Because many factors contribute to rising health care costs, state policymakers continue to pursue varied evidence-driven strategies to increase affordability. But national data (and available state data) consistently show the largest proportion of health spending is on hospitals and specialty care, with pharmacy spend increasing annually.
These services are essential to supporting everyone’s health, but the trajectory of cost growth is unsustainable. State policymakers continue to want to understand hospital financials, which are complicated.
Policymakers, even those with access to health system financials and claims data, have asked “what does it cost hospitals to provide patient care?” To help answer this question, the NASHP created the Hospital Cost Tool (HCT).
Updated in 2026, the HCT now includes data for almost 5,000 hospitals from 2011 through 2024 on a range of cost metrics not otherwise readily available or digestible for policymakers or purchasers of care. The HCT uses publicly available Medicare Cost Reports (MCR) that are annually submitted and attested to by hospitals to inform their Medicare payments. NASHP uses national accounting standards to calculate different metrics requested by state leaders eager to better understand hospital revenue and costs.
For more information on how the MCRs are used within the HCT, check out the cost calculator.
Using the Hospital Cost Tool
State policymakers and other purchasers of care want to develop and pursue cost containment strategies that increase affordability for consumers while assuring some level of profit for hospitals to ensure access. To date, states and employers have used the HCT to inform varied policies, including shifting reimbursement for hospital services from a negotiated discount off charges to a multiple of Medicare’s rate.
State officials also use the tool to inform their discussions with hospital executives. If state officials did not have access to data on expenses and revenue, these discussions could be unbalanced.
The HCT offers dozens of measures, but the commercial breakeven metric remains popular among users. Breakeven is the amount that a specific hospital needs to be paid by a commercial payer to cover its costs and is represented as a multiple of that hospital’s Medicare rate. Breakeven is an all-in measure that considers all the hospital’s revenue, costs, losses, and profits for a given year.
State officials interested in tracking the impact on hospitals of anticipated coverage changes resulting from the expiration of the enhanced tax credit for the individual market, and/or the implementation of OBBBA on Medicaid, can do so by observing trends in profit margins and also in breakeven changes.
Increased uninsurance will mean fewer payers for hospitals, which could drive up the reimbursement needed to breakeven. However, revenue is balanced by expenses in assessing breakeven, so hospitals that can identify and operationalize efficiencies may be able mitigate any major financial disruption. By offering individualized data for hospitals, the tool recognizes not all hospitals start from the same financial standing, and there are significant differences among hospitals given their locations, size, structure, and more.
Individual hospital payer mix measures within the tool can also provide valuable historical insights and will be helpful in the future to understand impacts of potential coverage changes. The tool includes data and graphics for individual hospital’s operating profit margin by payer, adjusted profit or loss by payer (which considers the population per payer), and Medicaid percent of net patient revenue. As OBBBA is implemented, tracking the changes to a hospital’s payer mix will be important, especially if there are decreases in payers and increases in charity care.
However, payer mix is one measure among many that are important to a hospital’s financial health. Hospital revenue is appropriately diverse, particularly for those within a larger health system, so changes in payer mix should be considered across other measures for a more complete picture of hospital financial health.
The HCT is one resource among many that offers hospital financial data. NASHP also supports state officials in using audited financials for a deeper understanding of finances throughout a health system, IRS 990 filings for community benefit details, and bond reports for more timely financials (submitted quarterly).
The HCT uses the most up-to-date MCR data available, which offers rich detail on individual hospitals provided through a uniform reporting structure and helps policymakers understand the similarities and variations of their hospital market. Recognizing the heterogeneity of hospitals supports targeted policymaking.
View a recording of our recent HCT webinar that includes a demonstration of how to use the tool and highlights recent updates to streamline information for users.
