AHA: Hospitals’ total expenses, patient volumes rose in 2025

Amid patient volume increases, wage pressure, and increased drug spending, hospitals’ total spending rose by 7.5% last year, according to data shared in the American Hospital Association’s (AHA) annual “Costs of Caring” report. This data-driven assessment seeks to identify the structural drivers of cost increases, instead of narrowing in on hospital prices only.

The analysis was based on industrywide benchmark data from Strata Decision Technology and other sources. The year-over-year total saw a 5.6% increase in workforce spending, a 9.9% increase in supplies, and a 13.6% increase in drug spending. These increases are accompanied by an increase in the quantity of care hospitals took on last year, as inpatient volumes rose 5.3% and outpatient volumes grew 9.8%.

Data from previous years (2019–2024) indicated that hospital case-mix index rose by about five percent. This means that hospitals have been treating “sicker, more care-intensive patients” in the buildup of 2025’s spending increases. AHA’s annual member survey data estimated that about 36% of cost growth across the five-year period was linked to volume increases and 19% to patient acuity. The remaining 45% was tied to input expenses, such as staff and supplies.

In 2025, hospital care maintained roughly one-third of the share of the country’s total health spending. Analyses referenced in the study attribute much of the bump to utilization and acuity.

“In other words, despite hospitals facing higher labor and input costs, treating more patients with greater clinical complexity, and maintaining essential, always-on services that communities depend on, they have managed to keep price increases below the increases in their input costs,” the report reads. “However, this mismatch between expenses and revenue leaves hospitals increasingly at risk of being able to maintain the full spectrum of services on which communities rely.”

The report outlined the negative margins hospitals incur on specific service lines, such as behavioral health, burns and wounds, and infectious disease. It also notes that 56.1% of all hospital costs are tied to service lines where the cost to deliver care is higher than reimbursements—and said shortfalls of payment are felt across public and commercial insurers.

The AHA stressed that almost $18 billion was collectively spent by hospitals to overturn claims initially denied by payers. The organization’s most recent annual survey suggests hospitals spent $43 billion in 2025 to collect payments from insurers. Rising costs of labor, supplies, drugs, and administrative duties, as well as the higher rate of sicker patients, pose great challenges for hospitals and health systems.

Editor’s note: This article originally appeared in CDI Strategies, ACDIS’ weekly e-newsletter.