While operating margins trended upward in June, hospitals’ overall performance still lags 2025 and is seeing “intensifying” uncompensated care pressures and faster-than-inflation expense growth, according to the latest monthly benchmarks from Kaufman Hall.
The healthcare advisory firm reported a calendar year-to-date operating margin index of 2.5% and a single-month operating margin index of 4.5% (both including health system allocations for the cost of shared services). The former is a 6% lag compared to the first half of 2025, while the latter reflects a 6% bump over this May’s median operating margin.
Echoing commentary from some of its preceding reports this year, Kaufman Hall’s primary red flag was a 2% month-over-month increase in daily bad debt and charity logged by hospitals, which year-to-date is 17% higher than the same cutoff in 2025. As a percentage of hospitals’ gross operating revenue, year to date, uncompensated care is 8% higher than 2025.
"As hospitals’ payer mix continues to shift, we are seeing pressure from uncompensated care intensify,” Erik Swanson, managing director and Data and Analytics group leader at Kaufman Hall, said in a statement. "While performance has remained relatively stable on the surface, there is considerable variation across hospitals, and those with the thinnest margins are often the ones caring for our most vulnerable populations. Proactive planning around resource allocation and expense management will be essential as these pressures continue to build."
Kaufman Hall’s monthly reports tap data from 1,300 nationwide hospitals as collected by Strata Decision Technology.
It showed a 1% bump in daily discharges and a 5% rise in adjusted discharges compared to May. Here, Kaufman Hall highlighted emergency department visits, which rose 2% from May and by 4% when comparing June 2026 to June 2025. Operating room minutes were up across the board, while average length of stay declined.
These June volumes heralded a 5% month-over-month increase in daily net operating revenue and a 6% rise in gross operating revenue, further broken down into a 2% bump in inpatient revenue and an 8% jump in outpatient revenue. Net patient service revenue per adjusted discharge was flat month over month, but increased 2% per adjusted patient day.
Comparing hospitals’ year-to-date data between this year and last, daily net operating revenue was 6% higher, gross operating revenue 7%, inpatient revenue 5% higher and outpatient revenue 8% higher. Net patient service revenue rose 5% both per adjusted discharge and per adjusted patient day.
Expenses grew a bit more slowly. Month to month, daily total expense rose 3% and declined by 1% on a per adjusted discharge basis, with non-labor expenses like supplies and drugs fueling the upward pressure. Year to date, daily total expense is 6% higher and 4% higher per adjusted discharge, with non-labor expenses again driving the growth and “reinforcing the need for targeted, disciplined spend management strategies across the system,” according to the report.
Accompanying the monthly hospital check-in was a quarterly report on physician group finances and operations, which covers data from over 200,000 employed physicians and advanced practice providers.
That report showed employers’ investment/subsidy per provider and per physician to be flat year over year, “a positive sign for medical group performance,” the firm wrote. Holding cost pressures in check, per the firm, was a 1% year-over-year increase in the share of advanced practice physicians (41.2% of total provider full-time equivalents) and 2% and 3% increases in respectively, provider and physician productivity (as measured through work relative value units per full-time equivalent).
"While growing utilization of APPs and rising productivity are helping medical groups offset cost pressures, tightening staffing and increasing non-clinical workloads continue to be a challenge for many," Matthew Bates, managing director and physician enterprise service line leader at Kaufman Hall, said in a statement. "Strategic care team design remains essential to sustaining performance while maintaining quality of care and preventing burnout.”