April 30, 2025- The American Hospital Association (AHA) released a new report showing that hospitals and health systems continue to experience significant financial headwinds that can challenge their ability to provide always-there, essential care to their patients and communities. The report outlines the significant financial burden of the heightened expenses that hospitals have faced in recent years in caring for patients, as well as the increasing strain on the field.
Key findings from the report include:
- Medicare reimbursed just 83 cents for every dollar hospitals spent caring for patients in 2023. From 2022 to 2024, general inflation rose by 14.1%, while Medicare inpatient payment rates increased by only 5.1% — amounting to an effective payment cut over the past three years.
- Having the right care team available for patients has long been the single largest category of hospital spending, accounting for 56% of total costs in 2024. Amid ongoing workforce shortages, hospitals have raised wages to recruit and retain staff, adding financial pressure even as these investments are essential to maintaining care.
- Medicare and Medicaid continue to underpay hospitals for patient care. Hospitals absorbed $130 billion in underpayments from Medicare and Medicaid in 2023 alone, and these shortfalls are worsening — growing on average 14% annually between 2019 and 2023.
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