting for patient discharges. Net patient service revenue (NPSR) per adjusted discharge decreased 0.4% for January 2024 versus January 2025, and was unchanged month over month. NPSR per adjusted patient day rose 4.0% YOY in January, but decreased 1.3% month over month. 

Patient Volume Benchmarks 

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

Patient demand continued to grow for hospitals heading into the new year. Inpatient admissions had the biggest YOY increase, rising 5.1% from January 2024 to January 2025. The metric increased 2.7% month over month. Compared to two years ago in January 2023 inpatient admissions were up 12.1%. 

Outpatient visits rose 3.4% YOY and had the biggest month-over-month jump at 5.1%. Observation visits rose 2.3% YOY but were down 2.3% month over month, while emergency visits increased 1.1% YOY and dropped 6.2% from December 2024 to January 2025. 

Patient volumes also increased YOY across most service lines. The cancer service line had the biggest increase, with patient volumes rising 11.5% from January 2024 to January 2025, followed by the genetics service line, which had saw a YOY increase of 10.5%. Examples of the few service lines that had YOY decreases in January include infectious disease, which was down 12.9%, and ear, nose, and throat (ENT) which had a decrease of 5.2%. 

Looking at trends in patient demand across 15 common procedure types, volumes increased YOY across 10 procedures and were down for five. Outpatient positron emission tomography (PET) had the biggest YOY increase, with patient volumes jumping 19.6% from January 2024 to January 2025. Outpatient computed tomography (CT) imaging volumes had the second highest YOY increase at 10.8%. Meanwhile, the outpatient microbiology lab service line had the biggest YOY decrease in patient volumes at 12.2%.  

Patient volumes were mixed for children's hospitals in January. Both inpatient admissions and emergency visits were nearly flat, with both rising just 0.2% from January 2024 to January 2025. Outpatient visits decreased 1.8% YOY and observation visits rose 4.9% over the same period. 

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 saw performance decline across some key metrics to start the new year in January. The level of investment needed to support physician practices was up for the month. The median investment per physician full time equivalent (FTE) rose to $335,195 for November 2024 through January 2025 annualized. That represents an increase of 1.9% compared to 2024 and 16.9% versus two years ago in 2023. 

Meanwhile, physician expenses continued to climb. Median total direct expense per physician FTE was $1.1 million for November 2024 through January 2025 annualized, up 7.1% from 2024 and jumping 20.1% versus 2023. 

Physician revenues continued to rise despite the expense pressures. The median net revenue per physician FTE was $774,118 for the three-month annualized period ending in January. The change marked a 7.1% increase compared to 2024 and a 19.2% increase from 2023. Physician productivity also showed moderate gains. The median physician work relative value units (wRVUs) per FTE were 6,395.64 for November 2024 through January 2025 annualized, up 1% from 2024 and up 8.4% from 2023. 

Physician practice staffing levels varied. Median support staff FTEs for 10,000 WRUs were 2.88 for the three months annualized. That marked a 2.3% increase compared to 2024 but a 2.6% decrease compared to 2023.