Hospitals confront rising non-labor costs, workforce pressures and reimbursement challenges, Kaufman Hall reports

Medical Economics December 10, 2025
Todd Shryock Fact checked by: Chris Mazzolini

Key Takeaways

• Non-labor expenses have increased by 6% to 10%, driven by tariffs and payer reimbursement challenges, necessitating financial resiliency in hospitals.
• Workforce optimization is a priority, with hospitals raising wages, offering bonuses, and utilizing advanced practice providers to address staffing challenges.
• Payer reimbursement pressures, including high claim denial rates, pose significant challenges for hospitals, impacting financial stability.
• The National Hospital Flash Report shows strong patient volumes but declining net patient service revenue, with rising bad debt and charity care expected.

Hospitals and health systems are grappling with sharp increases in non-labor expenses, workforce retention issues and continued payer reimbursement pressures, according to Kaufman Hall’s 2025 Health System Performance Outlook report.

Nearly 60% of surveyed organizations reported non-labor...

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