The Cost of Caring in 2025: Why Health Systems Must Take Action Now
Hospitals are navigating a financial crisis in 2025. Soaring labor costs, Medicare and Medicaid underpayments, and complex regulatory demands are pushing U.S. health systems to the brink, as detailed in the American Hospital Association’s 2025 Cost of Caring Report. The solution lies in leveraging CMS-mandated transparency data to empower smarter reimbursement strategies.
At Trek Health, our AI-powered Competitive Market Analysis (CMA) platform transforms healthcare payments by turning over a petabyte of CMS transparency data into actionable insights. We help hospitals close reimbursement gaps, negotiate stronger contracts, and ensure compliance with CMS price transparency rules. Ready to take control? Let’s explore the challenges and solutions.
The Financial Crisis Facing Hospitals
The AHA’s 2025 Hospital Cost Report highlights the mounting pressures threatening hospital sustainability. Here’s what hospitals are up against:
- Surging Labor Costs: Labor accounts for 56% of hospital expenses, with nurse salaries rising 26.6% faster than inflation since 2021.
- Massive Underpayment Gaps: In 2023, Medicare and Medicaid underpaid hospitals by $130 billion.
- Rising Utilization: Emergency visits for heart failure surged 126.7% per capita from 2010–2019, with related spending up 177.2%.
- Medicare Advantage (MA) Struggles: In 2024, MA observation stays were 36.9% longer than Traditional Medicare, yet only 49% of costs were reimbursed.
- Administrative Burden: MA plans issued 50 million prior authorizations in 2023, driving $26 billion in claims management costs—a 23% year-over-year increase.
- Supply Chain Vulnerabilities: With 70% of medical devices and 90% of generic injectable drugs sourced internationally, shortages can spike costs by up to 15%.
These pressures threaten patient care and financial viability. Hospitals need data-driven tools to fight back.
How Trek Health’s CMA Platform Helps
Hospitals rely on commercial contracts to offset public payer losses, but outdated tools limit negotiation power. Trek Health’s CMA platform leverages CMS’s machine-readable file (MRF) data to deliver real-time insights, enabling providers to:
- Pinpoint Under-Reimbursed Services: Identify services with reimbursement shortfalls instantly using CMS data analytics.
- Simulate Negotiations: Model rate increases to prepare for payer discussions, maximizing contract value.
- Secure Better Contracts: Achieve rate hikes with major payers.
- Stay CMS-Compliant: Ensure MRFs meet CMS’s updated guidance, avoiding penalties of up to $5,500 per day.
FAQs: Navigating Hospital Financial Pressures in 2025
Why are hospitals under such financial strain?
Rising labor costs, $130 billion in underpayments, and a 23% increase in administrative costs from prior authorizations are key drivers (AHA).
How does Trek Health’s CMA platform help?
It leverages CMS transparency data to identify underpayments, simulate negotiation scenarios, and secure better contracts while ensuring compliance.
What’s the issue with Medicare Advantage?
MA plans have longer stays but reimburse only 49% of costs compared to Traditional Medicare, squeezing margins (AHA).
How can hospitals stay CMS-compliant?
Publish accurate MRFs per CMS guidelines. Trek Health’s platform ensures compliance with current and upcoming requirements.
Take Control of Your Financial Future
With a $130 billion reimbursement gap and increasing regulatory demands, hospitals can’t rely on outdated systems. Trek Health’s AI-powered CMA platform puts CMS transparency data to work, helping you optimize contracts, protect margins, and stay compliant.
Act Now:
- Book a Demo to see the CMA platform in action.
- Explore Careers to join Trek Health’s mission.
- Stay up to date with our resources.
Stay informed, stay compliant, and stay profitable with Trek Health.
