Uncompensated care pressures intensify for hospitals as payer mix erosion persists
CHICAGO – August 18th, 2026 – Hospital performance remains under pressure from growing uncompensated care and expense inflation, according to the latest National Hospital Flash Report from Kaufman Hall, a Vizient company.
Bad debt and charity care continued to grow year-to-date through June amid ongoing payer mix challenges, accelerating financial pressure for health systems. ED visits also increased in June as compared with last year, with analysts noting that ongoing payer landscape shifts could drive further volume increases as more patients may rely on EDs for care. In addition, supply and drug expense continued to rise well above inflation year-to-date through June, posing a persistent drain on performance.
As a result, median adjusted year-to-date operating margin continues to pace below 2025 levels, with analysts noting that smaller and rural facilities bear the greatest strain on already thin cash reserves.
"As hospitals’ payer mix continues to shift, we are seeing pressure from uncompensated care intensify,” said Erik Swanson, managing director and Data and Analytics group leader at Kaufman Hall. "While performance has remained relatively stable on the surface, there is considerable variation across hospitals, and those with the thinnest margins are often the ones caring for our most vulnerable populations. Proactive planning around resource allocation and expense management will be essential as these pressures continue to build."
Productivity growth is offsetting medical group cost pressures but stretching providers
Kaufman Hall's latest quarterly Physician Flash Report shows investment per physician and per provider remained flat year-over-year, a positive signal for medical group performance amid broader industry cost pressures.
The number of APPs continues to grow steadily, now representing 41.2% of total provider full-time employees (FTEs) represented in this sample. At the same time, provider and physician productivity also continued to rise, with provider and physician work relative value units (wRVUs) per FTE increasing 2% and 3% year-over-year, respectively. Meanwhile, support staff expense as a percentage of total expense declined slightly, reflecting ongoing hiring and retention challenges.
"While growing utilization of APPs and rising productivity are helping medical groups offset cost pressures, tightening staffing and increasing non-clinical workloads continue to be a challenge for many," said Matthew Bates, managing director and Physician Enterprise Service Line leader at Kaufman Hall. "Strategic care team design remains essential to sustaining performance while maintaining quality of care and preventing burnout.”
Kaufman Hall’s National Hospital Flash Report draws on data from more than 1,300 hospitals from Strata Decision Technology, LLC. The Physician Flash Report draws on data based on more than 200,000 providers, also from Strata.
About Kaufman Hall, a Vizient Company
Kaufman Hall, a Vizient® company, provides management consulting solutions to help society’s foundational institutions realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods, rigorous analytics, and industry-leading solutions into their strategic planning and financial management processes, with a focus on achieving their most challenging goals.
Kaufman Hall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of Kaufman Hall advisory services are unparalleled, encompassing strategy; financial and capital planning; performance improvement; treasury and capital markets management; mergers, acquisitions, partnerships, and joint ventures; and real estate.
Contact:
Nancy Matocha
nancy.matocha@vizientinc.com
(972) 830-9756