By Massachusetts hospital systems finally returned to positive territory on their core operations in fiscal 2025, but the recovery remains fragile and uneven. According to the Massachusetts CHIA FY2025 hospital financial report released September 24, 2026, the median operating margin for the state’s 23 acute hospital health systems was 0.2%, the first positive median after at least four consecutive years in negative territory.
That improvement from a median of -2.7% in fiscal 2024 matters because it suggests patient-care operations stopped losing money in aggregate. At the same time, CHIA’s data show a divided picture: six health systems ended the year with negative total margins, several hospitals continue to post significant losses, and new pressure from Medicaid and safety-net funding could test the recent gains.
Massachusetts Hospitals Finally Returned to a Positive Operating Margin
The Center for Health Information and Analysis examines profitability using standardized financial statements, hospital cost reports and case mix data. For FY2025, which for most Massachusetts hospitals ended September 30, 2025, CHIA reported:
| Metric | FY2024 | FY2025 | What it means |
|---|---|---|---|
| Median operating margin | -2.7% | 0.2% | Core operating performance from patient care and related operations |
| Median total margin | 4.2% | 4.7% | Overall result including investment income and other non-operating items |
| Health systems with positive operating margins | 26% (6 of 23 systems in prior year pattern) | 57% | Share reporting positive operating results |
| Health systems with positive total margins | 74% in FY2024 pattern | 74% (17 of 23 systems) | Share reporting positive total results |
In FY2024, CHIA had reported widespread operating losses, with only six of 23 systems posting positive operating margins and aggregate expenses growing faster than revenues. The FY2025 report shows modest improvement in that core operating picture, while total margins were again buoyed by non-operating gains. In FY2024, those gains included about $2.6 billion in unrealized investment income across systems, a pattern that continued to support FY2025 results.
The Massachusetts Health & Hospital Association noted in its MHA comment on CHIA’s FY25 financial report that most systems were still operating on thin or negative margins and were bracing for more challenging conditions ahead.
What the Hospital Financial Numbers Actually Mean
Two margins tell different stories.
Operating margin measures money earned or lost from a hospital’s core operating activities — primarily patient care, plus related operating revenue such as parking or cafeteria, minus operating expenses like wages, supplies and utilities. A negative operating margin means a system spent more to run its hospitals and physician groups than it brought in from operations.
Total margin includes operating performance plus non-operating income or losses, such as investment returns, donations and other financial activity. A system can have a negative operating margin but a positive total margin if investments perform well, and vice versa.
That distinction explains why a median total margin of 4.7% does not mean patient-care operations are highly profitable. For many Massachusetts systems, non-operating income has masked operating losses in recent years. The shift to a positive 0.2% median operating margin in FY2025 is therefore more notable than the total margin increase alone.
A hospital’s financial margin does not directly measure quality of care, patient safety, clinical outcomes or patient experience. Financial performance affects ability to invest, recruit and maintain services, but it is not a proxy for clinical quality.
Not Every Hospital Improved
CHIA reported that six acute hospital health systems ended FY2025 with negative total margins, meaning even after counting investment income they lost money overall. The report’s dashboard shows continued concentration of losses in certain safety-net and community hospitals, including former Steward Health Care facilities that were in transition.
According to CHIA’s FY2025 data referenced by state summaries:
- Boston Medical Center Health System recorded the largest total loss, at approximately $144.4 million, reflecting pressure at its safety-net flagship and the integration of two former Steward hospitals.
- Mass General Brigham reported a total margin of approximately $2.38 billion, driven by strong operating revenue growth and significant non-operating gains. The system had reported a $59.2 million operating gain for the year ending September 2025, compared with a $45.7 million operating gain the prior year, with investment gains contributing substantially to total margin.
- Boston Children’s Hospital reported a total margin of approximately $705 million, consistent with its position as a nationally ranked pediatric center with a higher commercial payer mix and strong philanthropy and investment base.
Other facilities cited in recent CHIA annual reports as under pressure included Anna Jaques Hospital, MetroWest Medical Center, Holy Family Hospital, Winchester Hospital and Berkshire Medical Center, which have historically shown volatile operating margins. Berkshire Medical Center in FY2024 had posted one of the highest operating margins in the state at 9.6%, illustrating how performance can swing year to year.
The key point from CHIA is not a ranking, but the spread: a handful of systems with large total margins offset many systems operating near zero.
Why Some Hospitals Are Financially Stronger Than Others
A major driver of the divide is payer mix — the share of patients covered by commercial insurance versus Medicare, Medicaid or no insurance.
Hospitals with more commercially insured patients typically receive higher reimbursement rates negotiated with private insurers. Hospitals that treat larger proportions of Medicaid patients, Medicare patients or uninsured patients generally receive lower payment rates for similar services. Massachusetts has relatively high health insurance coverage, but reimbursement differences remain substantial.
