U.S. hospital performance improved modestly through the first half of 2026, though margins remain under pressure from rising costs and a shifting payer mix. Kaufman Hall’s National Hospital Flash Report found operating margins improved month-over-month in March, the best month of the year so far, even as year-over-year margins remained below 2025 levels. Drug expenses continued to drive expense growth, while bad debt and charity care, though down slightly, stayed elevated versus year-ago levels amid a continued shift toward outpatient care.
Reimbursement policy remains a key swing factor. CMS’s proposed FY2027 Inpatient Prospective Payment System rule would raise payments to hospitals meeting quality-reporting and EHR requirements by a net 2.4%, with total IPPS payments rising an estimated $1.9 billion, including $464 million in new medical-technology add-on payments.
On the OEM side, capital equipment demand remains constructive. GE HealthCare reported preliminary second-quarter 2026 revenue of $5.3 billion, up 5.7% year over year (3.5% organic), and reaffirmed full-year guidance despite a CFO transition. Siemens Healthineers opened fiscal 2026 with higher profit and profitability in its Imaging and Precision Therapy businesses despite foreign-exchange and tariff headwinds, while its Diagnostics unit continues to face a structural slowdown in China; the company reaffirmed 5%-6% comparable revenue growth for the year.
Trade policy remains a watch item. The 15% tariff rate under the U.S.-EU framework continues to apply to many EU-sourced medical technology exports, a cost pressure Siemens has flagged directly in its guidance. Financing implications: Margin-tight, outpatient-shifting hospitals favor structures aligned to cash-flow timing, such as deferrals and step-ups, for imaging, monitors and surgical capital.
OEM order momentum in imaging and diagnostics supports utilization-driven and service-wrapped lease structures, while tariff exposure on EU-sourced components argues for covenants or refresh options that hedge parts pricing and delivery risk.
