Nonprofit Hospitals Anticipate Modest Margin Gains Amid Medicaid Cuts
Nonprofit hospitals and health systems are projected to see modest margin improvements through 2026, despite ongoing macroeconomic pressures and anticipated Medicaid cuts from the One Big Beautiful Bill Act (OBBBA). Fitch Ratings forecasts a median operating margin between 1% and 2%, with a neutral outlook for the sector. The report highlights solid volume trends and strong balance sheets, though it warns of potential downgrades if profitability declines. Hospitals are increasing capital spending on outpatient services and technology to improve access and capacity, while labor costs remain a significant challenge.