Hospital finance leaders don’t need a report to tell them things are difficult, but the American Hospital Association’s latest “Costs of Caring” report does something extremely useful: it puts concrete numbers behind pressures that have been building for years and shows just how much they’ve compounded.
The picture the report paints is one of mounting strain across the industry. Total hospital expenses grew 7.5% in 2025, more than twice the rate of growth in hospital prices. Inpatient volumes rose 5.3% and outpatient visits climbed 9.8%, meaning hospitals are caring for more patients, and sicker ones. Medicare continues to reimburse hospitals at just 83 cents on the dollar, resulting in more than $100 billion in underpayments.
The administrative burden is just as costly. Hospitals spent $43 billion in 2025 trying to collect payments insurers already owed, including $18 billion spent overturning claim denials alone. The average hospital now employs roughly 64 administrative and billing staff dedicated solely to these functions — a reflection of how much it costs just to navigate the payment system.
The policy environment adds another layer of uncertainty beyond what the AHA report captures. Medicaid cuts totaling $940 billion are projected to leave 14 million more Americans without coverage by 2034, with hospitals absorbing an estimated $85 billion increase in uncompensated care. Rural hospitals are especially vulnerable. Together, these dynamics underscore why hospitals are looking for cost relief wherever they still have control.
Hidden Costs Deserve a Second Look
One of the quieter contributors to hospital financial strain is legacy IT — specifically, the ongoing costs of maintaining systems that are no longer in active use but still require licensing, infrastructure, and support. These systems create a persistent financial drag, made up of ongoing license fees, maintenance and server costs, and IT resources spent managing them. When budgets tighten, legacy systems are one of the most logical places to look for cost reduction opportunities.
A Q4 2025 survey of CHIME members found that 71% of health IT leaders believe legacy system decommissioning creates a significant cost savings opportunity, up from just 58% two years ago. That shift reflects real experience in the field. Organizations that have completed archiving projects frequently see ROI within 12 months, and 2-3X ROI within a few years. One large health system, for example, saved more than $3 million annually in maintenance costs after archiving legacy data and decommissioning legacy systems.
Operational Efficiency Matters Just as Much as Direct Savings
As hospitals and health systems face escalating administrative burdens, leaders should also prioritize initiatives that reduce operational friction and compliance risk. Archiving legacy data into a single platform that integrates with the EHR helps streamline processes and improve efficiency. With a strong archiving program in place, clinicians and health information management (HIM) teams spend less time navigating disconnected legacy systems to retrieve records.
As Tower Health’s VP and Chief Applications Officer shared after implementing an archiving program: “We’ve had significant six-figure ROI in hard dollars – Microsoft licensing, legacy maintenance fees, server costs. That doesn’t even begin to look at the soft-dollar ROI: the efficiency gains, having one source of truth, Single Sign-On [within the EHR to the archive], and easier access for HIM.”
A Practical Step in a Complicated Moment
The challenges the AHA report describes are pervasive and addressing them requires action well beyond what any single organization can solve alone. In the meantime, hospital leaders are looking for initiatives they can act on now, within their own organizations. For organizations still carrying the costs of systems they’ve largely moved past, legacy data archiving is one area where the return is straightforward and measurable.
About Brian Liddell
Brian Liddell is CEO of Harmony Healthcare IT, a data lifecycle solutions provider for healthcare organizations. He has more than two decades of experience in healthcare technology, finance, and operations, overseeing daily business functions while driving sustainable growth and customer-focused solutions.
