Summary:
Aggregate operating margins at nonprofit health systems slid from 2.2% to 1.3% over the past three quarters. Budgets went the other direction: 56% of finance leaders told The Health Management Academy their operating budget will increase over the next 12 months, up 21 points from last year. Health systems are splitting into two groups and buying very differently. Increasers report strengthening financial health and a growth posture, and skew large and multi-state. Decreasers are contingency-oriented, single-state or regional, and planning for downside risk.
The pressure is broad and the policy risk is sharpening. Finance leaders expect negative impact from labor (88%), drugs (88%), and supplies (78%), but the fastest-rising concern is site-of-care shift — up 19 points to 69%, with Academy modeling putting $42M of near-term facility revenue at risk for a $5B system and $247M at a 2028 run rate. Medicaid reform ranks as the top financial risk, with work requirements taking effect January 2027. Spending is still moving: advanced practice providers and permanent physicians lead anticipated increases at 76% each, followed by pharmaceuticals at 75%, while 78% plan to cut travel and contract nurses.
Based on a quantitative survey of 32 CFOs and senior finance leaders at health systems with more than $750M in annual revenue, this Q3 2026 Market Pulse also shows where AI stands against the business case. Only 16% of finance leaders say AI has met their ROI expectations; a quarter say it has fallen short, citing integration gaps and difficulty measuring financial impact. Anticipated returns concentrate in revenue cycle and documentation. Finance leaders were direct about what they want from industry partners — risk-adjusted models that account for implementation cost, evidence from comparable systems, transparent total cost, and follow-through after go-live.
Whether you're in an active sales cycle or building your 2027 engagement strategy, this briefing gives you the numbers to show up informed.
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Key takeaways:
1) Health systems have split into two buying postures. Aggregate nonprofit operating margins fell from 2.2% to 1.3% over three quarters, but budgets diverged: 56% of finance leaders expect their operating budget to increase over the next 12 months, up 21 points year over year, while 28% expect a decrease. The two groups look different. Increasers report strengthening financial health, name growth as their spending posture, and skew large and multi-state. Decreasers report softening or deteriorating health, name contingency as their posture, and skew single-state or regional.
What this means for industry partners: One playbook no longer covers the market. Segment accounts by financial posture before you build the pitch — lead with expansion and capability-building at increasers, and with cost reduction and risk mitigation at decreasers. Knowing which side of that line an account sits on is now table stakes for the first conversation.
2) Policy and site-of-care shift are pulling revenue out from under current operations. Site-of-care shift was the fastest-rising cost concern in the survey, up 19 points to 69%, and Academy modeling puts $42M of near-term facility revenue at risk for a $5B system, rising to $247M at a 2028 run rate. CMS has proposed more than doubling Inpatient-Only List removals for CY2027 and extending site-neutral payment to imaging without contrast. Medicaid reform ranks as the #1 financial risk, with 91% of finance leaders placing it in their top three and work requirements taking effect January 2027. 340B ranks #2 — and is the one policy area where preparedness declined year over year.
What this means for industry partners: There is a defined window before January 2027, and systems are still building the infrastructure to absorb these changes. Solutions that help model exposure, protect margin as volume moves to lower-cost settings, or support eligibility verification, member outreach, and financial counseling have a timing advantage that won't last. On 340B, the need is scenario planning and pharmacy economics, not another compliance tool.
3) AI spending continues, but the business case hasn't closed. Only 16% of finance leaders say AI has met their ROI expectations and 3% say it exceeded them; a quarter say it has fallen short. The two barriers they name are integration and data gaps, and difficulty measuring financial impact. Expected returns are concentrated in revenue cycle (84%) and documentation (65%) — the same categories where finance leaders will hold the ROI bar highest. Asked what industry partners should do better, they pointed to risk-adjusted models that account for internal implementation costs, evidence from comparable systems rather than the broader market, transparent total cost, and follow-through after go-live.
What this means for industry partners: Generic AI capability pitches are getting screened out. Bring defensible financial proof, or position yourself as the layer that converts soft value into P&L impact. Anchor to the specific lever you move — denials, coding accuracy and CDI, prior authorization — rather than efficiency in the abstract. As one finance leader put it, value feels generic more often than not.