Montefiore Swings to $73M Loss as FEMA Aid Fades and Payrolls Climb in the Bronx

Montefiore Medical Center’s $73m quarterly loss bodes ill for New York City’s health safety net as pandemic-era support evaporates and costs climb.

Every New Yorker knows that a city is only as healthy as its hospitals. But numbers now emerging from Montefiore Medical Center, the Bronx’s flagship institution, suggest that this pillar is wobbling. In the third quarter of 2025, Montefiore posted a thumping $73m operating loss, wiping out the modest black ink it posted just a year ago. The culprit? Plunging federal aid, stubbornly low government reimbursements, and swelling staffing costs—an unfortunate trifecta for a hospital that cares for the city’s most vulnerable.

The unaudited financial report, released last week, spares little comfort. Montefiore lost 5% on $1.4bn in revenue in the summer months alone. For the first nine months of the year, losses stood at $77m on $4.3bn of revenue. Safety-net hospitals like Montefiore—those serving primarily patients on Medicare and Medicaid—were always going to face a hangover as the fiscal stimulant of Covid-19 relief wore off. But the speed and scale of the reversal have surprised even seasoned administrators.

Unlike plush hospitals in Manhattan that serve the privately insured, Montefiore sits at the nexus of government policy and civic necessity. Eighty-five percent of its patients depend on Medicaid or Medicare. These programmes, for all their virtues, pay far less than commercial insurers. Low reimbursements steadily erode cashflows, making it nearly impossible for such hospitals to break even without regular infusions from various levels of government.

Those infusions are now drying up. In 2024 Montefiore received a buoyant $176m from FEMA’s pandemic relief funds—a sum that vanished this year, causing grant revenues to shrivel by 70%. Even Governor Kathy Hochul’s safety-net transformation grants, generous as they are relative to state budgets, cannot fill the void left by the lapsed federal largesse. Across the street from the accounting office, meanwhile, old pressures hardly abate: labor expenses soared 5% to $679m this quarter, thanks to tough union contracts and a fierce struggle for nurses and medical personnel. Total operating costs hit $1.5bn—up by 3% in just 12 months.

The loss has consequences for all New Yorkers, not just those in the Bronx. Hospitals like Montefiore are a bulwark against the city’s notorious inequalities. They train doctors, anchor medical research, and provide care to those fallen through every other social net. Should institutions like this falter—or, worse, shutter—patients would flow to already overburdened emergency rooms elsewhere, jeopardising citywide health outcomes. The knock-on effects for public health, community stability, and even crime would be hard to overstate.

Dig deeper and second-order consequences appear. Montefiore is just the largest of a wobbly cohort: the entire Montefiore Health System, spanning the Bronx and Westchester, closed the quarter with its own 1.6% operating loss. Management is seeking salvation in mergers and affiliations. In October, plans were floated to graft Garnet Health and St. John’s Riverside Hospital onto the group, with the latter propped up by state support. The gamble—spreading costs and boosting bargaining power—carries risk. Consolidation may buy temporary relief, but rarely fixes the underlying arithmetic of underpayment.

The economic patchwork that sustains New York’s safety-net hospitals looks increasingly threadbare. Political leaders, local and federal, have tinkered but not reimagined the system. Federal cuts embedded in President Trump’s tax overhaul a few years ago bit institutions like Montefiore especially hard; New York’s state government, for all its proclivity for high spending, faces its own puny coffers as Medicaid rolls swell.

The limits of patchwork funding

The situation at Montefiore echoes a national predicament for America’s safety-net hospitals. From Los Angeles to Philadelphia, institutions relying on Medicare and Medicaid hover perpetually close to insolvency, especially now that pandemic-era cash is exhausted. According to recent American Hospital Association data, over half of US safety-net hospitals reported negative operating margins in 2024. Other countries, notably Britain and Germany, tether core hospital funding more closely to actual costs and population health needs—often via explicit national policy rather than episodic grants.

Private philanthropy and insurance, vaunted as alternatives by some, rarely reach the poorest areas, nor can they absorb shocks of this magnitude. The US federal government spent gargantuan sums on healthcare during the pandemic, yet has shown scant appetite for a more comprehensive overhaul. New York’s experiments with grants for “transformation” are commendable, but remain, at most, palliative.

Should safety-net hospitals continue to wither, the city’s social fabric would fray in ways that reach beyond ward closures. There are macroeconomic consequences: hospitals are among the Bronx’s largest employers, and cuts ripple through neighbourhoods via lost jobs and retarded local spending. Politically, closures would fuel populist ire in the city’s left-leaning districts and gift ammunition to those arguing, sometimes tendentiously, for a national single-payer system. Socially, the cost is likely to be highest for the city’s least affluent—those for whom Montefiore is less institution than lifeline.

We at The Economist reckon that the predicament of Montefiore is both particular and emblematic. It is tempting for policymakers to hope that mergers, efficiency drives, or one-off grant programmes will suffice. History suggests otherwise. Without a clearer commitment to sustained funding—or, more radical still, reforming the patchy American payment system—future headlines will feature not only losses, but closures.

New Yorkers do not expect miracles, but they prize reliability. Montefiore’s present woes admit no simple solution. Yet unless politicians and health authorities chart a more sustainable course, the calculus of public health for millions will deteriorate—one balance sheet at a time. ■