Healthcare Insights
A look at hospital operating margins in the United States
Over the past several years, hospitals have experienced increasing costs coupled with decreasing net patient revenue, ultimately impacting their bottom line.
U.S. hospital operating margins remain negative, despite gradual improvement from pandemic-era lows. In 2024, the revenue-weighted operating margin across nearly 2,900 acute care hospitals was -2.9%, up from -6.3% in 2020 but still below breakeven, according to Definitive Healthcare data.
While overall performance has improved, financial pressure is uneven, varying significantly by hospital size and region, with mid-sized hospitals and Northeastern facilities experiencing the most sustained strain.
In this Healthcare Insight, we review operating margins at U.S. hospitals in relation to their bed count and geographic location. Operating margin measures hospital profitability by comparing net patient revenue (NPR) to total operating expenses.
How do you calculate operating margin for a hospital?
In the Definitive Healthcare HospitalView product, operating margin is calculated using metrics from the Medicare Cost Report. This analysis looks at operating margins across 2,873 short-term acute care hospitals.
Operating margins are reported as a revenue-weighted average, calculated by aggregating total NPR and total operating expenses across hospitals prior to computing the margin.
Median operating margin is also reported to reflect the financial performance of a typical hospital, independent of size. Arithmetic mean margins are excluded due to sensitivity to extreme values and variation in hospital scale.
What are operating margins for U.S. hospitals?
Based on data from 2,873 hospitals in the Definitive Healthcare HospitalView product, the median operating margin for U.S. hospitals was -1.0% in 2024. In contrast, the revenue-weighted operating margin was -2.9% in 2024, indicating greater financial pressure among larger hospitals.
Hospital operating margins vary widely across the distribution, ranging from significant losses to positive margins in certain facilities. Given this dispersion, both weighted and median values are included to provide a more complete view of industry financial performance.
Average and median hospital operating margins
Fig. 1 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Analysis includes 2,873 short-term acute care hospitals. Data accessed April 2026.
Hospital operating margins by bed count
Fig. 2 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Analysis includes 2,873 short-term acute care hospitals. Data accessed April 2026.
Financial performance varies by hospital size. Small hospitals (≤25 beds) consistently outperform larger facilities, maintaining near-breakeven or slightly positive margins throughout most of the period.
In contrast, mid-sized hospitals (26–250 beds) have experienced sustained negative margins since 2020, representing the most financially pressured segment.
Larger hospitals (250+ beds) remain below breakeven but show gradual improvement, reaching -0.6% in 2024.
Hospital operating margins by region
Fig. 3 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Analysis includes 2,873 short-term acute care hospitals. Data accessed April 2026.
Hospital operating margins also vary widely by geography. Hospitals in the Northeast had the lowest median operating margin at -7.2% in 2024. In contrast, the Southwest outperformed all other regions, reaching +4.1% in 2024. The Southeast has returned to positive territory in recent years, while the Midwest and West remain negative but show improvement.
How do hospital operating margins change each year?
Based on analysis of historical hospital operating margins, many hospitals run on a small loss each year and do not have high profit margins. In 2020, the median operating margin dropped to -4.6%, likely due to reduced capacity and delays in care related to the COVID-19 pandemic.
While hospital margins have stabilized since the height of the pandemic, the industry continues to operate under sustained financial pressure related to the overall economic climate of inflation and rising costs in the U.S. Differences by size and geography highlight the uneven nature of recovery across the U.S. healthcare system.
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