Revenues grow, margins slow at Advocate Health in H1 2026

In the first half of 2026, Advocate Health, the country's third-largest nonprofit health system, has seen an 8.6% increase in operating revenues, reaching nearly $20.5 billion. However, the company's operating performance has slowed compared to the previous year. The six-month operating margin stands at 3.8%, a decrease from 4.4% in H1 2025 and a slight improvement over the 3.7% margin from the preceding quarter. Operating income for the period was $775.3 million, up from $824.4 million in the same period last year.

The growth in revenues was primarily driven by an increase in patient volumes. Total bedded patients rose by 3.5% year over year, while total surgeries increased 3.1%, primarily due to outpatient procedures. However, the average inpatient length of stay decreased from 5.35 days to 5.25 days. Work relative value units, a measure of provider productivity, rose by 7.9%.

Despite the increase in patient volumes, the system's patient case mix index remained the same as the prior year's first half. Yet, the payer mix has shifted negatively, with commercial's share of patient service revenue falling from 50% to 45%, while Medicaid grew from 18% to 20% and "self-pay and other" rose from 1% to 4%.

Beyond care delivery, Advocate reported over $1.9 billion in nonoperating revenues, mostly from net investment income. This contributed to a bottom line of almost $2.7 billion for the period, up from $2 billion in the same period last year. The health system is on track to surpass the $38.9 billion in total revenue it reported in 2025, with further growth expected as one of its affiliates continues to expand.

Recently, Atrium Health, one of the organization's affiliates, announced plans to absorb North Carolina's WakeMed Health in exchange for a $2 billion investment. This merger, which generated about $6 billion of operating revenue for Atrium Health, has drawn some skepticism from local leaders but has not been halted yet.