Hospitals lost money on telehealth with every payer type in 2025

Telehealth encounters at U.S. hospitals and health systems rose 79% between January 2019 and January 2026. Remote patient monitoring encounters grew nearly 4,000% over the same stretch. And in 2025, according to Strata Decision Technology's latest Performance Trends report, the average total cost margin on a telehealth encounter was negative with every major payer: commercial, Medicare, Medicaid and self-pay.

That combination is the whole story for the finance and virtual care leaders who have to fund these programs. Seven years of growth have made virtual visits a permanent line of business, as Nathan Eddy reported for Healthcare IT News on the June findings, and none of the four payer categories in Strata's data covers the full cost of delivering one.

The figures come from Strata's Comparative Analytics system and its StrataSphere database. Together, the company says, those tools hold near real-time data covering more than 2,200 hospitals, 139 specialty categories, upward of 15,000 practices and a provider count above 149,000. In its June 4 release, distributed through GlobeNewswire, the company also states that StrataSphere accounts for roughly 25% of provider spend in U.S. healthcare. A base that broad lets a hospital CFO read the negative margin as a national reference point instead of one system's cost-accounting quirk.

Volume grew faster than the payment model

The report's framing, echoed by Laura Dyrda at Becker's Hospital Review, is that telehealth has moved from pandemic stopgap to fixture. The margin figures indicate the payment side did not make the same trip. Strata reports the number as a total cost margin, a measure that by its name accounts for more than the direct cost of the visit, which suggests the finding is harder than a thin contribution margin would be.

Remote patient monitoring is the sharper version of the same problem. Jon Asplund at Modern Healthcare noted that reimbursement for remote monitoring faces an uphill climb precisely because the service is so new, and Strata's near-4,000% encounter growth means the volume arrived before the payment rules matured. For a system that has just stood up a hypertension or heart failure monitoring program, that is the number to hold up against the business case.

Older research helps explain why reimbursement is the deciding variable. A 2022 review in Primary Care by Julia Shaver of Kaiser Permanente Northern California credited reduced regulation and increased payment parity during the pandemic with enabling the rapid rise in telemedicine, while noting the literature pointed to outcomes not inferior to in-person care and to cost-saving implications. Payment parity was the enabler. Strata's 2025 margin data suggests that whatever the current payment mix looks like at a given system, it is not covering the total cost of the encounter.

Steve Wasson, chief data and intelligence officer at Strata, said in the release that health systems are adopting new technology and different models of delivering care as they try to cope with staffing shortages and expand access. He noted that the difficulty lies in timing: much of that spending, and virtual care in particular, is happening while margins stay extremely thin.

A 0.2% margin is the cushion absorbing those losses

Strata put health system operating margins at 0.2% for April, a step down from the 0.4% recorded in March. The 12-month low came in January at negative 0.6%. In May, Becker's had reported that Wasson described the March rebound as fragile, and the April slip supports that view.

Put the two data sets together and the operational meaning is plain. A service line losing money on every payer is being carried by an enterprise earning two-tenths of a cent on the dollar. Strata's own framing is that these programs are how systems meet demand they cannot staff in person, so the practical question for a CFO is how much each virtual encounter loses, by payer and by service, and whether that figure is known at all inside the building.

Drug and utility costs are the backdrop, not the telehealth bill

Strata bundles several cost trends into the same report, and they are worth separating. Drug expense rose 8.9% year over year in April, driving a 9.3% increase in total non-labor expense. Northeast hospital utility costs were up more than 30% in March. Those are general non-labor pressures on the whole enterprise; none of the outlets covering the report tie them to virtual care specifically.

The outlets differ on one detail. Healthcare IT News describes the Northeast utility jump as a comparison with March 2025, while Becker's, Modern Healthcare and Strata's own release describe it as a comparison with 2024 levels. The release is the primary document, so the 2024 baseline is the safer reading.

Modern Healthcare added a state-level cut that a CFO in that market can use directly: Illinois expenses rose 7.5% year over year, with non-labor expense up 8.9% on a 7.5% increase in drug costs and a 6.1% rise in supply costs. Illinois outpatient revenue grew 9% year over year and inpatient revenue grew 8.6%, a narrower gap than the national picture.

Uncompensated care kept climbing too. Healthcare IT News and Modern Healthcare both report bad debt and charity care up 13.6% from April 2025, while Becker's puts the increase at 17%; the two figures come from the same report, and the discrepancy is unexplained in the coverage. Modern Healthcare's regional breakdown shows the South up 20.3% and the Midwest up 16.5%, with Illinois at 12.9%.

Outpatient revenue grew 9.7%, and nobody credits telehealth for it

Demand is not the problem. Healthcare IT News reported that April inpatient admissions climbed 4.8% from a year earlier, with outpatient visits up 3.0% over the same period. Modern Healthcare put outpatient revenue growth at 9.7% year over year, compared with 6.4% on the inpatient side. The month-to-month picture was softer: from March to April, outpatient revenue slipped 0.1%, inpatient revenue fell 3.7%, and gross operating revenue dropped 1.3%.

None of the reporting attributes the outpatient growth to telehealth. That matters for anyone tempted to read a strong outpatient line as evidence the virtual program is paying its way. Strata's margin finding says the opposite on a per-encounter basis, and the two numbers describe different things: total outpatient demand, and the economics of one delivery channel inside it.

For operators whose outpatient revenue is growing while the virtual care line is expanding, the sharper question is what the outpatient number would look like with virtual encounters costed separately. Strata's dataset spans 139 specialty categories, so the granularity for a specialty-level answer exists in the industry benchmark even where it does not yet exist in a system's own reports.

AI executive roles have nearly tripled while the payer question waits

The share of health systems with a C-suite or vice president-level executive dedicated to AI, data or machine learning has nearly tripled since 2019, according to Strata's leadership survey data as reported by Healthcare IT News and Modern Healthcare. Strata ties the growth to governance and operational efficiency. The report does not connect those roles to the telehealth margin gap.

It probably should. Data leadership and virtual care are scaling inside the same organizations at the same time, and the telehealth margin gap is exactly the kind of problem a data executive gets handed: which payers, which specialties and which visit types lose the most, and what a renegotiated contract or a different staffing model would do to each. Strata also flagged advanced practice providers as a growing part of the access strategy alongside telehealth and remote monitoring, which puts staffing mix squarely inside the same analysis.

Wasson's line in the release is that the organizations best positioned for the long run will be the ones that balance innovation, access and financial sustainability. The measurable test of that balance is whether any of the four payer categories shows a positive total cost margin on telehealth in Strata's next Performance Trends cut. In the 2025 data, none did.