Top hospitals by Medicaid and Medicare payor mix

Hospitals rely on a diverse mix of payors—Medicare, Medicaid, and commercial insurance—to fund patient care and maintain financial stability. The proportion of revenue from each payor significantly impacts a hospital’s ability to deliver quality care and plan for the future.

With Medicare and Medicaid covering more than 150 million Americans combined, these government programs play a foundational role in hospital finances. Medicaid, which primarily serves low-income and vulnerable populations, covers about 82 million people, while Medicare focuses on elderly and disabled individuals, serving approximately 68 million.

As the healthcare landscape evolves, understanding the balance between government and private payors is critical for hospitals navigating financial pressures, reimbursement challenges, and community healthcare needs.

Medicaid and Medicare’s role in hospital finances

Together, Medicare and Medicaid are essential in funding key areas of care, including long-term services, maternal and child health, and care for people with disabilities. For example:

• Medicaid covers nearly half of all U.S. children, or about 29 million children
• Medicaid is the primary payer for 63% of nursing home residents
• Medicaid finances 41% of all births in the U.S.
• More than 1 in 3 people with disabilities—around 15 million individuals—rely on Medicaid for their healthcare
• Medicare accounts for 40% of all U.S. hospital inpatient days

These statistics underscore how Medicare and Medicaid impact hospital finances and influence the care hospitals can provide, with the balance between government programs and private insurance playing a key role in shaping revenue.

Financial implications for hospitals

Hospitals that serve a high proportion of Medicare and Medicaid patients—often referred to as safety-net hospitals—are more reliant on government reimbursement rates, which are typically lower than commercial insurance payments. These hospitals face unique financial pressures, making it essential to understand and manage payor mix dynamics.

Conversely, hospitals with a higher proportion of commercially insured patients often operate with different financial constraints and opportunities, as private insurance generally reimburses at higher rates. However, all hospitals must continuously adapt to shifts in policy, demographics, and market trends to maintain financial sustainability and ensure continued access to care for diverse patient populations.

How is payor mix calculated, and why does it matter?

For this article, we focused on payor mix based on revenue, rather than discharges, to better understand how each payor type contributes to hospitals’ overall financial performance. Payor mix represents the distribution of hospital revenue by payor type, expressed as a percentage.

In the Definitive Healthcare HospitalView product, payor mix is derived from charge and revenue data reported in each hospital’s Medicare Cost Report (MCR). Results in the following analysis are aggregated from the most recent 12-month interval tracked in our database.

What is the average payor mix at U.S. hospitals?

The average revenue-based payor mix across short-term acute care hospitals in HospitalView shows that private insurance is the largest contributor, accounting for 70.5% of hospital revenue. This is followed by Medicare (15.1%) and Medicaid (14.6%).

Average revenue-based payor mix at U.S. acute care hospitals

Fig. 1 - Data is from the Definitive Healthcare HospitalView product and derived from the Medicare Cost Report. Data accessed February 25, 2025.

While private insurance contributes the largest share of revenue, the combined impact of Medicare and Medicaid—nearly 30%—is substantial. Hospitals with a higher proportion of Medicare and Medicaid patients often experience greater financial pressures, as reimbursement rates from these government programs are typically lower than those from private insurers.

Certain hospital types have distinct payor mix trends:

• Rehabilitation hospitals, long-term acute care hospitals, and rural emergency hospitals tend to rely heavily on Medicare, as they frequently serve older or medically complex patients.
• Psychiatric hospitals, rural emergency hospitals, and children’s hospitals have a higher-than-average Medicaid patient share, reflecting the role of Medicaid in covering low-income populations, pediatric care, and behavioral health services.

Conversely, hospitals with a lower share of government-funded payors—often those serving commercially insured or wealthier populations—may operate under a different financial model, with potentially higher reimbursement rates. These variations underscore the diverse financial realities of U.S. hospitals, influenced by patient demographics, service offerings, and reimbursement structures.

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Start a free trial today to start analyzing hospital financial performance, segmenting accounts by revenue figures or payor mix, and reaching the right hospital contacts.