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 2,200 hospitals.
Published September 22, 2026
July data shows a moderation in momentum: health system operating margins declined from June's year peak, while outpatient volumes remain resilient. Strong revenue growth continues, but persistent labor and supply cost pressures are driving expenses higher.
July 2026 data highlights:
Health system operating margin declined to a national median of +0.5% in July, retreating from June's year peak of +0.7%.
Outpatient revenue continues to outperform, up 3.5% month over month and 9.0% year over year, offsetting inpatient softness.
Total hospital expenses rose 1.7% month over month, significantly outpacing the month's revenue growth, driving margin compression.
Non-labor expenses dipped 0.8% month over month but remain 7.5% above year-ago levels, indicating ongoing structural cost pressures.
| Hospital KPIs from Comparative Analytics | ||
|---|---|---|
| Change from previous month | Change from previous year | |
| Operating Margin* | ▼ -0.1% | ▼ -0.3% |
| Total Expense | ▲ +1.7% | ▲ +6.9% |
| Total Non-Labor Expense | ▼ -0.8% | ▲ +7.5% |
| Outpatient Revenue | ▲ +3.5% | ▲ +9.0% |
*Note: Operating margins are calculated on a percentage point change basis. The table above reflects individual hospital performance, which may or may not include enterprise-level operating or administrative expense.
Operating Margins: Health system operating margins pulled back to 0.5% in July following June's peak, suggesting margin expansion may have cooled after a strong first half of the year. Meanwhile, on the individual hospital level, operating margin is down 0.1% over last month and 0.3% over last year.
Hospital Expenses: Total expenses climbed 1.7% month over month and 6.9% year over year. Non-labor expense dipped slightly month over month (-0.8%) but remains significantly elevated year over year (+7.5%), indicating that while month-to-month volatility exists, the underlying cost structure has shifted upward.
Hospital Revenues: Gross operating revenues grew solidly, with outpatient revenue up 3.5% month over month and 9.0% year over year. This outpatient strength is becoming the primary margin driver as inpatient softness persists.
Source: Comparative Analytics
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Hospital inpatient and outpatient volumes are drawn from analysis of more than 10 million patient visits.
| Patient Volumes from StrataSphere | ||
|---|---|---|
| Change from previous month | Change from previous year | |
| Inpatient Admissions | ▲ +2.8% | ▲ +4.4% |
| Observation Visits | ▲ +0.4% | ▼ -1.1% |
| Emergency Visits | ▼ -0.8% | ▼ -2.1% |
| Outpatient Visits | 0.0% | ▲ +2.7% |
Hospital volumes: Inpatient admissions rebounded 2.8% month over month and grew 4.4% year over year. Outpatient visits held flat month over month (0.0%) but are up 2.7% year over year. Emergency visits declined 0.8% month over month and 2.1% year over year—a notable softening that may reflect either seasonal patterns or a shift toward other care settings.
A look at last month's key performance indicators from more than 10,000 physician practices.
| Physician KPIs from Comparative Analytics | ||
|---|---|---|
| Change from last quarter | Change vs. Q2 2025 | |
| Investment | ▲ +3.3% | ▲ +3.1% |
| Total Direct Expense | ▲ +0.8% | ▲ +5.4% |
| Productivity | ▼ -0.3% | ▼ -0.8% |
| Physician Revenue | ▲ +1.1% | ▲ +5.1% |
| Support Staff Levels | ▼ -2.1% | ▲ +0.4% |
“Investment” measures per-physician profitability from patient care: net patient revenue minus total operating expenses, divided by physician FTEs. “Support Staff” includes all ancillary, business operations, clinical support, and front office personnel.
Physician practice expenses & productivity: Physician revenue growth remains in positive territory (+1.1% vs. 2025, +5.1% vs. 2024) alongside a parallel emerging trend: physician productivity declined 0.3% versus 2025 and 0.8% versus 2024. This productivity softening occurred amid a 2.1% year-over-year reduction in support staff levels, suggesting practices may be testing the limits of lean operations.
Total direct expenses per physician rose 0.8% compared to 2025, eroding some of the investment gains (+3.3% vs. 2025). This dynamic—declining productivity paired with reduced staffing—merits close monitoring.
July’s data shows moderating momentum despite resilient demand. Outpatient activity remains the bright spot, with double-digit year-over-year growth, while inpatient volumes have stabilized. Yet system-wide operating margins eased from June’s peak as expense growth continued to outpace revenue gains.
This ongoing divergence puts greater focus on how health systems translate volume growth into margin. As care continues to shift across settings and locations, understanding how utilization changes affect revenue mix and the cost of care becomes increasingly important. For physician practices, declining productivity alongside staffing reductions raises the risk of capacity constraints. Whether that reflects a cyclical adjustment or a more structural shift should become clearer in coming months.
Heading into Q4, two signals bear watching: whether the summer slowdown in emergency visits persists and whether outpatient growth maintains its current pace.
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Explore the previous monthly report to compare historical insights.
