Healthcare Leadership Trends for 2025
Industry Financial and Operational Context
As in recent years, 2025 presents a challenging financial and operational environment in which healthcare leaders must maneuver. Five themes stand out as top-of-mind for leadership.
Financial Improvement but Lingering Stress Points Improved metrics in 2024 further distanced the industry from pandemic-era lows. Net hospital operating revenue through November logged gains of 9% over the prior year and 18% over 2021. 1 Median year-to- date health system/hospital operating margins through November were 1.7% and 4.7%, respectively. 2 Those margins will increase this year, according to 60% of surveyed hospital CFOs. 3 S&P Global predicts a “stable but shaky” scenario for 2025, citing “good revenue and demand for services, easing of certain labor-related and inflationary expenses, and generally sound balance sheets.” 4 Diligent financial management will be essential. High costs for labor, drugs, and supplies will “require management teams to maintain aggressive annual operating initiatives.” 5 Average budgeted total compensation in healthcare services will climb 3.5%. 6 Progress is needed on other measures. Nonprofit hospitals’ median operating cash flow margin was 5.3% in 2023 but 8.5% in 2019. 7 Days cash on hand has plummeted from 260 in 2021 to 211 in 2023. 8
1 Kaufman Hall, National Hospital Flash Report, January 2025. 2 Strata Decision Technology, “Monthly Healthcare Industry Financial Benchmarks,” January 2025. 3 Wells Fargo, “Hospitals — CFO Survey Expects 2H24 Growth Acceleration Ahead, More Normalized Growth in 2025,” October 22, 2024. 4 S&P Global, “U.S. Not-For-Profit Acute Health Care 2025 Outlook: Stable But Shaky For Many Amid Uneven Recovery And Regulatory Challenges,” December 4, 2024. 5 Ibid. 6 Mercer, “Despite Economic Uncertainty, U.S.
Employers Maintain Elevated Compensation Budgets for 2025, According to Mercer,” December 10, 2024. 7 L. Dyrda, “Hospital Operating Margins to Stay Low in 2025: Moody's,” Becker’s Hospital CFO Report, October 16, 2024.
8 A. Condon, “Hospitals’ Credit ‘Trifurcation’ Issue,” Becker’s
Hospital CFO Report, August 16, 2024.
© B.E. Smith 2025
BESmith.com | 5
Made with FlippingBook. PDF to flipbook with ease