Nonprofit Hospitals Anticipate Modest Margin Gains in 2026 Amid Medicaid Cuts
Nonprofit hospitals and health systems in the U.S. are projected to experience modest margin improvements through 2025 and into 2026, according to Fitch Ratings. Despite these gains, systemwide operating margins are unlikely to return to pre-pandemic levels due to ongoing macroeconomic pressures and the anticipated impact of the One Big Beautiful Bill Act (OBBBA), which will alter reimbursement and coverage. Fitch forecasts a median operating margin between 1% and 2%, with a neutral outlook for the sector. The report highlights that while some hospitals are benefiting from improved labor conditions and increased capital spending, others continue to face significant labor pressures, resulting in weaker operating results. The sector is also seeing a trifurcation in credit quality, with the top 20% of hospitals leveraging strong market positions for growth, while the bottom 15% face deteriorating conditions. 
