U.S. Public Finance

Although 2025 medians on U.S. acute healthcare providers improved across most metrics compared with 2024 (see table 1), year-over-year gains in operating performance have slowed. This limited progress, despite management’s disciplined performance improvement initiatives, is likely due to increased operating investments and ongoing sector pressures.

We expect ongoing higher labor costs and persistent inflationary pressure coupled with the expected negative impact of last year’s tax and spending bill, will likely limit many organizations from improving materially or returning to historical performance levels in the near term.

Balance sheets remain healthy and have been bolstered by high investment returns and cash flow growth, although we expect many organizations will continue to execute on strategic capital initiatives, through a combination of excess cash flow and debt issuance, which could limit additional improvement in key balance-sheet ratios.