Nonprofit Hospitals Post Thin Margins in 2025

McKinsey's annual healthcare outlook, published November 11, 2026, finds the largest nonprofit systems earned the lowest margins of any revenue group.

Updated on Nov. 12, 2026 in Healthcare

Bold flat-color editorial illustration of identical stacked medical-office blocks beside a tall parking structure, rendered in deep red and cream, evoking thin margins across large nonprofit hospital systems. — Nonprofit health systems with more than $20 billion in annual revenue posted a 0.7% average operating margin in 2025, the lowest of any revenue group, McKinsey & Co. found. AI Illustration. Upload story photo >

Nonprofit health systems with more than $20 billion in annual revenue posted an average operating margin of 0.7% in 2025, the lowest of any revenue group, according to McKinsey & Co.'s annual healthcare economics outlook. The findings draw on roughly 190 nonprofit systems grouped by revenue from 2023 to 2025.

Why it matters

The thin margins at the largest nonprofit systems contrast with stronger results for smaller nonprofits and for-profit systems, pointing to pressure on the scale-driven hospital model. The outlook's projections suggest where profits are expected to shift across payers, providers and services over the coming years.

Nonprofit systems with $20 billion or more in revenue posted a 0.7% operating margin in 2025, against a 4.2% margin for $10 billion to $20 billion systems and 16% for for-profit systems of the largest size. Margins for the nine largest nonprofit systems were -1.4% in 2023 and -0.3% in 2024, and it is unclear from the outlook whether 2026 results will show a recovery.

The players

McKinsey & Co.

McKinsey & Company is a global management consulting firm whose healthcare practice publishes annual analyses of provider, payer and services economics.

The details

McKinsey grouped about 190 nonprofit systems by average operating revenue from 2023 to 2025 and calculated each group's margin from combined operating income and revenue. Hospital general acute care EBITDA margins rose from 6.9% in 2023 to 8.9% in 2025, while payer EBITDA fell from about $62 billion to $9 billion over the same period.

2023: Largest nonprofit system margin was -1.4%, and payer EBITDA was about $62 billion.
2024: Largest nonprofit system margin was -0.3%.
2025: Nonprofit systems over $20 billion posted a 0.7% operating margin.
November 11, 2026: McKinsey published its annual healthcare economics outlook.
2030: Projected targets include hospital margins near 8.8%, payer EBITDA of about $84.5 billion, and healthcare services and technology EBITDA above $120 billion.

Market Landscape

McKinsey's value pools model, which the outlook uses to project profits across payers, providers and healthcare services, frames these 2025 margins as a shift of profit away from payers and toward services and technology. The projected growth of healthcare services and technology EBITDA past $120 billion by 2030 suggests that margin pressure on large hospital systems is part of a broader reallocation of industry profit.

Patients at large nonprofit hospitals may see continued financial pressure on the systems that serve them, which can influence service lines and staffing decisions. Households with insurance coverage are affected as payer profits shift, though the outlook does not specify how premiums or out-of-pocket costs will change.

The takeaway

Compare the financial health of a hospital before assuming its services are stable, since a system's margin can narrow even as its revenue grows. Larger scale does not by itself guarantee stronger operating results in the current healthcare market.