Sources:
- American Hospital Association (AHA)
- Kaiser Family Foundation (KFF)
- Centers for Medicare & Medicaid Services (CMS)
- Healthcare Financial Management Association (HFMA)
- Health Affairs
- America’s Health Insurance Plans (AHIP)
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Inside you’ll learn:
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Hospitals are navigating a financial crisis in 2025. Soaring labor costs, Medicare and Medicaid underpayments, and complex regulatory demands are pushing U.S. health systems to the brink, as detailed in the American Hospital Association’s 2025 Cost of Caring Report. The solution lies in leveraging CMS-mandated transparency data to empower smarter reimbursement strategies.
At Trek Health, our AI-powered Competitive Market Analysis (CMA) platform transforms healthcare payments by turning over a petabyte of CMS transparency data into actionable insights. We help hospitals close reimbursement gaps, negotiate stronger contracts, and ensure compliance with CMS price transparency rules. Ready to take control? Let’s explore the challenges and solutions.
The Financial Crisis Facing Hospitals
The AHA’s 2025 Hospital Cost Report highlights the mounting pressures threatening hospital sustainability. Here’s what hospitals are up against:
- Surging Labor Costs: Labor accounts for 56% of hospital expenses, with nurse salaries rising 26.6% faster than inflation since 2021.
- Massive Underpayment Gaps: In 2023, Medicare and Medicaid underpaid hospitals by $130 billion.
- Rising Utilization: Emergency visits for heart failure surged 126.7% per capita from 2010–2019, with related spending up 177.2%.
- Medicare Advantage (MA) Struggles: In 2024, MA observation stays were 36.9% longer than Traditional Medicare, yet only 49% of costs were reimbursed.
- Administrative Burden: MA plans issued 50 million prior authorizations in 2023, driving $26 billion in claims management costs—a 23% year-over-year increase.
- Supply Chain Vulnerabilities: With 70% of medical devices and 90% of generic injectable drugs sourced internationally, shortages can spike costs by up to 15%.
These pressures threaten patient care and financial viability. Hospitals need data-driven tools to fight back.
How Trek Health’s CMA Platform Helps
Hospitals rely on commercial contracts to offset public payer losses, but outdated tools limit negotiation power. Trek Health’s CMA platform leverages CMS’s machine-readable file (MRF) data to deliver real-time insights, enabling providers to:
- Pinpoint Under-Reimbursed Services: Identify services with reimbursement shortfalls instantly using CMS data analytics.
- Simulate Negotiations: Model rate increases to prepare for payer discussions, maximizing contract value.
- Secure Better Contracts: Achieve rate hikes with major payers.
- Stay CMS-Compliant: Ensure MRFs meet CMS’s updated guidance, avoiding penalties of up to $5,500 per day.
FAQs: Navigating Hospital Financial Pressures in 2025
Why are hospitals under such financial strain?
Rising labor costs, $130 billion in underpayments, and a 23% increase in administrative costs from prior authorizations are key drivers (AHA).
How does Trek Health’s CMA platform help?
It leverages CMS transparency data to identify underpayments, simulate negotiation scenarios, and secure better contracts while ensuring compliance.
What’s the issue with Medicare Advantage?
MA plans have longer stays but reimburse only 49% of costs compared to Traditional Medicare, squeezing margins (AHA).
How can hospitals stay CMS-compliant?
Publish accurate MRFs per CMS guidelines. Trek Health’s platform ensures compliance with current and upcoming requirements.
Take Control of Your Financial Future
With a $130 billion reimbursement gap and increasing regulatory demands, hospitals can’t rely on outdated systems. Trek Health’s AI-powered CMA platform puts CMS transparency data to work, helping you optimize contracts, protect margins, and stay compliant.
Act Now:
- Book a Demo to see the CMA platform in action.
- Explore Careers to join Trek Health’s mission.
- Stay up to date with our resources.
Stay informed, stay compliant, and stay profitable with Trek Health.
Sources:
- American Hospital Association (AHA)
- Kaiser Family Foundation (KFF)
- Centers for Medicare & Medicaid Services (CMS)
- Healthcare Financial Management Association (HFMA)
- Health Affairs
- America’s Health Insurance Plans (AHIP)
