Hospitals spent $43 billion to get payments from insurers: Report

Hospitals and health systems are spending billions trying to get reimbursed from insurers, according to a new report from the American Hospital Association.

In 2025, hospitals spent $43 billion seeking payment from insurers for care they have already provided to patients, the association says. That’s one of the key findings in the AHA’s annual “Costs of Caring” report, which was released Wednesday.

“Hospitals spent a staggering $43 billion in 2025 trying to collect payments insurers owe for care already delivered,” the report states.

Hospitals are also seeing higher labor and supply costs, adding to financial pressures. Health systems also say their costs are climbing as they treat more patients, as well as patients with more serious illnesses.

Hospitals continue to see too many denials and delays, and changing billing rules that put more strain on health systems, the association says.

Rick Pollack, president and CEO of the American Hospital Association, told Chief Healthcare Executive in a February interview that battles with insurers carry more than a financial cost. He says hospitals and doctors are spending too much time battling with payers to get approval for requests for treatment, the process known as prior authorization.

“When we talk about workforce problems and burnout among clinicians, this is what's leading to that,” he said in February. “Because when clinicians are pulled away from the bedside and patient care, to have to deal with …. these practices of the insurance companies that get in the way.”

Pollack says he has seen some progress, pointing to recent federal regulations requiring insurers to make decisions on authorization requests more quickly.

“We're hoping that we can continue to see progress in terms of keeping or holding commercial insurance companies accountable for their behavior, and our partners and colleagues in the state hospital associations have been also very focused on this,” Pollack said.

Insurers have said the prior authorization is needed to control costs and to avoid costly treatments that are unnecessary.

Hospitals are also seeing the impact of treating more patients. From 2019 to 2024, 36% of hospital cost growth is tied to greater patient volumes, the association says. That figure includes more patients being admitted to hospitals, as well as more outpatient visits.

Hospitals have also been treating patients with more serious illnesses, and that’s also driving up their costs. From 2019 to 2024, about 19% of the rising costs for hospitals comes from treating patients who have more serious conditions, the report says.

“Put differently, a little over half of the growth in hospital expenses is explained by the fact that hospitals are caring for more patients who are sicker, while just under half reflects the higher cost of the people, medicines and materials required to care for them,” the report states.

The other drivers of hospital cost increases reflect higher pay and benefits for employees, and higher prices for drugs, supplies and medical equipment.

More than half of all hospital expenses (60%) went to paying staff, the report said. Labor costs rose 5.6% in 2025, compared to the previous year.

Hospitals are paying more for supplies and medication. Hospitals drug costs rose 13.6% in 2025, and supply expenses climbed 9.9%, according to the report.

Steve Wasson, chief data and intelligence officer for Strata Decision Technology, told Chief Healthcare Executive® in a recent interview that health systems have generally fared better in managing labor costs and reducing the need for contract labor. But he says rising costs for medications are posing challenges.

“The drug cost increases have been substantial,” Wasson said.

Hospitals have received more scrutiny from lawmakers regarding prices in recent years. But the association says in the new report that hospital expenses rose 7.5% in 2025, more than twice as much as hospital prices (3.3%).