August 20, 2025
What Separates High- and Low-performing Hospitals in 2025
In 2025, top-performing hospitals are setting themselves apart from lower-performing facilities through a combination of strategic, operational and financial factors. According to Kaufman Hall and Fitch Ratings, the key differentiators include:
- Strong market presence in growth regions
- Hospitals located in expanding markets – especially in the South, Midwest and Northeast – are benefiting from rising demand, better payer mixes and stronger revenue potential.
- These organizations are leveraging local demographics and economic growth to drive performance.
- Workforce recruitment and retention
- Talent remains a key differentiator. High performers are more successful in hiring and retaining clinical and nonclinical staff amid national shortages, allowing them to maintain service capacity and quality care while controlling labor costs.
- Aggressive payer strategy
- Top-tier hospitals are skilled at negotiating favorable payer contracts, often using a “mind the gap” approach to keep reimbursement rates at the upper end of the scale.
- These hospitals maximize market leverage to drive revenue growth.
- Operational agility
- High-performing hospitals are nimble and can adjust quickly to changing conditions.
- They centralize purchased services, optimize supply chains and adapt care models to improve efficiency.
- Investment in technology and infrastructure
- Successful systems are proactively investing in AI, health IT and data analytics.
- These investments support care delivery and administrative efficiency and prepare hospitals for value-based care and alternative payment models.
- Outpatient expansion and service diversification
- Expanding outpatient footprints and diversifying service lines allow top hospitals to meet evolving patient demand and offset pressures on inpatient care, particularly in high-cost settings.
- Proactive real estate and capital management
- Strong performers are strategically managing real estate assets to bolster balance sheets and fund growth initiatives, such as facility modernization and digital transformation.
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