North American hospitals face stalling financial recoveries as funding pressures mount. While U.S. nonprofit hospitals raised their median operating margin to 1.5% in fiscal 2025, Fitch Ratings warns this recovery is uneven and may peak before major Medicaid funding cuts under the One Big Beautiful Bill Act take effect in 2027. Meanwhile, Ontario hospitals face a parallel crisis of chronic underfunding, rising deficits, and privatization pressures.
Nonprofit hospital financial recovery
- ▪The 1.5% median operating margin for nonprofit hospitals in fiscal 2025 remains below every pre-pandemic data point in the 20-year dataset of Fitch Ratings.
- ▪Nonprofit hospitals and health systems rated by Fitch Ratings raised their median operating margin to 1.5% in fiscal 2025, up from 1.1% in 2024.
- ▪The financial recovery of nonprofit hospitals in fiscal 2025 was supported by personnel expenses falling to 52.6% of operating revenue, down from 53.5% in 2024.
- ▪In fiscal 2025, 67% of rated nonprofit hospital providers reported a positive operating margin, an increase from 64% in 2024 and approximately 50% in 2022.
Operating margin disparities
- ▪Fitch Ratings warned that the financial recovery of nonprofit hospitals is uneven, with the divide between financially stronger and weaker systems widening.
- ▪Fitch Ratings senior director Kevin Holloran stated that deteriorating operating margins present the most immediate risk for less-stable providers by draining liquidity.
Federal policy changes
- ▪The One Big Beautiful Bill Act is expected to reduce Medicaid enrollment and restrict provider taxes and state-directed payments used for hospital reimbursement.
- ▪Fitch Ratings expects the regulatory changes from the One Big Beautiful Bill Act to begin materially affecting healthcare providers in 2027.
Ontario hospital austerity crisis
- ▪The Canadian Union of Public Employees scheduled a media conference for August 14, 2026, to release a research report on Ontario's hospital capacity and privatization crisis.
- ▪The Canadian Union of Public Employees report highlights the destabilization of Ontario's hospital sector through chronic underfunding, rising deficits, and increasing healthcare privatization.
Story comments
Loading comments…