More than a third of U.S. hospitals were losing money even before the latest round of federal policy shifts started to bite, according to a new Urban Institute and Robert Wood Johnson Foundation analysis.
From CFOs describing the divide to rural hospitals bracing for closures, here’s the full financial picture:
Where hospitals stood before the policy shifts hit:
Thirty-nine percent of hospitals had negative operating margins in 2023, the Urban Institute and Robert Wood Johnson Foundation analysis found. Another 39% posted margins of at least 5%. In an interview with Becker’s, Robert Broermann, CFO of Sentara Healthcare, and John Beaman, CFO of Adventist Health, pinned the high-low divide on market position, payer mix and labor costs that had climbed 7% to 10% a year.
Rural hospitals fared worse, with 41.2% operating at a loss. A Center for Healthcare Quality and Payment Reform analysis put the number of at-risk rural hospitals at 700 nationally, 264 of them at immediate risk, and found more than 100 have already closed since 2015.
By raw count, Texas (84), Kansas (58), Oklahoma (45), Mississippi (34) and Arkansas (32) have the most rural hospitals at risk, per Urban Institute, while Becker’s rural-risk reporting instead ranked states by share of rural hospitals endangered, Arkansas (68%), Oklahoma (62%), Kansas (58%) and Texas (55%) — two different cuts of the same crisis. Twenty-nine states had at least 40% of hospitals operating at a loss in 2023, and Kansas, Mississippi, Vermont and Washington each topped 60%.
What federal policy changes are projected to cost hospitals:
Premier estimated federal policy shifts will cost hospitals $68.6 billion in lost revenue in 2026-2027. The Commonwealth Fund projects hospitals in Medicaid expansion states will see operating margins fall by an average of 13.3%, with safety-net hospitals facing declines as steep as 29.6%.
New Medicaid work requirements are projected to cut expansion enrollment by 5.7 million by 2034, with another 700,000 people expected to lose coverage from eligibility reviews. Separately, new federal caps on state-directed Medicaid payments, aimed at saving $775 billion, are projected to cut Medicaid revenue by more than 20% in 19 of 25 states analyzed.
ACA marketplace enrollment is projected to fall by 9 million more by 2028, on top of a drop already underway: national ACA enrollment fell from 21.8 million to 19.2 million between February 2025 and February 2026, a 12% decline.
Winners and losers from the same policy shift:
HCA Healthcare raised its full-year payer-mix loss estimate to $1 billion to $1.2 billion, up from $600 million to $900 million, and Community Health Systems more than doubled its own estimate to $50 million to $75 million in annual EBITDA impact, with self-pay patients now just over 6% of its visits and collections CHS CEO Kevin Hammons said are “a few pennies on the dollar.”
Insurers have benefited from the same trend. Centene raised its full-year marketplace margin outlook to 4.5% to 5% from 3%, and Elevance and UnitedHealthcare both said their individual ACA businesses outperformed expectations.
What health system executives are saying:
Universal Health Services’ CFO said “virtually everyone” who lost exchange coverage became an uninsured patient rather than shifting to other coverage. HCA Healthcare CEO Sam Hazen echoed that, saying patients “migrated almost one for one to uninsured.”
How margins have already moved in 2026:
National hospital operating margins fell 13% year over year comparing February 2026 to February 2025. February’s margin sat at 1.9% with allocations (5.5% without), up slightly from January’s 1.0% (4.6% without). The smallest hospitals took the hardest hit, with facilities of 0-25 beds seeing margins decline 22.8% year over year and 26-99 bed hospitals declining 23.9%, while the largest hospitals (500+ beds) were the only group with positive year-over-year growth, up 3.1%, and have improved 23.9% over three years.
Regionally, year-over-year declines ranged from -21% in the West and -16% in the South to -2% in the Northeast/Mid-Atlantic. System-wide margins were still hovering around 1%, well below the pre-pandemic “magic number” of 3%, even as individual systems clawed back losses, with CommonSpirit’s operating loss narrowing to $225 million from $875 million, Ascension’s to $490.9 million from $1.8 billion, and Trinity Health’s to $12.2 million, nearly break-even.
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