Safety-net hospitals, such as Boston Medical Center, care for a disproportionate share of low-income, Medicaid and uninsured patients. They provide essential services including trauma, behavioral health and substance-use care, but face tighter margins because public payer rates often do not fully cover costs. Commercially focused academic medical centers, by contrast, benefit from higher relative prices and stronger investment portfolios.
This dynamic explains why statewide medians can improve while safety-net systems remain negative. CHIA’s Massachusetts hospital financial data and relative price reports consistently show that low-relative-price hospitals serving high-Medicaid populations have thinner margins.
The Steward Health Care Collapse Still Matters
The bankruptcy and closure of Steward Health Care, formerly the state’s largest for-profit system, continues to affect Massachusetts finances. Steward closed Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer in 2024 and sold its remaining hospitals.
Two former Steward hospitals were taken over by Boston Medical Center:
- St. Elizabeth’s Medical Center in Brighton became BMC-Brighton
- Good Samaritan Medical Center in Brockton became BMC-South
Other former Steward hospitals, including Holy Family Hospital and Saint Anne’s Hospital, were acquired by new operators. CHIA data for FY2024 showed these facilities posting deep deficits — for example, St. Elizabeth’s at -$68.4 million, Holy Family at -$44.1 million and Good Samaritan at -$29.5 million — reflecting both historic underinvestment and the cost of transition.
The state committed hundreds of millions in emergency aid in 2024 to stabilize these transitions, including a $417 million package focused on Steward legacy sites. The FY2025 results for BMC include integration costs and ongoing operating losses at the newly acquired campuses, which contributed to its negative total margin even as the broader system improved.
State Funding Helped Support Struggling Hospitals
In September 2025, lawmakers rushed a $234 million aid package to Governor Maura Healey just before the end of the hospital fiscal year. The package, signed as part of the state’s supplemental budget, allocated:
- $122 million for acute-care hospitals serving high percentages of low-income patients, prioritized by negative margins, low relative prices and large Medicaid loads
- $77 million for the Health Safety Net Trust Fund
- $35 million for community health centers and hospital-licensed health centers
The funding was characterized on Beacon Hill as essential to prevent defaults on bond covenants. Senate Ways and Means Chair Michael Rodrigues said during debate that many hospitals were close to defaulting and needed cash infusion immediately.
This followed the prior year’s Steward-focused aid. For hospitals with high Medicaid exposure, such targeted relief can be the difference between maintaining services and cutting programs, because their commercial revenue base is too small to offset rising labor and supply costs.
The Health Safety Net Faces Another Financial Challenge
The Massachusetts Massachusetts Health Safety Net information program reimburses hospitals and community health centers for care provided to uninsured and underinsured residents. It is funded by assessments on hospitals, insurers and general revenue.
According to the Boston Globe report and Health Safety Net financial summaries, the program ran a deficit in recent years as demand for care grew. In fiscal 2023, the shortfall was reported at about $107 million, rising to an estimated $197 million in fiscal 2024. The Massachusetts Health & Hospital Association estimated the FY2025 shortfall at $230 million, with some advocacy estimates totaling $600 million in cumulative deficits across 2023-2025.
State officials have warned the shortfall could potentially reach $600 million by fiscal 2028 if trends continue, driven by higher uncompensated care volumes and rising costs. That figure is a projection, not a guaranteed outcome, but it matters because hospitals rely on the Health Safety Net to cover eligible services for residents who cannot pay.
A growing deficit means hospitals that already serve vulnerable populations may face additional pressure, either through lower reimbursements or through increased assessments that ultimately raise costs for all payers.
Medicaid Changes Could Add More Pressure
As of September 2026, Massachusetts is closely watching federal Medicaid policy. Under the One Big Beautiful Bill enacted in 2025, federal lawmakers authorized changes that include more frequent eligibility redeterminations, new work requirements in some states and reductions in federal matching for certain coverage groups.
Massachusetts officials and hospital leaders have warned that reductions in Medicaid coverage could increase uninsured rates and uncompensated care. Safety-net hospitals would be disproportionately affected because they treat larger shares of Medicaid beneficiaries.
The Centers for Medicare & Medicaid Services and state Medicaid agency MassHealth have not implemented all of the authorized changes as of September 2026, and Massachusetts has sought waivers and state funding to maintain coverage. The distinction is important: current FY2025 financial results reflect care delivered under largely stable Medicaid enrollment, while future risks reflect projected eligibility losses.
If Medicaid enrollment falls, hospitals could see lower Medicaid revenue and higher uncompensated care that must be absorbed or reimbursed through the already strained Health Safety Net. That combination would hit hardest at BMC, Holy Family, and other high-Medicaid systems, even as the statewide median improved.
Why the Overall Improvement May Not Tell the Whole Story
A median operating margin of 0.2% is positive, but it is essentially break-even. By definition, half of systems are below that median. Many are operating with less than 1-2% operating margins, which rating agencies consider below the level needed for long-term financial health — typically 3% or more for reinvestment in facilities, technology and workforce.
