Julia Burleson, Sabrina Corlette, Christine H. Monahan
The One Massive Lovely Invoice Act (HR 1) is anticipated to chop greater than $1 trillion {dollars} in funding to hospitals and different suppliers, primarily by way of cuts to Medicaid and the Inexpensive Care Act Marketplaces. As many as 300 rural hospitals face disproportionate danger of closure, service reductions, or conversion, with some already citing HR 1 in choices to restructure or shut important companies. In an try to offset the impression, the invoice features a $50 billion Rural Well being Transformation Program. Nonetheless, this funding is a stop-gap measure at greatest and might not attain the hospitals or well being techniques most in want.
In the meantime, many People are struggling to afford care and protection, with excessive hospital costs contributing to increased premiums and better cost-sharing necessities for sufferers. Simply as households are adjusting to financial pressures, hospitals and well being techniques should additionally adapt—and plenty of doubtless can. Nonetheless, it may be difficult for coverage makers and regulators to know which hospitals can afford to tighten their belts and which can not. Hospital monetary information are sometimes fragmented throughout a number of sources and require specialised experience to interpret, making it tough for states to determine which techniques are at best monetary danger. On the similar time, as hospitals lose income from cuts in federal protection applications, state and native officers will face rising stress to financially help the upkeep of important companies and successfully goal restricted public assets, together with by way of the Rural Well being Transformation Program.
Important Variety In Hospital And Well being System Monetary Well being
Hospital monetary well being varies broadly throughout the nation. A 2023 nationwide evaluation from KFF discovered that working margins had been usually increased amongst for-profit, system-affiliated, and city hospitals, in addition to these serving extra commercially insured sufferers. In contrast, many rural and unbiased hospitals continued to face destructive working margins after the COVID-19 pandemic. On the state stage, Pennsylvania information present that 37 % of common acute care hospitals reported destructive working margins in fiscal 12 months 2024, whereas practically half had constructive margins above 4 %. In Oregon, 45 % of common acute care hospitals had destructive working margins in fiscal 12 months 2024, whereas greater than 28 % recorded constructive margins above 4 %.
Profitability alone, nevertheless, gives an incomplete image of monetary well being. Different metrics—akin to liquidity and solvency—are important to understanding a hospital’s monetary standing. KFF discovered that 60 % of well being techniques and unbiased nonprofits with destructive working margins in 2022 nonetheless had not less than “robust” ranges of days money readily available, which is a metric that displays how lengthy a hospital may function with out new income. Unsurprisingly, most well being techniques and unbiased nonprofits with “susceptible” or “extremely susceptible” money reserves additionally reported destructive working margins, signaling deeper monetary instability.
Almost 70 % of hospitals function inside well being techniques, the place a person hospital’s monetary metrics supply solely a partial view of its monetary situation. System-affiliated hospitals might centralize bills throughout the well being system, distorting hospital-specific metrics of monetary well being and doubtlessly masking indicators of hospital misery. To acquire a extra correct monetary image, coverage makers and analysts ought to consider metrics at each the hospital and system ranges.
As coverage makers work to stabilize the well being care system and pursue long-term reforms, a extra full and nuanced understanding of hospital funds might be important to directing assets successfully. Reaching this requires entry to standardized, dependable monetary information. Nonetheless, current public sources fluctuate broadly in scope, high quality, and objective.
Sources Of Hospital And Well being System Monetary Knowledge
The three major public sources of monetary information for hospitals and well being techniques are Medicare Price Stories, Inside Income Service (IRS) 990 Kinds, and audited monetary statements (AFSs). Every presents strengths and limitations when it comes to content material, supplier scope, and accessibility.
Medicare Price Stories
All Medicare-certified hospitals should submit annual price reviews to the Facilities for Medicare and Medicaid Companies (CMS), which the company makes use of to calculate hospital cost charges. Knowledge on the associated fee reviews describe facility traits akin to use, payer combine, price, and expenses. Though these information can be utilized to evaluate profitability and income, analysts ought to interpret them with warning, because the reviews don’t observe Typically Accepted Accounting Rules and should lack enough element for analysts to standardize the metrics. These reviews are submitted on the hospital stage and don’t include well being system-level information. They’re additionally recognized to have reporting errors and are usually not independently audited. Public entry is accessible roughly two years after the hospital’s fiscal 12 months ends by way of CMS’s Healthcare Supplier Price Reporting Data System. A extra user-friendly model of choose metrics from the associated fee reviews can also be accessible to most of the people by way of the Nationwide Academy for State Well being Coverage’s (NASHP’s) Hospital Price Software.
Inside Income Service 990 Kinds
Non-public nonprofit hospitals or well being techniques file IRS 990 Kinds yearly to take care of their tax-exempt standing. Whether or not they’re filed on the hospital or well being system stage is dependent upon which entity holds the nonprofit standing. When they’re filed on the well being system stage, hospital-level data typically will not be reported. The varieties present distinctive data on neighborhood profit expenditures and monetary help applications not reported by way of different hospital monetary information sources, which may help coverage makers consider the diploma to which a given nonprofit hospital or well being system is giving again to its neighborhood. (Though the duty to supply neighborhood advantages is on the hospital stage, the IRS doesn’t require nonprofit well being techniques to report neighborhood advantages for particular person hospitals within the system.) The varieties are publicly accessible about two years after the tip of the supplier’s fiscal 12 months by way of the IRS, ProPublica Nonprofit Explorer, and GuideStar.
