Not All of Your Growth Is Worth Having
OCTOBER 2026
Not All of Your Growth Is Worth Having
The Signal
Walk into almost any health system strategy meeting right now and you will hear relief. Volumes are back. The schedule is full. Net patient revenue is climbing. After a few brutal years, the demand looks like a recovery.
Then someone pulls up the margin line, and the room goes quiet.
Advisory Board laid this out plainly at SHSMD last month. In their 2026 strategic planner survey, 79% of health systems reported volume growth and 90% reported revenue growth, but only 60% saw margin growth. The gap is the whole story. Hospital net operating revenue per day climbed about 8%. Median operating margin moved 1%.
Kaufman Hall's monthly numbers tell the same tale from a different seat. Hospital operating margins have been stuck in the low single digits all year, dipping again in the summer as outpatient activity softened. The volumes come back. The money mostly doesn't.
Something has come loose. Revenue and volume used to pull margin along behind them. They don't anymore.
The Shift
From "is demand growing" to "is this particular demand actually worth serving."
For most of the history of health systems, the growth equation was simple: Get more patients, fill more slots, open more access points, and margin followed almost automatically. Volume was the goal because volume worked.
That assumption is quietly breaking, and the Advisory Board data shows why. The growth is real, but it is landing in the wrong places. Emergency department visits, physician office visits, hospital outpatient work, all up. Inpatient surgical volume, the stuff that historically carried the margin, flat or down at more than a third of systems. So you are treating more people, working harder, running fuller, and watching the surplus thin out.
Here is the part that should change how you plan. When volume and margin move together, "grow" is a sufficient strategy. When they come apart, "grow" becomes a dangerous instruction, because some of the growth you are chasing actively costs you money to deliver. An ED visit that generates low margin but demands real staffing and infrastructure is not a win just because it shows up as a bigger number. It can be a slow leak dressed up as success.
The old reflex was to ask whether a service line could bring in more patients. The sharper question, the one the next few years will reward, is whether a given stream of demand earns its keep once you account for what it truly costs to serve. Not all growth is good growth. Some of it is just motion you are paying for.
The Move
Stop celebrating volume in the aggregate. Start interrogating it by the piece.
Know the contribution margin of every front door, not just every service line. The service-line view is too blunt now. Advisory Board's point, and it is the right one, is that the real answer lives at the procedure and encounter level. Two services under the same banner can sit on opposite sides of the margin line.
Sort your ambulatory bets by the job they actually do. Some sites exist to throw off margin. Some exist to create downstream demand and keep patients in network. Some exist to take pressure off the hospital and avoid costly admissions. Those are three different jobs with three different scorecards. Judging them all on the same metric guarantees you misread at least two.
Treat capacity as a strategy input, not an afterthought. The constraint that quietly kills margin growth is usually not demand. It is a bottleneck nobody priced in, an OR that can't turn over fast enough, a clinic that ties up staff for low return. Growth planning that ignores capacity produces plans built for a calmer market than the one you are in.
Make "no" a real option. If a growth opportunity can't show a credible path to margin, the disciplined move is to pass, even when the volume is sitting right there for the taking. Walking away from unprofitable demand is not timidity. In this market it is strategy.
The goal is not more. The goal is more of what pays.
SPIRTO Insight: For a generation, volume was a reliable proxy for health. Busier meant stronger. That proxy has stopped working, and a lot of leaders haven't updated the instinct.
The systems that pull ahead over the next few years won't be the busiest ones. They will be the ones that learned to tell the difference between growth that builds the franchise and growth that merely consumes it, and had the nerve to act on the distinction.
A full schedule is not the same thing as a healthy business. It never entirely was. The gap between the two is just finally too big to ignore.
Closing Thought
If volumes are up and margin isn't, then "we're growing" has quietly stopped being good news on its own.
So I wouldn't open the strategy meeting by asking, "where can we capture more volume."
I'd open it here:
"Of everything we're busy doing right now, which of it is actually worth doing, and would we know the difference if it weren't?"
By Paula Serios
Chief Executive Officer, SPIRTO Healthcare Growth Consultancy
If this is something you’re seeing, you’re not alone.
We’ve been helping teams step back and quickly spot where growth and value are out of sync—and what to do about it.
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