Medical Economics November 7, 2025
Here’s how direct contracting can unlock faster cash flow, lower costs and lasting partnerships with employers.
Hospital operating margins have recovered from a low of 1.1% in 2023 to 4.9% in early 2024, but the outlook remains fragile. Nearly two months of revenue sits in accounts receivable, one-third of spending disappears into administration, and forecasts suggest margins may slip again in 2025. Optimizing a flawed system will not solve these pressures.
Rethinking the revenue source
Hospitals often view carriers as their primary commercial partners, but most revenue ultimately comes from employers. A full 63% of commercially insured Americans, employers provide the funding, physicians and other providers deliver the care, and intermediaries sit in the middle capturing margin.
This matters because...
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