Audited Monetary Statements
AFSs are thought of the “gold commonplace” of monetary information on account of their comprehensiveness, reliability, and objective as a file of monetary well being. They have to be licensed by unbiased auditors, and hospitals are legally liable in the event that they misrepresent data. The IRS requires nonprofit hospitals and the Securities and Change Fee requires publicly traded for-profit hospitals to submit AFSs, and members of the general public can entry these filings by way of the web sites of a number of federal businesses. AFSs for privately held for-profit hospitals might not be accessible on a constant foundation. AFSs present detailed information on profitability, liquidity, solvency, capital funding, and monetary burden. Nonetheless, when hospitals are a part of bigger well being techniques, separating out hospital-level information in a system-level AFS may be difficult. AFSs are sometimes launched inside six months of the tip of the supplier’s fiscal 12 months and can be found solely as PDFs, with essential contextual data in footnotes. The format and variations in calculation strategies make comparisons throughout hospitals and well being techniques difficult. Varied sources publish AFSs for various subsets of hospitals, together with state reporting techniques and nationwide databases such because the Digital Municipal Market Entry (EMMA); Digital Knowledge Gathering, Evaluation, and Retrieval (EDGAR); and the Federal Audit Clearinghouse. Nonetheless, none supply a complete assortment of AFSs for all hospitals nationwide.
Analyzing And Standardizing Monetary Knowledge
States fluctuate broadly in how they gather and analyze hospital and well being system monetary information. Whereas some states haven’t any monetary reporting necessities, others mandate that each one hospitals submit AFSs, that are then analyzed and made public. To extra successfully distinguish between financially distressed hospitals from financially robust ones, states can take the next steps:
- Require all hospitals to submit audited monetary statements to the state: Requiring hospitals to submit AFSs on to the state ensures centralized entry to finish, independently verified monetary information. At the moment, 17 states require not less than some hospitals to submit AFSs. States with reporting necessities may additionally take into account publishing a public-facing database with the AFSs they gather to make this data extra accessible.
- Standardize monetary metrics throughout hospitals and well being techniques: Variations in how hospitals and well being techniques apply Typically Accepted Accounting Rules, on account of managerial discretion, can restrict the comparability of monetary metrics throughout suppliers. To make sure constant comparisons, standardizing the inputs for monetary metrics is crucial. Sources such because the monetary evaluation templates that the NASHP and the Milbank Memorial Fund have developed can facilitate uniform evaluation of hospital information throughout key areas of monetary well being akin to profitability, liquidity, and solvency. States can even create their very own standardization templates and require hospitals to make use of them for submission, as Maine has achieved. Whereas states will focus their analyses on hospitals and techniques inside their jurisdictions, better consistency throughout states in how monetary metrics are outlined and reported would promote comparability nationwide. Present nationwide templates already present a typical framework for outlining key monetary metrics, and states growing their very own templates can construct on these expert-developed requirements to make sure coherence.
- Publish analyses: States can conduct analyses evaluating and aggregating hospitals and well being techniques inside their borders and launch reviews explaining their analyses and highlighting implications. For instance, Massachusetts maintains a frequently up to date hospital and hospital system monetary dashboard for readers to simply evaluate hospital and well being system metrics.
- Use information to tell coverage and determine at-risk hospitals early: Complete analyses of audited hospital monetary information can advance long-term efforts to enhance well being care affordability. Outcomes of monetary analyses can function an early warning system, serving to states determine distressed hospitals earlier than they attain a disaster level. They’ll additionally support evaluations of the monetary impacts of hospital mergers and acquisitions, post-transaction. As well as, insights can inform focused methods to include statewide well being expenditures.
Wanting Forward
The impression of HR 1 will fluctuate, with some hospitals struggling to remain open whereas others stay financially flush. To make sure that restricted state and Rural Well being Transformation Fund {dollars} are distributed pretty and successfully, coverage makers ought to have well timed, correct monetary information and strong analyses to determine which suppliers are in most monetary misery.
By taking the steps outlined above to standardize and analyze hospital monetary information, state coverage makers and the general public can higher perceive the monetary standing of hospitals and well being techniques. Though this image should be imperfect, extra dependable information can help stronger, evidence-based coverage making.
As hospital and well being system funds develop more and more complicated, sustaining transparency will stay an ongoing problem. Investing in centralized, publicly accessible monetary reporting and strong analyses now may help states make higher short-term funding choices and lay a stronger basis for data-driven well being coverage sooner or later.
Julia Burleson, Sabrina Corlette, Christine H. Monahan “Federal Price range Cuts Received’t Hit All Hospitals Equally: How States Can Higher Analyze Hospital And Well being System Monetary Knowledge” December 3, 2025, https://www-healthaffairs-org.proxy.library.georgetown.edu/content material/forefront/federal-budget-cuts-won-t-hit-all-hospitals-equally-states-can-better-analyze-hospital. Copyright © 2025 Well being Affairs by Undertaking HOPE – The Folks-to-Folks Well being Basis, Inc.