Where hospital financial data comes from: Medicare cost reports, explained
Every US hospital that takes Medicare files a public cost report: income statement, balance sheet, charity care, and more. Here is what it holds and where it bends.
Hospital financial statements feel like private information, and for most individual hospitals the audited version is. But every hospital that accepts Medicare, which is essentially every hospital, files an annual cost report with CMS, and those filings are public. Income statement, balance sheet, cost structure, charity care, per-discharge metrics, Medicare DRG detail. All of it, for all 6,421 hospitals, every year.
This is the source behind every figure in our hospital coverage, so this post explains the machine: what a cost report holds, what we extract, and where the data bends. If you cite our numbers, or want to check them, start here.
What a cost report is
Medicare reimburses hospitals partly on reported costs, so it requires an annual filing, submitted to CMS and published through the Healthcare Cost Report Information System, HCRIS. The filing exists for reimbursement mechanics, but it carries a financial statement package along the way: revenue and expense, assets and liabilities, wage data, uncompensated care, utilization.
From each hospital's filings we extract five years of income statements and balance sheets, the cost structure, revenue and cost per adjusted discharge, charity care and bad debt, and top Medicare DRG volume with charges and payments. That becomes the free financial layer on every profile and the deeper detail in the Pro tier.
The definitions that matter
Three definitions carry most of the analytical weight, and each has a trap in it.
Gross charges vs net patient revenue. Charges are list prices; net patient revenue is what the hospital collects after contractual discounts and write-offs. The gap is enormous: at the median, a hospital collects 33 cents per charged dollar, and the spread goes from 15 cents at the tenth percentile to 68 cents at the ninetieth. Any analysis built on charges is built on air. Full definition: net patient revenue.
Patient-care margin vs total operating margin. Net patient revenue minus operating expense is what care delivery earns; add other operating revenue and you get the margin hospitals report. The median hospital is negative on the first, negative 2.4%, and positive on the second, 5.6%. Which one a chart shows changes the story completely, which is why our margin coverage always names its definition.
Adjusted discharges. Inpatient discharges grossed up for outpatient activity, the unit that makes a surgical hospital and a rural medical center comparable. The unit economics live in revenue and cost per adjusted discharge.
How current the data is
Hospitals file annually on their own fiscal calendars, so "the latest year" differs by hospital. In the current dataset, 3,528 hospitals have FY2024 as their most recent filing and 2,503 have FY2025, meaning 94% are current within the last two fiscal years. The rest are stragglers with older filings, disclosed as such on their profiles.
We show the cost report fiscal year on every profile, and each refresh updates the whole estate at once. For trend work we use 2021 through 2024, the years with full sector coverage; 2020 and 2025 filings exist but cover only part of the sector, so we keep them out of year-over-year charts.
Where the data bends
Cost report data is the best public source on hospital finance, not a perfect one. Four bends to know about.
Self-reported. Filings are prepared by the hospital under CMS rules, with audits focused on reimbursement-relevant lines, not the full statement package. This is not a GAAP audit, and occasional filing errors survive.
Hospital-level. A system's flagship files its own report; the system's consolidated audit is a different document. For HCA's corporate income statement, read the 10-K. For what a specific HCA hospital earns, only the cost report will tell you.
Other operating revenue is a grab bag. The line separating patient-care margin from total margin holds 340B spread, cafeterias, investment income booked as operating, grants, and relief funds, without clean itemization. We treat it as one bucket because the filing does.
DRG detail covers 2,904 hospitals. Charge and payment detail requires enough Medicare inpatient volume to report, so our markup analysis covers IPPS hospitals above the threshold, not small and specialty facilities below it.
Why we use it anyway
Nothing else exists at this scale. Audited financials are private for most nonprofits below the bond-disclosure threshold and consolidated past usefulness for the big systems. Panel surveys average away the distribution. State transparency programs cover a handful of states, each differently. The cost report is the only per-hospital, all-hospital, public, annually refreshed financial source in American healthcare, and it is auditable: every number we publish traces to a provider number and a filing you can pull yourself.
Our approach follows: medians and distributions, never means; the definition named under every figure; the data vintage shown on every profile; and the hospital-level figures kept free, where the incumbents paywall them.
FAQ
What is a Medicare cost report? An annual filing every Medicare-participating hospital submits to CMS, published through HCRIS. It exists for reimbursement purposes but includes an income statement, balance sheet, cost structure, uncompensated care, and utilization data, all public.
Are hospital financial statements public? Audited statements usually are not, unless the hospital has bond disclosure obligations. Cost reports are, for every Medicare-participating hospital, and they carry the core financials.
How current is cost report data? Hospitals file annually on their own fiscal calendars. 94% of hospitals in our dataset are current within the last two fiscal years, and each profile shows its report year.
Sources and method
All Healthcare DealHub hospital figures are computed from CMS HCRIS cost report filings, most recent filed year per hospital, refreshed on the HCRIS release cycle. Counts: 6,421 hospitals; 6,200 with a usable latest income statement; 2,904 with Medicare DRG detail; 4,237 reporting charity care. Medians throughout, never means.
Healthcare DealHub publishes market data for informational purposes only. Nothing here is investment, legal, or reimbursement advice.