YuLin Zhen, Photography Editor

In the fiscal year 2024, which ended on June 30, 2024, Yale New Haven Health, or YNHH, posted its first financial surplus since 2019. 

The $46.2 million surplus marked a dramatic reversal from the $162.3 million loss in 2023 and the $240.3 million loss in 2022. Yet, as one of the state’s largest healthcare systems stabilizes, its long-term financial outlook grows increasingly complex, shaped by an insistent expansion strategy, rising liabilities and a rapidly evolving healthcare landscape.

While YNHH remains a tax-exempt nonprofit, its mission extends beyond patient care to include medical education, research and community service. According to its Form 990 filing, the health system is dedicated to “providing innovative and excellent patient care, teaching, research, and service to the communities it serves.” This comes as YNHH is also expanding into high-revenue specialties and suburban markets.

“The challenge is always figuring out how to be true to your mission and to deliver high-quality health care to everybody in an accessible, affordable way, and then at the same time, to maintain the mission in the long run and not find yourself out of business in a year,” Howard Forman, a Yale professor specializing in health policy and management, said.

YNHH did not respond to a request for comment.

YNHH’s financial recovery

For much of the past decade, YNHH has maintained relatively stable financial performance, navigating shifts in healthcare reimbursements, labor costs and regulatory changes. 

However, the COVID-19 pandemic presented an unexpected financial strain. The system’s revenues dropped sharply as elective surgeries — the hospital’s most profitable services — were postponed, while labor costs surged, in part due to reliance on expensive traveling nurses. 

At the same time, rising healthcare costs have placed increasing financial strain on hospitals across Connecticut.  

A 2024 report found that the state’s hospitals operated at a collective loss in 2023, with operating expenses growing 6.5 percent in one year. 

This year, increased patient revenue and strong non-operating income from investments and donations drove YNHH’s net gain.

According to YNHH’s financial report, the system’s total revenue rose to $7.24 billion, while expenses increased to $7.19 billion, reflecting both the growing cost of healthcare services and a shift toward more high-margin specialty care. 

Further, non-operating gains, including investment income and philanthropy, rose from $248.8 million in 2023 to $378.2 million in 2024.

Operating expenses have also surged, growing from $6.43 billion in 2022 to $6.71 billion in 2023 and reaching $7.19 billion in 2024​. 

The largest cost driver was salaries and benefits, which increased from $3.3 billion in 2022 to $3.55 billion in 2024. This rise was driven by overall labor costs, including increased wages and staffing expenses, as hospitals worked to address workforce shortages. 

“Hospitals operate on razor-thin margins, and YNHH is no exception,” said Edieal J. Pinker, deputy dean for strategy and professor of operations at the School of Management. “Because the profit margin for a hospital like Yale is typically one to five percent, there’s very little room there to spend extra.”

Spending big: debt and capital investments   

YNHH’s latest financial report also showcased another trend: the system is spending at a comparatively increased rate. 

In 2024, capital expenditures, the amount of money corporations spend, exceeded $416 million, more than doubling since 2022. The spending reflects a strategic expansion effort, including the construction of a new neuroscience tower at St. Raphael’s Campus, investment in advanced treatment facilities and the $87 million acquisition of PhysicianOne Urgent Care, a regional chain of outpatient clinics.

These expansions come at a cost. YNHH’s total liabilities, or the financial obligations it owes, increased to $4.33 billion in 2024, up from $4.05 billion the previous year. This includes debts, unpaid expenses and other financial commitments, such as loans, operational costs, employee benefits and lease agreements. 

The system’s long-term debt grew to nearly $1.7 billion, up from only $0.67 billion in 2019, raising questions about its future financial flexibility.

“Debt isn’t inherently bad,” Rick Antle, an accounting professor of Accounting at the School of Management, said. “But when a hospital is borrowing to fund investments in equipment [and other assets], those investments have to generate sustainable revenue. Otherwise, you end up with an institution that is financially over-extended.” 

The nonprofit dilemma: profitability versus public service   

As a nonprofit hospital, YNHH is tax-exempt. 

While YNHH reported $94.6 million in uncompensated care and community benefits in 2024 — including charity care, research funding and health education programs — the hospital system has also made considerable investments in expanding into affluent suburban areas and high-revenue specialty care, such as neurosurgery and oncology.

“The challenge is always balancing mission with margin,” said Forman. “YNHH has to maintain profitability, but at what cost? If its growth comes at the expense of community hospitals or lower-income patients, that’s a problem.”

As hospitals face rising expenses, there is increasing pressure to focus on the most lucrative services, potentially at the expense of broader community health initiatives. The challenge, as Forman suggests, is whether this financial calculus ultimately erodes access to care for vulnerable populations.

Pinker echoed this sentiment, noting that hospital systems like YNHH face increasing pressure to consolidate services and expand their footprint in commercially favorable markets to maintain financial stability. 

Many hospital systems acquire outpatient facilities and physician groups, which generate higher reimbursement rates. YNHH’s acquisitions, including urgent care centers and specialty clinics, illustrate how nonprofit hospitals operate similarly to private healthcare corporations, leveraging consolidation to maintain financial strength.

Antle noted that hospitals have little choice but to expand aggressively in today’s healthcare economy. 

“A lot of people in healthcare now feel like they have to expand to be competitive,” Antle said. “It seems that running a small teaching hospital is extremely difficult, or even impossible, to do in the current environment.” 

In the 2025 Super Bowl, Yale New Haven Hospital placed an advertisement. 

Will Forbes contributed data visualizations.