McKinsey Finds Largest Nonprofit Health Systems Post Lowest Margins
McKinsey & Co.'s annual healthcare economics outlook, published Nov. 11, found that nonprofit health systems with more than $20 billion in annual revenue posted an average 2025 operating margin of 0.7%, the lowest of any revenue group studied. The analysis grouped about 190 nonprofit systems by average operating revenue from 2023 to 2025; systems with $10 billion to $20 billion in revenue posted 4.2% margins, those under $5 billion posted 3%, and for-profit systems over $20 billion posted 16%. McKinsey also projects payer EBITDA fell from about $62 billion in 2023 to $9 billion in 2025, and that ACA subsidy expiration and federal policy changes, along with Medicaid coverage changes, could weigh on payer and provider profits through 2027. Overall healthcare EBITDA is projected to grow about 7% annually from 2025 to 2030, but only about 4% annually through 2027.