U.S. hospitals experienced a 7.5% increase in total expenses in 2025, with workforce expenses rising 5.6% and remaining the largest operating cost category, according to the American Hospital Association's 2025 Costs of Caring report.[2]
Who's Involved
The American Hospital Association (AHA), a not-for-profit association of healthcare providers and organizations, released this data.[2] The findings affect hospitals nationwide and have implications for employers, employees, and health plans managing healthcare costs.
Context and Timeline
Hospital expense growth has accelerated significantly over recent years. In 2024 alone, total hospital expenses grew 5.1%, outpacing the 2.9% inflation rate.[1] Labor costs have consistently dominated hospital budgets, accounting for 56% of total hospital costs, with registered nurse salaries growing 26.6% faster than inflation over the past four years.[1] Broader healthcare spending reached $5.3 trillion in 2024 (up 7.2% from 2023), with projections for medical cost trends to remain at 8.5% for employer group markets in 2026.[3][5]
Why It's Newsworthy
Hospital financial pressures are intensifying amid persistent workforce shortages, supply chain costs, and underpayments from Medicare and Medicaid—which grew 14% annually between 2019 and 2023.[1] These mounting expenses directly impact employer health benefit costs (projected to rise 9.5% in 2026) and worker affordability, with 47% of Americans worried they cannot afford necessary healthcare.[6] Additionally, delayed capital investments indicate hospitals are increasingly strained, with the average age of hospital infrastructure rising over 10% in two years, threatening long-term care quality.[1]