Recent CHIA quarterly reports illustrate the volatility. In Q1 FY2025 (October-December 2024), the statewide median operating margin was -0.7%, with 55% of hospitals reporting negative operating margins. Expenses rose 6.8% year over year in FY2024 while revenues rose 6.5%, continuing a pattern of costs outpacing payment. Temporary labor costs fell $500 million (37%) as travel nurse rates normalized, but total workforce spending still rose $500 million, representing 41.5% of acute hospital expenses.
For patients, thin margins can translate into delayed capital projects, slower hiring, service consolidations and increased reliance on state aid. That does not automatically mean reduced quality or imminent closures, but it does mean less cushion to absorb shocks such as a surge in labor costs or a drop in Medicaid enrollment.
What the Numbers Mean for Patients
Financial performance affects access more than it affects bedside care in the short term. Systems with stronger margins, such as Mass General Brigham and Boston Children’s, have more capacity to invest in new programs, facilities and research. Systems with sustained losses may need to evaluate service lines, seek partnerships or rely on public support to maintain community services.
For residents of communities served by financially vulnerable hospitals — including Dorchester, Brockton, Methuen, Newburyport and Framingham — the Steward transition showed how quickly access can change when a system collapses. The current improvement in median margin does not eliminate that risk, particularly if Health Safety Net and Medicaid pressures grow.
The Bottom Line
Massachusetts hospital finances improved in fiscal 2025, according to CHIA’s report released September 24, 2026. The median operating margin moved from -2.7% to 0.2%, the first positive reading in years, and the median total margin rose to 4.7% from 4.2%. Fifty-seven percent of health systems had positive operating margins and 74% had positive total margins.
That improvement masks a divided system. Six systems ended the year with negative total margins, led by Boston Medical Center’s approximately $144.4 million total loss, while Mass General Brigham and Boston Children’s posted large total margins of approximately $2.38 billion and $705 million respectively, driven in part by investment income.
State funding — $122 million for high-Medicaid acute hospitals, $77 million for the Health Safety Net and $35 million for community health centers — helped stabilize struggling providers after the Steward collapse. Looking ahead, a potential Health Safety Net shortfall that could reach $600 million by FY2028 and pending Medicaid changes pose new risks, especially for safety-net hospitals that already operate with the thinnest margins.
Frequently Asked Questions
Are Massachusetts hospitals financially healthy?
As a group, they improved in FY2025, with a median operating margin of 0.2% compared to -2.7% in FY2024, according to CHIA. However, health is uneven. Six of 23 health systems had negative total margins, and many community and safety-net hospitals continue to lose money on operations.
What was the median operating margin for Massachusetts hospitals in 2025?
The median operating margin for acute hospital health systems was 0.2% in FY2025, per the CHIA FY2025 hospital and health system annual performance report. The median total margin was 4.7%.
What is the difference between operating margin and total margin?
Operating margin measures core hospital operations — patient-care revenue minus operating expenses. Total margin adds non-operating items like investment income. A hospital can have a negative operating margin but positive total margin if investments perform well.
Why are some Massachusetts hospitals losing money?
Reasons include rising labor and supply costs outpacing reimbursement, higher proportions of Medicaid and uninsured patients who are reimbursed at lower rates, lingering effects of COVID-19 and workforce shortages, and transition costs from the Steward Health Care bankruptcy. CHIA’s annual report noted costs rose 6.8% in FY2024 while revenues rose 6.5%.
How did Steward Health Care affect Massachusetts hospitals?
Steward’s 2024 bankruptcy led to closure of Carney and Nashoba Valley hospitals and sale of remaining hospitals. Boston Medical Center took over St. Elizabeth’s (now BMC-Brighton) and Good Samaritan (now BMC-South). Those campuses posted significant losses during transition, contributing to statewide volatility and prompting $417 million in state stabilization aid in 2024 plus $234 million in 2025.
What is the Massachusetts Health Safety Net?
The Health Safety Net reimburses hospitals and community health centers for care to uninsured and underinsured residents. It is funded by hospital and insurer assessments. When uncompensated care rises, the fund can run a deficit, which has grown from about $107 million in FY2023 to an estimated $230 million in FY2025, with state warnings it could potentially reach $600 million by FY2028 if trends continue.
How could Medicaid changes affect Massachusetts hospitals?
Under federal changes authorized in 2025, more frequent eligibility checks and other requirements could reduce Medicaid enrollment. Fewer covered patients means less Medicaid revenue and potentially more uncompensated care, increasing pressure on safety-net hospitals and the Health Safety Net. As of September 2026, many changes are projected but not fully implemented in Massachusetts.
Does a hospital’s financial performance indicate the quality of its care?
No. Financial margins do not measure clinical quality, safety, outcomes or patient experience. A hospital with strong finances may have more resources to invest, but quality depends on clinical processes, staffing, protocols and other factors distinct from accounting margins.
Dr. Samuel Kemp is a Consultant Physician at the Royal Brompton Hospital with specialist expertise in respiratory medicine, including lung cancer, COPD, and advanced interventional bronchoscopy.